The Hague, 13 September 2013

Dr. Lukita Dinarsyah TuwoVice Minister of National Development Planning/

Vice Chairman of the National Development Planning Agency (Bappenas)

Republic of Indonesia

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Steady High Economic Growth and Increasing Per Capita Income &GDP

Source: Bappenas , BPS, World Development Indicators

Economic Growth 2004 – 2012 (%)

GNI & GDP Percapita 2003 –

2012 (US$)

impact of global

financial crisis

3

Declining Open Unemployment and Poverty

Open Uneployment 2004 – 2013 (Feb)

Source: Bappenas , BPS,

4

Annual Inflation Rate 2004 – August 2013

5

Declining Government’s Debt to GDP Ratio

6

Demographic Dividend

Indonesia has one of the world’s youngest demographic profile, with 60 % of population below 30 years of age. The ratio of children (0-14 years) and elderly (over 64 years) to the productive population has declined to 45 %

today from 75 % in 1975. By 2025, 67 % of the population will be betwen 15 and 64 the most productive years. It is essential that the

real incomes of the most productive population continue to rise in order to maximize the benefits of this demographic devidend.

Source: BPS

In 2012 : 53% live in urban area.

In 2025 : projected 65% live in urban area

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FAST GROWING URBANIZATION

Dare to Dream…

“Imagination will carry us

to worlds that never were.

But without it we go nowhere.”

Carl Sagan

MP3EI: Vision 2025

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GDP: US$ 700 Billion Income/capita: US$ 3,000

GDP: US$ 4.0 – 4.5 trillion Income/capita: US$ 14,250 – 15,000 (country with high income)

2025

2045

GDP: US$ 15.0 – 17.5 trillion Income/capita: US$ 44,500 – 49,000

~ 10 world largest economies~ 10 world largest economies~ 9 world largest economies~ 9 world largest economies

2011 – 2014 economic growth: 6.4 – 7.5%

2015 – 2025 economic growth:7.5 – 9%

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.

Increase value, adding and expanding value chain for industrial production processes, and increase the efficiency of the distribution network.

Encourage efficiency in production and improve marketing efforts to further integrate domestic markets to push for competitiveness and strengthen the national economy.

To push for the strengthening of the national innovation system towards an innovation-driven

economy

MP3EI: 3 Main Elements

SSources of Wealthources of Wealth……

Wealth of TheWealth of TheNationNation

““Competitiveness”Competitiveness”ProduProductivityctivity

InnovationCapacity

1 KE Sumatera

2 KE Jawa

KE Bali – Nusa Tenggara3 KE Kalimantan

KE Papua – Maluku 4 KE Sulawesi

Economic CentreMega Economic centre Special Ec.Zone SEZ + FTZ

DenpasarDenpasar

MataramMataram

JakartaJakarta

MedanMedan

PekanbaruPekanbaru

JambiJambi

LampungLampung

SemarangSemarang

BanjarmasinBanjarmasin

PalangkarayaPalangkaraya

PontianakPontianak

MakassarMakassar

ManadoManado

KendariKendari

GorontaloGorontaloManokwariManokwari

JayapuraJayapura

1

2

3 4

SerangSerang

MamujuMamuju

IMT-GTIMT-GT

BIMP-EAGABIMP-EAGA

SurabayaSurabaya

MeraukeMerauke

KupangKupang

SamarindaSamarindaSofifiSofifi

WamenaWamena

SorongSorong

AmbonAmbon

PaluPalu

Banda AcehBanda Aceh

PadangPadang

BengkuluBengkulu

JogjakartaJogjakarta

PalembangPalembang

Tj. PinangTj. Pinang

Pkl. PinangPkl. Pinang

6 Economic Coridors : Commodity Based Comparative Advantage

6

6

5

5

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ECONOMIC

DISTANCE

Padang

Singapore

Balikpapan

Makassar

Jayapura

Padang

2.7

Singapore

1.0

Balikpapan1.3

Makassar1.7

Jayapura3.4

GEOGRAPHICDISTANCES

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Connectivity Challenges

15.32

13.67

15.61

11.70

14.08

4.88

0.00 5.00 10.00 15.00 20.00

Jabotabek

Surabaya

Medan

Makassar

Indonesia (Avg)

Japan

Logistics Costs 15.32 13.67 15.61 11.70 14.08 4.88

Jabotabek Surabaya Medan MakassarIndonesia

(Avg)Japan

Sources: LPEM-UI

3,5% 5,0% 5,7% 5,9% 7,1%

96,5% 95,0% 94,3% 94,1% 92,9%

0%

20%

40%

60%

80%

100%

2004 2005 2006 2007 2008

Nasional Asing

Logistic cost relatively high, on average 14,08% of sales. National shipping line share very low (International Shipping: National 7,1%,

Foreign 92,9%; Domestic Shipping: National 79,4% , Foreign 20,6%).

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LOGISTIC COST

“Efforts and courage

are not enough

without purpose and

direction.”

John F. Kennedy

What direction we are heading…

GLOBAL COMPETITIVE INDEX : Improve substantially in 2013/2014

2012/2013 2013/2014

TOTAL 50 38

1. Basic Requirement 58 45

a. Institution 72 67

b. Infrastructure 78 61

c. Macro Econ. 25 26

d. Health & Primary Educ. 70 72

2. Efficiency Enhancers 58 52

(Higher educ., market efficiency, labor, financial market, technology)

3. Innovation & Sophistication 40 33 16

Economic:Economic:Increased Increased value addedvalue added

Facilitate Facilitate acceleration of acceleration of bussines sector bussines sector investment investment

Promote Promote R&D R&D InnovationInnovation

Integrate Integrate sectoral and sectoral and regional regional developmentdevelopment

Government Government Role : Role :

regulator, regulator, facilitator and facilitator and

catalisatorcatalisator 17

SUSTAINABLE GROWTH WITH EQUITY

Wind of Change...

"It is not the strongest of the species

that survives, nor the most intelligent;

it is the one that is most adaptable to

change.“

Charles Robert Darwin (1809-82)

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