U.S.-Indonesia Society Gala Dinner
Under Secretary for Economic Growth, Energy, and the Environment
Thank you, Ambassador Merrill for that kind introduction. Honored guests, ladies, and gentlemen, let me extend a warm welcome to Foreign Minister Retno Marsudi who is here in Washington for the first time in her official capacity as Foreign Minister. I would like to thank the U.S.-Indonesia Society for inviting me to speak tonight, and recognize all of the important work they do to maintain the close partnership between the United States and Indonesia.
There is a great deal to celebrate about our relationship, and the close personal and business ties between our two countries.
That is why I made it a priority to visit Indonesia last spring during my first trip to the region as Under Secretary.
Indonesia’s success is important to the United States. We have a strong partnership that holds tremendous potential for growth in a number of different areas.
Indonesia’s dynamic economy already makes it an important destination for American companies and investors who have a long history of partnership there.
Between 2004 and 2012, U.S. businesses invested more than $65 billion in Indonesia, making us one of Indonesia’s largest investors – larger than Korea and China for example. According to a study commissioned by the American Chamber of Commerce in Indonesia, U.S. companies directly employ about 200,000 Indonesians. More importantly, the overall impact of their presence has meant an additional 1.7 million Indonesian jobs.
Clearly, our partnership is robust. Yet there is considerable room for growth. Our two-way trade last year was only about $28 billion. We’d like to see this number grow. And our companies certainly want to invest more in Indonesia under the right conditions. This is why there has been so much enthusiasm for President Jokowi’s commitment to fight corruption and improve governance
We are constantly looking for ways to break down barriers, to increase trade and investment, and to foster shared prosperity with all of our trading partners. As Secretary Kerry discussed with Foreign Minister Marsudi this morning, we are encouraged by the economic reforms President Jokowi is undertaking to strengthen Indonesia’s private sector.
President Jokowi reduced a popular fuel subsidy that had consumed 15 percent of the national budget, and which now accounts for only one percent of the budget.
He recently began the process of simplifying or removing numerous business regulations that hampered economic growth.
And just last week, we held the latest session of the U.S.-Indonesia Trade and Investment Framework Agreement.
Yet it is evident the U.S.-Indonesia relationship can blossom even further.
President Jokowi could build on his initial reforms in several important ways. He could begin by ensuring the enforceability of contracts, move away from the import substitution model, and reduce the negative investment list.
As I mentioned, when I visited Jakarta last spring I met with entrepreneurs and government ministers who were enthusiastic about using technology to address some of Indonesia’s most pressing challenges.
I was struck by how Indonesia has embraced the Internet like few other countries in the world. Jakarta is the world’s Twitter capital – no other city on earth Tweets as much as Jakarta – and Indonesia has the third highest number of Twitter users on the planet. Indonesia has the world’s fourth largest number of Facebook users, and our Embassy in Jakarta has one of the largest Facebook and Twitter followings of any foreign post.
The Internet entrepreneurs I met with told me they are trying to create a “Silicon Valley mindset” in the vibrant tech start-up communities around Jakarta and Bandung.
They believed – rightly in my opinion – that the kind of reforms I mentioned earlier would enable their promising startup ecosystem to take off.
The potential certainly exists.
Google, Facebook and Apple have all recognized this and each have opened offices in Jakarta.
In fact, there is almost unlimited interest from American companies to bring their technological know-how to the Indonesian market. For instance, while some cities in Indonesia have high Internet penetration rates, far too many Indonesians still lack basic Internet access. There are scores of American technology companies that would be interested in helping Indonesia address this challenge.
Similarly, Indonesia has 40 percent of the world’s potential geothermal resources. President Jokowi has called for adding 35 Gigawatts of new electric capacity and 40 American companies formed a Power Working Group to propose solutions to support Indonesia in addressing this need for electricity.
As an island nation, Indonesia’s abundant fisheries provide more than three million people with their livelihood. But, Indonesia loses up to $5 billion every year due to Illegal, Unregulated and Unreported fishing. When it comes to managing fisheries, there are American companies that specialize in providing electronic tracking systems, satellite data and other technology that deters IUU fishermen.
Let me add that I applaud Minister Susi’s efforts to address not only illegal fishing but also ocean pollution and waste management.
The steps President Jokowi and his administration have taken during their first year in office have sent important and positive signals to the international community and investors everywhere. Indonesia’s economy has shown remarkable resiliency in bouncing back from the worldwide economic slowdown and returning to nearly 5 percent growth.
There are and will continue to be significant new opportunities for businesses to prosper in Indonesia.
I look forward to working with Indonesia to create the regulatory and policy environment that can lead to increased growth for our economies, and the U.S.-Indonesia relationship.
Thank you very much.