The rapid expansion of business has changed our 21stcentury economic landscape for the better. Governments will remain important in formulating economic policies but, without the help of the private sector, we might not be able to provide more jobs for our citizens. We know that whatever country one comes from, the top national and local agenda is going to be jobs.
Already, global growth in 2013 is showing different dynamics. Advanced economies are experiencing recovery and showing positive growth, while emerging economies – including the so-called BRICS countries (Brazil, Russia, India, China and South Africa) – are facing a slowdown. They are also suffering from large trade deficits, capital flight and depreciating currencies. This is also true for the APEC region.
In some APEC advanced economies, growth is gaining strength. Meanwhile, APEC emerging economies need further momentum for growth. Not withstanding this, APEC economies remain a crucial source of global growth. According to the IMF, as a group, APEC is expected to grow by 6.3% in 2013 and by 6.6% in 2014 – which is more than twice the world average.
At present, APEC economies account for 54% of global GDP and 44% of global trade. Within the region, trade has grown nearly seven-fold since 1989, reaching over $11trn in 2011. In the past 25 years, average tariffs in APEC have declined by close to 70%. The total cost of conducting business across borders decreased by two successive rounds of 5% tariff reductions: resulting in nearly $59bn of savings for businesses. All this shows that with its combined potential, APEC is in the ideal position to help the recovery of the global economy. Therefore, APEC members – through individual and collective measures – must put extra efforts to promote growth. Let me highlight some possible measures.
First and foremost, we all need to do our part in helping prevent protectionist policies, and continue on our path of trade liberalisation in ways that uplift the wellbeing of all our citizens. We must also ensure that our trade relations are not only strong but also balanced.
Second, we need to intensify efforts to stimulate investment within our region so as to maintain growth and create jobs. There is major opportunity for this as we are experiencing a rapid growth of the middle class.
Third, we need to develop more and better infrastructure as an essential element for our connectivity.
This will of course help not only to facilitate trade and investment, but also boost job creation. APEC needs to tackle inefficiency in the supply chain. We have to make it easier, cheaper and faster to conduct trade in goods and services across borders. In this regard, it is crucial that we promote connectivity as a priority.
Fourth, to ensure growth with equity, we must embrace the SMEs that form the backbone of all our economies. Fifth, we must work together to ensure the financial stability, which is an absolute requisite for sustainable economic activities, including trade and investment. APEC members can help to stabilise the global financial market through bilateral as well as regional initiatives. These include regional financing agreements and the Financial Stability Board. The Chiang Mai Initiative Multilateralisation is a good example of the close collaboration among some APEC members.
Sixth, to ensure development for all, we must not forget to provide a social safety net for the poor and financial inclusion for shared prosperity. Finally, APEC economies can only achieve all this if we intensify our policy consultation and coordination.
Indonesia envisions the future of this region as prosperous, stable, dynamic, inclusive and forward-looking.
Our objective is to make the APEC region the epicentre for the world’s economic advancement. I believe through close collaboration with the business community, APEC can achieve the following priorities: Attaining the Bogor Goals: APEC economies have achieved tremendous progress toward achieving the Bogor Goals. But while APEC has reduced average tariffs from 16.9% in 1989 to 5.7% in 2011, restrictive nontariff measures, lengthy Customs procedures and poor transport infrastructure still pose challenges to trade.
Therefore, as we continue to work for trade and investment liberalisation, as well as deeper regional economic integration, we must ensure we have the capacity to tackle those challenges. We have to be able to address growing trade barriers, financial instability and fluctuating commodity prices.
Achieving sustainable growth with equity
Today, APEC economies are confronted by new challenges that could cause disruption and stunted growth. Important among these is population growth.
The global population has grown rapidly from just over 5.5bn people in 1994 to more than 7bn people today. By 2045 there will be 9bn people worldwide. Much of this population increase will come from the Asia-Pacific region, placing a great burden on the supply of energy, food and water for our people. We cannot achieve APEC’s goals without ensuring the principles of inclusion in our economic development. Therefore, maintaining a growth path that is sustainable and inclusive is of great importance. Our efforts should focus on economic empowerment, engagement of stakeholders, enhancement of small and medium-sized enterprises’ global competitiveness through innovation, and tapping women’s productivity in the economy. It is also critical to ensure financial inclusion, strengthen food security and improve access to health services.
Unlike in 1994, the advent of new technologies has opened new ways for people to do business with each other, across countries, and across continents. Improving connectivity, therefore, becomes a critical development priority.
I believe that focused and improved physical, institutional and people-to-people connectivity will help integrate our region. It will also facilitate the flow of goods, services, capital and people of the Asia-Pacific region. Thus, we must work together to strengthen connectivity through infrastructure development and the promotion of infrastructure investment.
Indonesia will work with both APEC leaders and all other stakeholders to help advance progress on these three priorities. After all, the success of our country is strongly tied to the success of other nations.
Like other emerging markets, Indonesia is facing some head-winds resulting from financial market turbulence. Yet, this situation is manageable and the Indonesian government is responding to it with a package of focused policy measures, including substantive structural reform. As a result, in recent times Indonesia’s financial market has stabilised.
We believe this is only a short-term challenge, and we remain confident that the long-term prospects to invest and grow are enormous, as Indonesia will remain a land of opportunity and growth.
Indonesia has become a trillion-dollar economy with a large middle class. Our democracy is strongly rooted, and this makes Indonesia well-placed for foreign investment. Global consultancy McKinsey & Company predicted that Indonesia’s business opportunity will increase up to $1.8trn in 2030. This opportunity ranges from consumer services, agriculture and fishery, and natural resources to education, industry and infrastructure.
We continue to create a better business and investment climate, addressing many of the challenges. We have made steady progress, including major bureaucratic reforms to strengthen government institutions.
To accelerate economic growth, in May 2011, we launched the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development 2011-25 (MP3EI). In the next 14 years, we are aiming to reach over $460bn worth of investments in 22 main economic activities, integrated in eight programmes. These include agriculture, mining, energy, industry, marine, tourism and telecommunications.
Therefore, the MP3EI offers a great number of opportunities for international investors. Let us build a strong partnership together and forge a resilient APEC. Let us also ensure that APEC continues to bring prosperity to all the people in the APEC region.
The above is an excerpt from the speech at the APEC CEO Summit 2013, Bali, Indonesia on October 6, 2013.
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