Indonesia Summit 2016 Down to Business Or Back to Reality? February 25Th 2016 • Shangri-La Hotel, Jakarta

Indonesia Summit 2016 Down to business or back to reality? February 25th 2016 • Shangri-La Hotel, Jakarta

When it comes to reform, Joko Widodo, known to the world as Jokowi, is not short on ideas. Implementation, alas, is another story. On taking office in October 2014, he promised an investment-friendly business climate, and began courting capital for much-needed infrastructure upgrades. But political infighting, currency woes, a rise in protectionism and continuing legal uncertainty have kept investors wary.

Jokowi has had some quick policy wins in cutting fuel subsidies and rolling out poverty alleviation and social-service programmes. But on infrastructure, arguably the biggest brake on Indonesia’s economic growth, improvement has been achingly slow. Economic news is not encouraging, either: GDP growth is below target and the rupiah has fallen precipitously against the strong US dollar. If 2014 was characterised by a sense of optimism, 2015 has been a reality check.

Yet there is another side to the story. Digital entrepreneurship is flourishing. Investors, while frustrated, say that opportunity still abounds. Jokowi may find political opposition frustrating, but he oversees a robust and largely functional democracy. Many argue that the new president has made some serious policy missteps, but with expectations running so high, it was always going to be impossible for him to deliver everything voters anticipated in the first year.

Fifteen months into Jokowi’s term, the Indonesia Summit 2016 will review the new government’s progress and examine the areas still in urgent need of reform. Will 2016 be more of the same? Or will it be the year the new president finally gets down to business?

Conference chairman Jon Fasman, South-East Asia bureau chief, The Economist

Moderators Charles Goddard, editorial director, Asia-Pacific, The Economist Intelligence Unit Robert Guest, foreign editor, The Economist

DRAFT PROGRAMME

8.30am Registration and refreshments

9.00am Conference vision

Welcome and overview from the conference chairman Jon Fasman, South-East Asia bureau chief, The Economist

9.30am Keynote interview: Down to business?

Moderator Charles Goddard, editorial director, Asia-Pacific, The Economist Intelligence Unit

10.00am In conversation with Minister of Finance, Bambang Brodjonegoro

Moderator Jon Fasman, South-East Asia bureau chief, The Economist

10.15am Investing in Indonesia

According to official government estimates, Indonesia needs around $362 billion, roughly 8% of GDP, between 2015 and 2019 to make up its infrastructure deficit. The country has little chance of finding that amount alone, but lower commodity prices and slowing growth make the need for investment more urgent.

President Jokowi has made no secret of his desire to court foreign capital. In 2015, he made his first trip outside of the Association of South-East Asian Nations (ASEAN) region to China and Japan, in both cases trying to drum up funds. There have also been moves to make Indonesia’s notoriously byzantine investment process more manageable: in January 2015, the Indonesia Investment Coordinating Board (BKPM) launched One Stop Services for investors.

But there are questions over whether Jokowi’s pro-investment rhetoric matches up with reality. Policymaking circles in Jakarta have been permeated by a populist mood that at times seems openly hostile to foreign investment. Investors have long bemoaned the slow pace of regulatory change, but were largely positive about where Indonesia was heading. Now they worry about backsliding. Local content rules and import-substitution policies are slowing many sectors, and the threat of criminal © 2015 The Economist Events This is a confidential draft programme for the conference mentioned in this document. All topics and speakers are indicative and subject to change.

prosecution for inadvertent wrongdoing means officials are reluctant to sign off on new projects.

Is Indonesia genuinely welcoming to investors? Should it become more so? How? And if not, why not?

Speakers Bambang Brodjonegoro, minister of finance, Republic of Indonesia Farah Ratnadewi Indriani, deputy chairman of investment climate development, Indonesia Investment Coordinating Board

Under invite Li Wen, chief executive officer, China-ASEAN Capital Advisory Company Sinthya Roesly, president director and chief executive officer, Indonesia Infrastructure Guarantee Fund

Moderator Jon Fasman, South-East Asia bureau chief, The Economist

10.50am Networking break

11.20am The Economist’s special report on Indonesia: A conversation

Jon Fasman, South-East Asia bureau chief of The Economist, discusses his special report on Indonesia, due to be published in January 2016, with Robert Guest, foreign editor of The Economist.

11.45am Spotlight interview: Who’s the boss?

As leader of a minority government, one would expect Jokowi to be vexed by political rivals, but his biggest headaches have come from within his own party. His election victory, as the first president from outside the old elite, suggested a decisive move away from the patronage politics of old and a win for Indonesian democracy. But in appointing a number of political patron Megawati Sukarnoputri’s allies to his cabinet, the new president gave critics and investors alike a reason to question his independence. A scandal over the appointment of an allegedly corrupt police chief, also close to Ms Sukarnoputri, has brought the president’s commitment to tackling graft into question. Jokowi came to power on a jubilant wave of popularity, but this seems to have dwindled quickly. In 2016, can Jokowi prove that he is the boss?

 How dependent is Jokowi on Ms Sukarnoputri and her party, the PDI-P?  What influence do Golkar and other opposition parties have on the policymaking process?  Given the political constraints he faces, can Jokowi be the transformational leader he aspires to be?

Moderator Charles Goddard, editorial director, Asia-Pacific, The Economist Intelligence Unit

12.05pm In conversation with Minister of Energy and Mineral Resources Sudirman Said

Moderator Robert Guest, foreign editor, The Economist

12.20pm The world if… Reforming Indonesia

Policymaking is often an incremental exercise. Yet, occasionally political and international ructions bring on bold change. We ask business leaders, economists and notable thinkers to explore how Indonesia’s economic policymaking might transform given three plausible imagined scenarios. What would Jakarta’s policy response be? What should it be?

Scenario 1: Politics Jokowi leaves the PDI-P to form his own political party

Scenario 2: Economics Indonesia’s GDP growth falls to below 4%

Scenario 3: Foreign policy Open hostility emerges between China and ASEAN over land reclamation in the South China Sea

Speakers Sudirman Said, minister of energy and mineral resources, Republic of Indonesia

Under invite Rizal Sukma, executive director, Center for Strategic and International Studies

Moderator Robert Guest, foreign editor, The Economist

1.00pm Networking lunch

2.20pm The future is digital

Indonesians are some of the most connected people on earth. They use smartphones for everything from banking to parcel delivery and accessing healthcare services. Indonesian e- commerce is not just a story of new digital industries emerging, but also of old ones trying to recast themselves. In protected industries where competition has long been muted, a new crop of disciplined and well-funded digital entrepreneurs are betting that the old guard won’t be able to make the transition. The digital economy is thriving largely because it is governed relatively lightly: many small players fly under the regulatory radar. Yet larger, foreign players face the same dilemma that peers in more established sectors do: while the government says it welcomes investment, it often seems determined to stymie it.

Indonesia could build a world-beating digital economy. What needs to happen to make that a reality?

Speakers Magnus Ekbom, chief strategy officer, Lazada Group John Riady, director, Lippo Group

Under invite Toru Shimada, executive vice-president and representative director, Rakuten

Moderator Jon Fasman, South-East Asia bureau chief, The Economist

3.00pm Indonesia as a manufacturing hub?

Indonesia’s manufacturing sector suffered as China’s boomed, sliding from 20% of export revenue in 2001 to 14% in 2011. But as China’s economy slows and wages grow, Indonesia may be in a position to pick up where it left off.

Productivity in the sector is still depressingly low: creaking

infrastructure, labyrinthine bureaucracy and a relatively low- skilled workforce could yet conspire to undermine Indonesia’s ability to compete with neighbours who are also trying to position themselves as manufacturing hubs. The country is also ranked a dismal 114 out of 189 in the World Bank’s Ease of Doing Business index, suggesting there is much to do before Indonesia becomes an attractive place for manufacturers to set up shop.

But Indonesia does have the region’s largest domestic economy, is within easy reach of key shipping lanes and has an abundant supply of cheap labour. Can it become the region’s next major manufacturing hub?

Under invite Saleh Husin, minister of industry, Republic of Indonesia Vismay Sharma, president director, L’Oreal Indonesia Anthoni Salim, president director, Indofood Sukses Makmur Toru Moriyama, regional chief executive officer, Asia and Oceania, Mitsubishi Corporation

Moderator Charles Goddard, editorial director, Asia-Pacific, The Economist Intelligence Unit

3.40pm Networking break

4.10pm Cities 2050

Indonesia is the world’s fourth–most populous country, but aside from the capital, its cities are remarkably small. Jakarta is a sprawling megalopolis of more than 10 million people. The second-largest city, Surabaya, has a population of just over three million. Only eight cities had a population of more than one million in 2014. Bigger is not necessarily better: Jakarta is beset by infrastructure woes. It is prone to flooding and blackouts, and gridlock frequently brings its centre to a standstill. These problems are proving too hard to fix, keeping investors away. In 2014, Jakarta attracted 16% of Indonesia’s inbound foreign direct investment, down from 40% in 2010. The flipside is that Indonesia’s second-tier cities now know exactly what not to do. As Indonesia’s population urbanises and grows richer, the country’s cities can make themselves into manufacturing or logistics hubs, and build green public-transport

systems and modern bureaucracies. This forward-looking discussion will begin with a presentation from The Economist Intelligence Unit to set the scene.

Under invite Basuki Tjahaja Purnama, governor of Jakarta, Republic of Indonesia Mochamad Ridwan Kamil, mayor of Bandung, Republic of Indonesia

Noni Sri Ayati Purnomo, president director and chief executive officer, Blue Bird Group

Moderator Jon Fasman, South-East Asia bureau chief, The Economist

5.00pm Closing keynote interview

Under invite Darmin Nasution, coordinating minister for economic affairs, Republic of Indonesia Agus Martowardojo, governor, Bank Indonesia

Moderator Robert Guest, foreign editor, The Economist

5.30pm Chairman’s closing remarks

Jon Fasman, South-East Asia bureau chief, The Economist

5.35pm Networking cocktails: Meet the moderators

Meet our session moderators from The Economist and The Economist Intelligence Unit to ask their views about Indonesia’s future.