Seizing business opportunities towards a better partnership between Indonesia and the Netherlands
Thank you very much Secretary General for your kind words and your analysis of our present day excellent relations and your stress on the enormous possibilities to broaden and deepen our ties.
Secretary General, Mr. Imron Cotan, Distinguished guests, ladies and gentlemen,
It is a pleasure to be here with you to kick off the Seminar on 'Seizing business opportunities towards a better partnership between Indonesia and the Netherlands'.
My presence here today also reflects the excellent and ever improving relationship between Indonesia and the Netherlands. The strong ties between our two countries are a compelling reason to keep building bridges. The two ambassadors present here are the excellent impersonation of this.
Personal relationships and friendship based on mutual feeling of trust and respect are prerequisites to that end. Over the years my colleague, Minister Wirajuda, presently on Bali at the Climate Conference Indonesia hosts, has shown himself to be a true friend of the Netherlands.
I would like to take this opportunity to express my deep appreciation for his invaluable support in building the excellent bilateral relationship we enjoy today.
Dr. Wirajuda has also been one of the main architects of the Comprehensive Partnership which I hope President Yudhoyono and PM Balkenende will be able to sign next year. The CP will cement the wide-ranging and close relationship between our two countries. It refers to political and security matters, economic and sustainable development issues, socio-cultural and consular subjects, but also to international affairs. It creates the basis for more cooperation in international for a, as is exemplified already in my contacts with Minister of Finance Sri Mulyani regarding the preparations for the Bali-summit. Obviously, business and industry in both countries also stand to profit from the Comprehensive Partnership.
The current, healthy relationship between the Netherlands and Indonesia is also reflected by a significant increase in the frequency of ministerial visits. Indonesia is also close to my heart: as a member of Parliament I visited Indonesia on several occasions and over these past five days, I had the privilege to spend some time again in Indonesia. In Aceh and central and eastern Kalimantan, I discussed existing and possible future Dutch development co-operation programmes with the authorities and non governmental institutions and organisations in my new capacity as minister for development co-operation. Later today, I will continue my journey and fly to Bali to attend the International Climate Conference.
Ladies and gentlemen,
Let me return to the subject of this seminar: seizing business opportunities and trade and investment relations.
It is in my view essential to forge and deepen the ties between the Dutch and Indonesian Business Community.
In today’s world, borders are becoming less and less important. Internet chat programs, which enable young people from every corner of the globe to interact, have become commonplace. Footage from an earthquake in Indonesia is picked up by the Dutch news bulletins within minutes, as I actually experienced myself last Friday.
The march of globalisation is nothing new to anyone in this room. More and more Dutch and Indonesian investors are working closely together which I warmly welcome. The business people among you are constantly forced to make decisions about the best place to manufacture and market their products. If a country can meet certain basic conditions, the corporations will come. Macro-economic indicators, inflations levels, legal certainty, education levels, stability and human rights are all factored in the equation.
Globalisation and economic growth can be a source of great opportunities. But the current style of economic growth in our world is also harming the environment and widening the gap between rich and poor. And if we are to meet the Millennium Development Goals by 2015, we are running out of time.
In addition to fulfilling our MDG commitments, the Netherlands will focus on four priorities in the years ahead: fragile states, equal rights and opportunities for women, growth and the distribution of growth, and sustainability, climate and energy.
Just one word about our development co-operation
The Netherlands contributes 81 million Euro (2007) on co-operation with Indonesia, focussing on improving the investment climate, promoting good governance and the rule of law, protecting the environment and biodiversity, achieving the MDG output objectives for water, sanitation and education sectors, and supporting the reconstruction process in Aceh. Education key component (20 M euro): essential for getting people to jobs. Job creation is the Lynchpin for Indonesia’s development.
Ladies and gentlemen,
As I just said, economic growth and distribution and a sustainable environment are key issues. The industry has a crucial role to play in both areas. Without the private sector as a driving force, economies cannot grow; and without growth, it is impossible to improve the position of the poorest of the poor. But economic growth as such is not enough. Everyone should be able to contribute to this growth and reap its benefits. In other words, growth must be sustainable, taking account of environmental and social needs.
In this connection I would like to appreciate Indonesia on its hard work to make its administrative and economic reforms a success. I also welcome the financial efforts the government has made to create jobs, thereby allowing society’s least privileged members to share in the economic growth. Unfortunately much of Indonesia’s development has been at the expense of the natural environment. In the period 1997 to 2000 3,5 million hectares of the wonderful Indonesian forests were lost anually.
The Netherlands would like to support the Indonesian government in close co-operation with the business community, to stimulate further sustainable economic growth by creating the necessary conditions to encourage investment in Indonesia.
In the coming years the Netherlands will support the Indonesian government with significant investments in the following three sectors:
- Improved democratic governance – leading to a just society, national peace, stability and security.
- Improved economic governance – leading to more prosperity and less poverty.
- Improved environmental governance – leading to a sustainable environment and mitigating climate change and adapting to it.
Ad 1: Improved democratic governance
The Netherlands supports programmes aimed at strengthening the rule of law and legal certainty for companies, by increasing judicial capacity and improving access to the justice system. Our support also goes to the anti-corruption committee (KPK) and the Indonesian national audit office. More generally, we are interested in promoting the decentralisation process, improving basic service delivery and supporting the education sector.
Ad 2: Improved economic governance
As growth and distribution are among my priority themes, it is vital to ensure that there is enough economic growth to create new jobs and to free up resources for social programmes. I am happy to say that Indonesia is already on the right track.
In close co-operation with the Indonesian government, we have subdivided the supporting efforts of the Netherlands in this area into three categories:
- Public Finance Management
- Investment climate
- Corporate social responsibility
Public finance management helps the government to manage its money. But more important for business people, it also affects the tax and customs authorities. One of the programme’s principal aims is to make the tax authority more customer friendly for businesses, by providing expert tax return processing for large and medium-sized business and refunding your VAT faster. With respect to the customs service, we are working on the introduction of a ‘one-stop shop’, or National Single Window, where you will be able to file all your import documents with a single online application.
In addition, the investment climate must be made much more attractive, by cutting red tape and clarifying procedures. This will benefit smaller companies as well as large corporations. The Indonesian government has made some ambitious plans, and the Netherlands would like to help implement them.
Finally, through the Benelux Commerce, the Netherlands is supporting corporate social responsibility. Companies are being educated about sustainable production practices. This is crucial if Indonesian firms are going to continue exporting their products to Europe. Even now, some of your European importers are already requesting sustainability certificates. And that number will only rise. In Europe, companies are held accountable for the entire chain of production. Corporations need to recognise that there is more to business than turning a profit. There is also a social dimension. Companies have a responsibility to bring about change in their own industry. For example, timber processing firms need to ensure that all their wood is legal, and preferably from a sustainable source. Textile firms need to provide good working conditions for their employees, and this includes accepting workers’ right to organise.
Turning back to the subject of growth and distribution, the Netherlands also supports Indonesian government programmes that seek to close the gap between rich and poor. Indonesia has earmarked a considerable amount of money for a large-scale community empowerment programme (PNPM). This is the kind of ambitious initiative we would expect from a middle-income country. On Bali we will join several other donors in signing an agreement to support these efforts.
Ad 3: Improved environmental governance
When it comes to sustainable production, Indonesia has signed a number of international agreements to preserve biodiversity and combat climate change. We would like to cooperate with you on the implementation of these agreements.
Indonesia is in the process of drawing up a ‘master plan’ for the area of Central Kalimantan that used to be the site of the Mega Rice Project. For thousands of years the peat forests were a massive natural storehouse of carbon dioxide . As a result of deforestation, fires and drainage, huge quantities of carbon dioxide were released into the atmosphere. Deforestation and fires had a serious impact on local livelihoods and the release of carbon dioxide contributed significantly to the growth in greenhouse gases in the atmosphere. We are ready to assist you in restoring the balance of the ecological system in this part of Kalimantan and in reducing carbon dioxide emissions.
The Netherlands has offered assistance in making the production of palm oil more sustainable. We support the Roundtable on Sustainable Palm Oil, a global multi-stakeholder initiative, of which leading Indonesian companies are members as well. The Roundtable has just formulated and endorsed criteria for sustainable palm oil production. We would like to work together with you on the implementation and strengthening of these criteria to further economic growth and increase local employment, while at the same time ensuring environmental and social sustainability. My visit to Kalimantan has made it clear to me that there is not much time to loose, and that we could co-operate even more to deter illegal logging, fight destruction of sustainable land, strengthen institutions to protect the environment and local communities, and make sustainable production criteria an urgent international priority.
The government of the Netherlands has made additional funding available to encourage the use of sustainable energy in developing countries above the 0.8% GDP. That is unique in the world. I am convinced that Bali should take a major step in advancing institutional finance mechanisms for adaptation including a price for forests. Past 2012 carbon trading schemes. Together with you we are ready to explore specific possibilities for sustainable energy in Indonesia. I feel certain that we can develop an effective programme together, and public-private partnerships in financing development for clean energy will be the key to success.
Ladies and gentlemen,
The relationship between the Netherlands and Indonesia is multi-faceted. It touches on sustainable development, economic and political cooperation, cultural exchange and –increasingly – climate policy. I am fully aware that the Netherlands’ active involvement also creates certain obligations.
For example, donors and their partners need to align their efforts with government policies and assist in pursuing its national medium-term development plans. This assistance can be provided along different channels: multilateral organisations, bilateral cooperation – though sometimes the ideal partner is actually the private sector. Whichever course it chooses, Indonesia must remain at the helm.
Ladies and gentlemen,
I think I have already taken too much of your time, I thank you very much for your attention and wish you an interesting and productive seminar with a view to strengthen economic trade and developing an even more investment friendly partnership between Indonesia and the Netherlands.
Thank you.