Indonesia, Southeast Asia’s largest economy continues to see growth momentum despite the slowdown in the global economy. The World Bank expects Indonesia’s GDP to expand to 5.2 percent this year,...
RGE Director Anderson Tanoto was interviewed by CNBC on April 20, 2015, on the sidelines of the World Economic Forum on East Asia in Jakarta, Indonesia. He provided his thoughts and insights on a variety of topics.
The Indonesian government has the political will and the desire to build infrastructure. For us, in the rural areas, we see it in a different way. We’re taking the lead to build our own infrastructure.
In the last 10 years, (companies in the) pulp & paper and palm oil industries like us have built more than 3,000km of roads in the rural areas, which are so important for the community.
We see it as opportunity for us to develop further in partnership with the public sector to invest in the infrastructure for Indonesia.
(The three concerns) that people have are electricity, roads and people. This is the same problem that people are facing everywhere else around the world. I think in Indonesia, the government is taking the lead (in infrastructure development).
The Indonesian government is trying to realise their vision of 35,000MW (mega Watts) in a few years. But most importantly, it’s the first 3,500MW. For the roads, likewise, it’s the first 1,000km of roads. And that really gives the market the confidence that the government is doing something on the ground.
On the political environment in Indonesia
Most importantly, the politics in Indonesia have to be seen from bottom up. The people are stable here. While the currency is fluctuating, the confidence in the market is still very strong.
(Indonesian President) Jokowi has the right intentions for the country. This is extremely important for Indonesia to realise the growth potential in the next five to seven years.
(Progress in Indonesia) has proven to be quite strong. Jokowi passed the fuel subsidies cut immediately in the first 30 days of his government. In the next few months, it’ll be much tougher to work through the Houses. But I believe, principally, that we have the right government; we have the right people in government. Not only that, if you see around Jokowi, there are a lot of young generations of Indonesians – in their early 30s and early 40s – taking the lead in the government, and with that, we see a huge potential for the country.
On commodities and currencies
To be in the commodity business, it’s inevitable to be cyclical. The most important thing for us is to manage the risks accordingly.
Our loans are in the respective domestic currencies and also in US dollar – that in itself is a balancing act. For our group, we’ve a very strong treasury team in Jakarta, Singapore and Hong Kong. Those three areas give us good insights to take good positions on currencies.
On infrastructure investments in Indonesia and attraction of private investors
You’ve to see it from the long-haul perspective.
If you look at Indonesia from a three-to-five year horizon, it’s extremely attractive looking at the population, demographics, the macro environment, and that Indonesia remains the largest economy in the ASEAN region.
Indonesia, marcoeconomically, is still very attractive. There is teething growth in the next few months, but it’s still very exciting in the long run.
About the World Economic Forum on East Asia
The World Economic Forum is an International Institution, founded in 1971, committed to improving the state of the world through public-private cooperation. It engages political, business, academic and other leaders of society in collaborative efforts to shape global, regional and industry agendas. Together with other stakeholders, it works to define challenges, solutions and actions, always in the spirit of global citizenship. It is independent, impartial and not tied to any special interests, working in close cooperation with all major international organisations.
Anderson Tanoto is a director of RGE, a group of companies in the resource-based manufacturing industry founded by its Chairman Sukanto Tanoto. He also oversees fibre operations in APRIL (Asia Pacific Resources International Holdings Ltd), and is a member of the board of trustees at Tanoto Foundation International.