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Indonesian President Joko Widodo gestures as he delivers a speech in Parliament in Jakarta. Photo: Reuters

Indonesia’s Jokowi says pandemic can spur ‘big leap forward’ for economy

  • Indonesia has the highest Covid-19 death toll in Southeast Asia and lockdowns have decimated business
  • The President’s priorities announced during his state of the union address include slashing oil imports, reforming the health sector and strengthening food supply chains
Indonesia must use the coronavirus pandemic to reboot Southeast Asia’s biggest economy, including by improving food and energy security, as well as processing more natural resources at home, President Joko Widodo said on Friday.

Widodo, commonly known as Jokowi, made the remarks in his annual state-of-the-union speech to Parliament. Due to coronavirus precautions, less than half of the lawmakers were present for his address, with the rest watching online.

Likening the current economic situation to “a computer crash” causing stagnation, he said Indonesia, along with other countries, must “shutdown, restart and reboot”.

“We must not let the crisis bring about setbacks. In fact, we must capitalise on the crisis as a momentum to make a big leap,” said Widodo, who was wearing a traditional outfit from the Sabu people in the eastern part of the archipelago.

Indonesia's President Joko Widodo, dressed in a traditional outfit from East Nusa Tenggara and wearing a face mask, enters the Parliament building in Jakarta. Photo: AFP

The government expects the economy to post near flat growth this year due to the pandemic, which has infected over 132,000 people and caused nearly 6,000 deaths in the country, the highest death toll in Southeast Asia. Last year, the economy grew 5 per cent.

The economy shrank 5.32 per cent year on year in the second quarter, its first contraction in more than two decades, as movement restrictions to contain the coronavirus outbreak decimated business. The government plans to spend as much as 1,476 trillion rupiah (US$99 million) in the six months through December to boost the economy, Finance Minister Sri Mulyani Indrawati said last week.

About US$50 billion in fiscal stimulus has been set aside to counter the impact of the pandemic after temporarily scrapping a fiscal deficit limit and getting the central bank to directly finance government spending.

Widodo said accelerating reform of the health sector was a top priority, along with strengthening food supply chains, including with a newly planned food estate on Borneo island.

Under energy reforms, Widodo highlighted plans to slash expensive oil imports by using fuel made from palm oil.

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Indonesia’s Pertamina produced its first batch of biodiesel made fully from palm oil last month and is set to produce 1,000 barrels of the fuel at its Dumai refinery.

The so-called D100 would absorb a minimum of 1 million tonnes of farmer-produced palm for 20,000 barrels of production capacity per day, Widodo said, without giving a timeline.

Indonesia's President Joko Widodo and officials pose for photos ahead of the state-of-the-union address in Parliament. Photo: AFP

Indonesia currently has a mandatory use of biodiesel with 30 per cent palm oil content.

The president also stressed a need to push forward the downstream processing of raw materials including converting coal into gas and nickel ore into ferro nickel and stainless steel, as part of government efforts to create jobs.

Additional reporting by Bloomberg

This article appeared in the South China Morning Post print edition as: widodo calls for economy reboot