JAKARTA – Indonesian Finance Minister Sri Mulyani Indrawati on Friday called for Asean to stay united and neutral to demonstrate that it stands for cooperation and progress as a means to avoid becoming a battleground for influence amid the great power rivalry between the United States, China and Russia.
This can be achieved by stepping up cooperation in durable growth sectors such as digital technology, cross-border payment systems, sustainable finance, the green energy transition and electric vehicles, she told The Straits Times in an interview.
Dr Mulyani noted that the US is struggling with inflation, Europe is seriously affected by the prolonged war in Ukraine and China is struggling with to return to growth after closing itself off during the Covid-19 pandemic.
Hence, “this is really a good timing for Asean to look at recovery and sources of growth that are resilient, given the global environment which continues to be weakened, uncertain and fragmented”, she said.
At the 42nd Asean Summit held in Indonesia’s Labuan Bajo in April, Asean leaders had signed an agreement to push for better regional payment connectivity and the use of local currency transactions as part of efforts to reduce dependency on established currencies used for trade, such as the US dollar.
Dr Mulyani hailed the move as “very good in creating resiliency”, adding: “Using our own local currency (means) transactions and trade investments can continue to be facilitated and be less vulnerable to the global (markets that comes with) using dominant currencies like the dollar.”
Asean and Singapore cooperation
“It is in the interest of the whole of Asean to want to see Indonesia continue to be stable, grow healthily and sustainably... because we are big,” she said.
But being big alone is not enough, she acknowledged, stressing that Indonesia has been investing in human capital and infrastructure and sprucing up its business climate.
“These are the areas that we will continue to improve because we know that we cannot attract economic activities, investments and trade only because of the size of our economy, the population or our country,” she said.
The support of Asean countries is invaluable in helping Indonesia achieve “open and win-win” collaboration.
She added: “Cooperation is something that needs a lot of communication and discussion, intense exchange of ideas... The goodwill and the good intentions are really strong among all the Asean countries.”
She praised Singapore, saying it “definitely has an advantage” given its status as a global financial hub and “own sophistication” in attracting investments due to its good legal system and governance.
“Indonesia also wants to establish its own ability to become a big economy with a strong financial system,” she said.
“The country (Indonesia) needs to be well governed, well run and formulate policies so that we are able to create a good and sound environment not only for Indonesia, but also for Asean and the rest of the world.”
Hence, it hopes for Singapore’s support in the areas of sustainable finance, renewable energy transition and the development of Indonesia’s new administrative capital in East Kalimantan, known as Nusantara.
“These are the areas in which we can communicate with potential investors through many channels directly or indirectly, or through the Singapore hub,” she said.
Challenges as Finance Minister
Dr Mulyani, 61, who has a doctorate in economics, has had an illustrious career in finance.
She previously worked as an executive director at the International Monetary Fund from 2002 to 2004, and was managing director and chief operating officer at the World Bank in 2010.
She had also served as finance minister under then President Susilo Bambang Yudhoyono in 2005, and acting coordinating minister for the economy in 2008.
She counts the Covid-19 pandemic as an unprecedented shock, and said it had not been “an easy time and easy task” for finance ministers, herself included, to ensure that state budgets could meet the needs of the people and protect them from such impacts as high costs of food and energy.
“We really have to focus in a very detailed, calculated way (on) this potential shock within the economy, on the state finance, on the budget and how the budget can continue adapting, functioning effectively in protecting people from the pandemic,” she said.
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Many countries have had to deal with shrinking fiscal space, volatile capital flows and high inflation. And for some, the effects are far from over.
The pandemic aside, Dr Mulyani also has to deliver on the goals set out by President Joko Widodo, known for his ambitious infrastructure projects such as toll roads, seaports and Nusantara.
Mr Widodo, she said, wants to see Indonesia progress, even in tough times, as it is his responsibility to do so. And her job as a finance minister is to help him achieve his targets without sacrificing or destabilising both short- and long-term sustainability.
In the face of competing goals, trust and teamwork among government ministries are crucial in making decisions on projects, including on producing “accountable and appropriate budgets”.
“People always think as if this is like constant competition (between ministries); it is not. It is constant collaboration and coordination,” she added.
Dr Mulyani also defended the government’s proposed state budget of 40.6 trillion rupiah (S$3.6 billion) for 2024 for the construction of the new capital. She explained that the fiscal outlook is going to be healthier in the medium term of between one and three years.
“People put it as if this (project) is taking all the resources. We are providing a very clear... fiscal position. Within that context, we are going to be able to finance those kinds of priorities. If we cannot, then we have to choose which needs to be done partially first, and so on,” she said.
With Mr Widodo’s 10-year administration coming to an end in 2024, Dr Mulyani has yet to chart her future plans.
She said: “My answer is always stay focused on what we are doing now, and I’m still serving this government until October 2024. That is a very big task, which really demands my full attention.”