VOA Interview: Indonesia's Sri Mulyani Indrawati

Summary

The Indonesian Finance Minister discusses the challenges Indonesia faced while hosting the G20 amid geopolitical tensions, particularly regarding Russia's involvement. She emphasizes the importance of global cooperation to address economic recovery post-pandemic. The conversation touches on Indonesia's diplomatic role, its stance on the G7's oil price cap, and Indonesia’s relations with both China and the U.S. The minister also highlights the country's infrastructure projects, including the Belt and Road initiative and the new capital city, while addressing energy transition goals and the Just Energy Transition Partnership (JETP) funding.

Takeaways

• 🌍 Indonesia emphasized the importance of cooperation for global economic recovery post-pandemic and amidst new challenges.
• ⚖️ Despite pressures, Indonesia maintained neutrality and opposed isolating Russia during the G20 summit, stressing that G20 was created to address global economic issues.
• 💬 Indonesia facilitated communication between conflicting parties, including Ukraine and Russia, to prevent prolonged conflicts and encourage dialogue.
• 🛢️ Indonesia acknowledged that energy and food disruptions caused by the war in Ukraine have affected countries globally, especially import-dependent ones.
• 💡 Indonesia's decision to buy Russian oil depends on government-controlled procurement and availability, with price caps providing potential benefits.
• 🤝 Indonesia played a key role in creating a platform for communication during the G20, allowing Ukraine's President Zelensky and Russia to voice their perspectives.
• ⚠️ Indonesia remains non-aligned in the US-China rivalry, though it has strategic relationships with both powers, emphasizing trade, investment, and peace in the ASEAN region.
• 🚉 Indonesia clarified that many infrastructure projects, including the Jakarta-Bandung high-speed rail, are funded by its own budget and state-owned enterprises, not dominated by foreign investments.
• 🌱 Indonesia's capital city relocation to Kalimantan will be gradually funded by government money, with plans to attract private and foreign investments later.
• 💰 Indonesia is committed to energy transition and has secured $20 billion in pledges under the Just Energy Transition Project (JETP), though its success depends on project implementation and financing delivery.

Q & A

What were some of the main challenges Indonesia faced while hosting the G20 summit?

Indonesia faced significant geopolitical tensions, particularly due to the war in Ukraine. There were pressures to focus on isolating Russia and helping Ukraine, along with threats of boycotts from Western leaders unless Vladimir Putin was excluded.

How did Indonesia address the issue of whether Russia should participate in the G20 summit?

Indonesia maintained that cooperation was necessary to tackle global economic challenges like the pandemic and climate change. They emphasized the importance of keeping the G20 focused on economic recovery rather than breaking the forum over political disagreements.

What was Indonesia's strategy to manage the tensions surrounding Russia's participation in the G20 summit?

Indonesia acted as an 'honest broker,' inviting both Ukrainian President Zelensky to speak virtually and allowing Russia to make statements. This was aimed at diffusing tensions and fostering communication despite the ongoing war.

How does Indonesia view the G7's price cap on Russian oil?

Indonesia sees potential benefits from the price cap but questions its effectiveness. The country emphasizes the importance of securing oil at the best price to meet domestic energy needs, especially during the recovery period.

What role does Pertamina play in Indonesia's oil purchasing decisions?

Pertamina, assigned by the government, is responsible for procuring and importing oil. Indonesia's domestic oil production is insufficient to meet demand, so Pertamina looks for the best-priced oil sources globally.

How does Indonesia balance its relationships with both the U.S. and China in terms of trade and investment?

Indonesia maintains a non-aligned stance, fostering strategic relationships with both countries. Trade and investment with China and the U.S. are significant, but Indonesia remains open to partnerships from multiple sources, including ASEAN and other regions.

What is Indonesia’s position on the rivalry between the U.S. and China?

Indonesia, and ASEAN in general, prioritize peace, security, and economic development in the region. They aim for responsible relationships between the U.S. and China to avoid disrupting global economic recovery.

How is Indonesia funding its new capital city project in Kalimantan?

The new capital city project is being financed primarily through government funds and state-owned enterprises. While the government is open to foreign investment from strategic partners, the majority of the funding is currently domestic.

What are some of the major infrastructure projects under China’s Belt and Road Initiative in Indonesia?

One of the major projects under the Belt and Road Initiative is the Jakarta-Bandung high-speed rail. However, most infrastructure in Indonesia, like the Sumatra toll roads, is funded by the government and state-owned enterprises.

What is Indonesia’s approach to the Just Energy Transition Partnership (JETP) and the $20 billion pledged for energy transition?

Indonesia views energy transition as critical, especially since the economy is growing and energy demand is rising. The country aims to reduce reliance on coal while developing renewable energy. The $20 billion pledge is part of international support for this transition, with a focus on retiring coal plants and investing in renewables.

Outlines

00:00

🌍 Navigating G20 Challenges Amid Ukraine Crisis

The speaker reflects on Indonesia's leadership at the G20 Summit, which faced geopolitical challenges due to the Ukraine war. There were calls to isolate Russia, but Indonesia emphasized the importance of global economic cooperation for recovery post-pandemic. The G20's original goal was to avoid economic collapse, and this cooperation remains essential to address challenges like the war and climate change. The speaker describes the complex negotiations on Russia's participation, including efforts to facilitate communication and how President Putin’s absence and President Zelensky’s virtual participation created a delicate balance.

05:01

🛢️ Indonesia's Stance on Russian Oil Price Cap

The speaker discusses the global economic impacts of the Russia-Ukraine war, especially on food and energy supplies. Indonesia, as an energy importer, faces challenges due to rising oil prices. The speaker clarifies that Pertamina, Indonesia's state-owned oil company, handles oil procurement and would make decisions based on market conditions. The speaker explains that while Indonesia acknowledges the benefits of the G7's price cap on Russian oil, it remains uncertain whether this mechanism will be effective in addressing supply and pricing concerns.

10:03

🇺🇸🇨🇳 US-China Rivalry: Indonesia's Perspective

The speaker addresses concerns about rising tensions between the U.S. and China, two major global economic powers, and their potential impact on the global economy and Southeast Asia. ASEAN, including Indonesia, aims to maintain peace, security, and prosperity in the region, emphasizing responsible cooperation between the two countries. Indonesia seeks balanced relations with both China and the U.S., maintaining its non-aligned stance while benefiting economically from both through trade and investment. The speaker underscores the importance of stability in the region for continued economic growth.

15:05

🏗️ Infrastructure Development and Foreign Investment

The speaker highlights Indonesia's openness to foreign investment and economic cooperation, particularly in strategic infrastructure projects such as the Jakarta-Bandung high-speed rail and ports. While foreign partners, including China and the U.S., are involved, most infrastructure is financed by the Indonesian government and state-owned enterprises. Indonesia aims to attract private sector participation, especially in projects related to its Belt and Road initiative, while remaining open to investors from around the world. The speaker also notes that domestic resources are becoming increasingly significant in funding infrastructure.

🏙️ Financing Indonesia's New Capital City

The speaker discusses plans for Indonesia’s new capital city in Kalimantan, outlining that it will be developed over a 20-25 year period with multiple stages. The project is primarily financed by the government, with foreign partners invited to contribute as it progresses. Infrastructure for the city, such as roads and power plants, is already underway. Indonesia is seeking investment from various global partners, including G7 countries and China, to support its development. The speaker emphasizes the importance of this project for Indonesia’s long-term growth and sustainability.

💡 Indonesia’s Energy Transition and International Cooperation

The speaker elaborates on Indonesia's commitment to transitioning towards renewable energy while maintaining economic growth. With heavy reliance on coal, Indonesia aims to reduce CO2 emissions through the Just Energy Transition Project (JETP), which has received $20 billion in pledges. The project focuses on phasing out coal plants and investing in renewable energy sources. The speaker acknowledges the importance of international support, especially from the U.S., Japan, and European countries, as well as private sector involvement in ensuring a successful and just transition to sustainable energy.

Keywords

💡G20 Summit

The G20 Summit is a global economic forum where leaders from the 20 largest economies discuss international financial and economic policies. In this video, Indonesia hosted the summit amidst geopolitical tensions, particularly due to the war in Ukraine. Indonesia navigated these challenges by focusing on the theme of 'recovery together, recover stronger,' emphasizing global cooperation.

💡Russia-Ukraine War

The war between Russia and Ukraine is a significant geopolitical event affecting global politics and economics. It created pressure on Indonesia during the G20 Summit to address Russia’s involvement and the global economic impacts of the conflict, including sanctions and energy disruptions. This issue heavily influenced discussions and dynamics at the summit.

💡Economic Recovery

Economic recovery refers to the process of rebuilding economies after significant downturns, such as the global pandemic or financial crises. In the video, Indonesia highlights 'recovery together' as a central theme for the G20, aiming for cooperation to overcome challenges like the pandemic and geopolitical tensions.

💡Geopolitical Tensions

Geopolitical tensions refer to strained relations between countries that can influence global diplomacy and economics. The video discusses tensions caused by the war in Ukraine and the U.S.-China rivalry, both of which complicated Indonesia's role as a neutral host during the G20 Summit.

💡Sanctions

Sanctions are economic measures imposed by one country or group of countries on another to influence behavior, often used during conflicts. In the context of the Russia-Ukraine war, sanctions have global spillover effects, especially on energy markets. Indonesia discusses the impact of these sanctions on global energy supplies.

💡Energy Crisis

The energy crisis refers to the global disruption in energy supply and sharp price increases, partly due to the war in Ukraine and related sanctions. Indonesia addresses this issue in the video, discussing how it impacts their economy and the global energy market, particularly in terms of oil prices and sourcing.

💡Price Cap on Russian Oil

The price cap on Russian oil is a policy measure designed by the G7 to limit Russia's revenue from oil exports without disrupting global energy markets. Indonesia discusses the potential benefits of this mechanism, noting that it could help stabilize prices and supply, though the country remains open to various oil sources.

💡ASEAN

ASEAN, the Association of Southeast Asian Nations, is a regional organization focused on political and economic cooperation. Indonesia, as part of ASEAN, emphasizes the importance of maintaining neutrality and stability in the region amidst tensions between major powers like the U.S. and China, advocating for peaceful economic development.

💡U.S.-China Rivalry

The U.S.-China rivalry refers to the growing geopolitical and economic competition between the United States and China. In the video, Indonesia expresses concern over the impact of this rivalry on global and regional stability, especially in Asia, while maintaining its non-aligned stance in foreign policy.

💡Belt and Road Initiative

The Belt and Road Initiative (BRI) is a global development strategy by China involving infrastructure projects in various countries. Indonesia discusses its involvement in BRI projects, such as the Jakarta-Bandung high-speed rail, while also emphasizing that much of its infrastructure development is financed domestically or through other international partnerships.

Highlights

Indonesia navigated significant geopolitical tensions during the G20 summit, focusing on global economic recovery while balancing Russia’s involvement.

Indonesia’s firm stance emphasized the importance of 'recover together, recover stronger,' promoting global cooperation to overcome the pandemic and economic challenges.

The G20’s purpose, originally created to prevent economic collapse during the global financial crisis, was highlighted as still vital in addressing modern global issues like pandemics and climate change.

April was the most challenging month for Indonesia due to the war in Ukraine, requiring detailed negotiations on Russia’s participation in G20 meetings.

Indonesia positioned itself as an 'honest broker,' facilitating communication between Russia and Ukraine, with Zelenskiy participating virtually and Putin not attending in person.

G7 leaders walked out of a meeting when Russia spoke, but Indonesia viewed this as a necessary tension-relieving step.

Indonesia is open to purchasing Russian oil through its state-owned company Pertamina, if available, while adapting to market mechanisms and global price caps.

Indonesia’s approach to the G7’s Russian oil price cap is evolving, recognizing the potential benefits but questioning its overall effectiveness.

Indonesia, as an open economy, balances relations between the US and China, maintaining non-alignment while engaging in strategic trade and investment partnerships with both.

Indonesia prioritizes ASEAN regional stability and economic growth, promoting cooperation to avoid escalation of tensions between the US and China.

Indonesia’s infrastructure projects, including the Jakarta-Bandung high-speed rail, are mainly funded by domestic budgets and state-owned enterprises, despite some foreign involvement.

Indonesia’s new capital city in Kalimantan will be developed in stages over 20-25 years, with government-driven financing in the early phases and private sector involvement later.

The $20 billion pledged under the Just Energy Transition Project (JETP) aims to support Indonesia’s shift to renewable energy while managing the transition away from coal.

Indonesia seeks a fair and just energy transition, balancing economic growth with climate goals and aiming to reduce CO2 emissions by 31% independently and 43% with international support.

Indonesia emphasizes that foreign investments in infrastructure projects are welcome, but the majority of its major developments are funded domestically.

Transcripts

thank you so much for spending time with

VOA today

I'd like to start with a brief look back

at the G20 Indonesia hosted The Summit

under very challenging circumstances

geopolitical tensions from The Fallout

of the war on Ukraine I mean even just a

few months ago there were these boycott

threats from Western leaders unless

Vladimir Putin was excluded I think

there was a lot of pressure on Indonesia

to focus the summit on isolating Russia

and helping Ukraine so if you can share

a little bit about the behind the scenes

Dynamics and how Indonesia navigated

those challenges well Indonesia

presidency is very firm first

from the very beginning we say that the

theme of recovery together recovered

stronger is very important this is

showing that the G20 as a global

economic uh Forum Premier global

economic cooperation Forum should be

able to address the issue of

economically important globally that is

how to recover together recover stronger

from the pandemic and then the new

challenge because of the new race which

is coming

and for and in order for us to be able

to recover together the cooperation is

definitely needed that's one very

important the second one we also as a

presidency we also remind the membership

especially the one who tried to say that

well why don't we Justice disinfight

Russia we said that the G20 was created

to save the world from the economic

collapse during the global financial

crisis

and that kind of cooperation certainly

will need it not only facing with the

global financial crisis back in 2008 but

also when we are facing with the

pandemic in which all country need to

work together no single country can

actually address the issue like pandemi

which is

actually borderless

and then also the issue we're getting a

climate change which is also require a

lot of cooperation definitely in order

for us to address the issue of This

Global challenge so we reminded all the

membership that this kind of cooperation

is non-accusable for us this forum

should not be breaking but two weeks

after our February meeting then the War

Began so April is actually the most

difficult one because that's only like

couple months after the awards started

so we have to respond to whether Russia

should be attended whether if they are

attended they are allowed to speak when

they are going to speak how they are

going to respond to those very very

detailed preparation and negotiations

and the outcome with G7 leaders coming

President Vladimir Putin not showing up

in person obviously and then President

Vladimir zielinski participating

virtually is that the optimum outcome

for Indonesia

yes we are considering that we try to

create the honest broker and at the same

time also try to

overcome the problem by creating a

platform of communication because when

you are even in the world you still need

to communicate to each other right or

else then the war is going to be long

lasting so our initiative to say that

okay we are going to wait to invite uh

president zielinski in this case our

administer level I invite the Minister

of Finance first so we invited for

example this uh in April they are

actually welcoming this Chester and then

we also provide them with the ability or

to the time to speak regarding what is

happening and also Russia to also allow

to also intervene and make the statement

although on the first meeting there were

a group of seven that walk out from the

room but I think that is a good for the

ministerial level to provide to scan of

tension to be diffused so when we have

this leaders meeting I think they've

already knows uh what is actually what

we want in terms of their expectation of

the meeting and then who should attend

how we are going to address the issue if

we may stay on the Fallout on the war of

Ukraine you're now saying that Indonesia

can benefit from the G7 price cap on

Russian oil this seems to me a softening

from your earlier position when you said

that a price ceiling won't solve Global

energy supply issues can you clarify

where Indonesia is in terms of Russian

oil price cap and the purchasing of

Russian oil

the war is creating what you call it the

unprecedented of using the sanction and

this is on the economic side which is uh

also have the spillover effect globally

uh so although the war is actually

between Russia and Ukraine but the

spillover is actually globally that's

especially true for the food and energy

so

with this kind of situation in which

disruption on the supply side creating a

very extreme increase on the food and

energy

some food as well as energy producer

they are benefiting from that and the

cost of many other countries actually

need to import those two very important

commodities

so um but just to be clear though if the

Russian oil is available on the market

would Indonesia purchase it

this is not like a free market in which

you are actually going to the market and

buying in this sea so for Indonesia the

need for our oil in this case is up to

the patamina which is assigned by the

government to actually procure and

importing because Indonesia the

production of Indonesia will is not

adequate comparing to the demand for the

recovery especially so it's really up to

the patamina to actually finding what is

the source of oil and how they are going

to then get the oil with the best price

and especially also securing in terms of

the availability and at this point

Indonesia the price cap

for Indonesia the mechanism in terms of

the budget in this case is actually when

we

decided what price that can be charged

by the patamina then there is always a

possibility that the importing price

especially when the prices increase at

the 90 120 dollar per barrel much much

higher than what is our budget is

already assumed that is 64 at 64 dollars

so I think the decision or the attempt

to create this kind of

ah cap price cap definitely is going to

provide benefit what we are saying

whether this is actually effective or

not is actually the question regarding

what is mechanism that is in place and I

think the G7

discussing that through the process in

April and then starting in July when

they start communicating with us it is

not yet clear and then they are becoming

more and more clear what mechanism that

they are trying to establish I want to

move on to another meeting that was

considered you know partly Indonesia's

diplomatic success which is the meeting

between President Biden president XI

which was some sort of modest lowering

of tension in the region

um from your point of view from point of

view of Indonesia and the region what is

the most concerning on the U.S China

rivalry do you feel that there is a new

Cold War brewing in this region

was the two country is the two biggest

countries in terms of the economy so

whatever going to happen between the two

countries definitely is going to affect

the rest of the world that's one the

second one

that China is in Asia so it's when there

is a tension or geopolitical change in

this case trade or investment relation

which is creating attention it will

definitely affect the Asia interview

because it's really happened in this

region so for all of us I think asean

then the rest of the world we have the

interest to make the relationship work

in a responsible way and that's exactly

what is communicated by the two leaders

that is going to create a less damage to

the very fragile global economic

recovery at this very moment and at the

same time also creating a much better if

they have any differences or any

political objective then this should

have the ability to discuss among them

but for sure Asia and asean in general

this is the region which is being seen

as the brightest part of the world in

terms of the economic performance

relatively safe

in terms of the the the the security as

well as the war or tension in this case

and that's allowing many of the asean

country to actually catch up and build

and develop so that they are reducing

the poverty creating prosperity and

creating also a bad positive benefit to

the world right so that kind of benefit

that need to be emphasized and how would

you characterize Indonesia's position in

this rivalry between the US and China I

mean you know we understand the free-in

active foreign policy we heard president

Jokowi dodo call President Biden My

senior and president Xi Jinping big

brother I mean we get all of that but

when we're looking at trade volume

investment in infrastructure the

interaction between leaders it does seem

that Jakarta is closer to Beijing

compared to Washington is that a fair

characterization

politically we always stated that we are

not aligned economically whether you are

talking about trade investment I think

we are establishing a strategic relation

with parties if you look at the trade

partner Indonesia to China as well as

the United States they are always among

the two largest of course sometimes

going through the Singapore as the half

another Hub but they are still the most

important if you talk about the

investment sources also I think the

China in terms of their many of the

objectives to build like a a

silk road that is going to also creating

an opportunity for Indonesia to continue

improve connection but at the same time

Indonesia traditionally also have a lot

of investment from the United States so

I I don't know what do you mean by

characterizing it meaning that Indonesia

is an open small relatively small if you

talk about the size but we are always

open and non-aligned and I think that's

also the situation which is adopted by

relatively asean 10 which that I said

earlier it's creating a much much better

result in term of the peace security and

prosperity for many people don't forget

of course for Indonesia we are still

need first of course trade partner which

is reliable we also need investors to

come to Indonesia because we continue

need to have the capital inflow in order

for us to be able to continue building

although domestic resources is starting

to be also becoming so important and

significant but we are still open

economy and on that note other than the

Jakarta Bandung high speed rail project

how many projects and what would be the

total worth of those projects that are

under the belt and Road initiative

whether it's current or being planned

can you give us a sense

I'm not actually now have remembering

which project in this case yeah so it's

not in my list also in this case but we

can provide you what is the list of the

project but I do understand that some of

the what you call it strategic project

like the railways uh uh the speed drill

with Jakarta Bandung in this case some

of the port is being actually a design

but as a finance minister I feel like

most of the infrastructure is still

actually built by our own budget and the

state-owned Enterprises so I'm not

really like seeing that the as if the

perception this is dominated by uh the

the foreign fun or foreign sources as I

said earlier Indonesia is quite open if

you look at for example from tall

Sumatra from Ace up to the lampong these

are all also using the budget

government-owned budget and using the

state-owned Enterprises and now we are

also asking for the private sector uh

through the state-owned Enterprises to

do it many of what you got a project

within the Indonesia tour route in Java

they are all mostly also coming from the

budget as well as from the state-owned

Enterprises and now we try to divest

thing so that there is a private sector

participation is going to be there so

and maybe some of the project which is

the investor is coming we know Freeport

is the United States long long time ago

but there is now like a nickel and some

of the downstreaming industry which is

based on natural resources in Indonesia

in which China investor is also playing

uh starting to be very important I think

that's just creating what we call it the

Indonesia as an again open economy so

the perception as if like one project

dominating the whole thing is actually

out of proportion what about the plan

for the new capital city in kalimantan

can you speak about the source of

financing whether it's from Belton Road

initiative or from G7 countries that

that the Indonesia envisions

the new capital city is actually through

the legislation is going to be built in

stages

it will uh at least four or five times

five years so it's going to be 20 to 25

years

from the first stage the whole idea of

first of course the government owned

money is very important because for

example like opening the the the the

road to the location uh water and we're

also allowing in this case the

electricity power plant to be able to

and then starting to uh producing the

the electricity but kalimatan has a huge

potential for renewable over there so

most of them is in this case uh each

stages has a different regarding how

much the portion of the

government-driven money and this is also

government-driven money was actually

invested in order for us to be able to

attract more investors coming to

Indonesia so it's like a one package uh

presidents of course saying this out as

a project which they also offer for many

strategic partner whether this is from

the Middle East whether this is coming

from G7 or from the China I think we are

open for that and what we are now aiming

to achieve is on the first stage in

which the level of

Readiness for the building that need to

be executed I think it's already being

started and most as I can remember until

today is mostly is the government budget

money the next States when we are

allowed to have more mature plan then we

are going to be able to attract more

private sector to come my last question

Indonesia has received 20 billion

dollars in pledges under the Just Energy

transition project jetp I understand

this is a mix of public and private

financing grants and and also so loans

are you happy with the you know the fine

prints of the scheme

um

energy transition is very important for

Indonesia

because Indonesia is going to be an

economy which will we continue growing

and the demand for energy is definitely

is going to continue increase Indonesia

have many possibility of energy sources

but current Libya still dominated by the

coral as a energy sources so for

Indonesia to be able to continue growing

and having more energy but without in

this case worsening the climate change

because we have our what we call it

national determined contribution of

reduction of the CO2 by 31 now which we

call it enhance by our own sources and

then 43 with the international support

that will definitely require a

transition on energy sector now for us

to be able to

transforming the energy towards more

renewable that will require how we can

handle the existing Core Power plan

retiring soon and that will require also

an investment to retire The Core Power

plan and also another investment to

build the renewable So within that

context what we are talking about the

affordable and just transition is the

principle in which the Indonesia willing

to use our own policy resources as well

as

a framework for cooperation for this

transition

and international is going to support

based on what we are offering in this

case so the 20 billion which is uh

announced or on the chat piece just uh

uh an transition for the energy I think

this is one of the initiatives in which

United States Japan some European

countries as well as multilateral

then also discuss with the private

sector how they are going to then commit

to a participate in this transition I

think at the end of the day

the test is going to be whether this

money will be really delivered when we

are preparing the real project

Madam Finance Minister thank you so much

for your time with VOA today thank you