Chapter 1: A New Indonesia 04 1.1 Embracing Change 04 1.2 Unity in Diversity 04 1.3 Our Place in The World 05

Chapter 2: A New Economic Perspective 06 2.1 The Role of The Market 06 2.2 Building from the Bottom Up 07 2.3 Our Approach to Economic Decisions 07

Chapter 3: Our Planet and Our Natural Resources 08 3.1 Food, Farming, & Fisheries 08 3.2 Harnessing Science & Technology 09 3.3 Managing Our Natural Resources 10 3.4 Waste & Recycling 10 3.5 Jogja Green City 11

Chapter 4: Life is Energy 12 4.1 The Demand for Energy 12 4.2 The Economics of Energy 12 4.3 Keeping It Clean 13 4.4 Geothermal: Indonesia’s Natural Renewable Energy Source 13 4.5 New Solutions to Old Problems 13

Chapter 5: The Financial System 14 5.1 An Integrated Approach 14 5.2 Banking 15 5.3 Microfinance 15 5.4 Insurance 16 5.5 Fund Management 16 5.6 Money Transfer Services 16 5.7 Our Financial Model 17 5.8 Our Financial Structure 18

Chapter 6: Health and Wellbeing 19 6.1 Prevention Is Better Than Cure 19 6.2 The Role of Medical Insurance 19 6.3 Mental Health 20

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6.4 Combining Better Medical Care with Improved Economics 20 6.5 Research & Development 22 6.6 Medical City, Sentul 22

Chapter 7: Education, Education, Education 23 7.1 Workplace Education 23 7.2 Making Education a Constant Process 24 7.3 Integrating Education 24 7.4 Learning Through Teaching 24

Chapter 8: Housing 25 8.1 Homing in on Economic Growth 25

Chapter 9: Developing Tourism 26 9.1 SHD Bali 26 9.2 New Yogyakarta International Airport 26 9.3 Medical Tourism 26

Chapter 10: Reaching New Heights 27 10.1 Pertamina Energy Tower 27

Chapter 11: International Trade 28 11.1 Implementing Export Discipline 28 11.2 Developing Specialisations 28

Chapter 12: Developing Infrastructure 30 12.1 Key Aims 30 12.2 Funding Infrastructure Development 30 12.3 The Importance of Digital Infrastructure 30 12.4 First Class Infrastructure for a First Class Economy 30

Chapter 13: Taxation 31 13.1 Increasing the Tax Base 31 13.2 A New Perspective to Taxation 31 13.3 A Fairer System 31 13.4 Improved Collection of Taxes 32 13.5 Improved Spending of Taxes 32

Chapter 14: Increasing Wealth for All Indonesians 33 14.1 A National Dividend 33 14.2 Working Towards Universal Basic Income 34

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Being one of the strongest and most successful countries in the world should be more than just a dream for Indonesia. We are blessed with abundant natural resources, a large – mainly young – population, and a constitutional philosophy – Pancasila – which puts social justice at its core.

Yet despite this, Indonesia still faces many challenges due to past mismanagement of the economy and a deviation from its founding principles of Pancasila.

Natural resources are being stripped from the land by citizens working in terrible conditions, whilst most of the profits generated from their activity flow to a very small number of wealthy individuals both inside and outside of Indonesia.

Most of our citizens are poorly educated, with many kept in poverty, as industry and commerce rule supreme – utilising the cheap manual labour, making huge profits, and giving nothing back except for small token “corporate social responsibility” exercises that seem to more closely resemble a marketing campaign.

Expensive cars and houses sit just a few meters away from slums with no electricity or water. Poor citizens work all month to receive a payment of as low as $100 for their efforts, whilst some others receive large payments, bribes, or “commissions” for doing nothing – or perhaps even worse, doing things which harm our country.

1.1 Embracing Change

But it doesn’t have to be this way. There is much which needs to be done, and it won’t come cheap, but there is a way to build a New Indonesia, which provides social justice for all citizens, in a fair, sustainable, and environmentally friendly way. Oh, and a highly profitable way too.

JARI IBU is that way. Here is our plan for a New Indonesia.

1.2 Unity in Diversity

The third principle of Pancasila, considered the official national motto of Indonesia – Unity in Diversity – is at the heart of our plan. This means that we will provide sustainable economic growth for all Indonesians – all those currently left behind, as well as those currently doing just fine.

Our human diversity is something we celebrate and want to protect, so we will not exclude anyone. All Indonesians are our brothers and sisters – whether old or young, male or female, rich or poor, able-bodied or disabled, from any religion, any sexuality, any ethnicity, and any social status.

To bring the country to a position of true equality, we need to put extra focus on those currently marginalised or repressed in our society. This means boosting the opportunities and treatment of women, children, the disabled, those suffering from illness, and LBGTQ sexualities.

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In particular, better care needs to be provided to our orphans, elderly, and of course the poorest in our communities.

1.3 Our Place in The World

Our dream is for Indonesia to become a top 5 economy by 2050, taking its place as a leading nation and setting an example for other countries, particularly developing countries, to follow.

We want to become the best, and therefore need to work with the best, and learn from them. We can learn from others’ successes as well as their failures. And together we can develop new solutions to old problems which plague not just Indonesia, but also wider humanity.

To achieve our dream, Indonesia needs to be an open, efficient, and productive economy – constantly striving to be better and constantly accepting help from our international friends who have specialisms in the areas we need to improve.

It is our hope that by being open, collaborative, and welcoming to all of humanity, we can set an example of tolerance and mutual benefit for the whole world to follow – and develop our citizens so that in time, we can be a major provider of international assistance to other countries in need of specialist help.

JARI IBU is not just a plan for Indonesia, it is a plan to lead humanity through a process of positive change, with the objective of creating a better world for us all to live in.

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For too long, our economy has been ruled by “the market”. It’s continually given as a reason to do things, or not to do things – the setting of interest rates, government spending policy, social benefits etc – it always comes down to the market.

A quick glance at many government publications, research by various academics, and particularly commercial reports and plans, will demonstrate that citizens are not at the heart of policy. Even the way we’re described – as consumers, customers, or merely “the target market” – shows that from even the most basic level, at the point of initial thought, we’re not often considered as human beings – we’re just a profit generator if we have some disposable income, or a useless consumer of resources if we don’t have any disposable income.

And yet clearly market forces are not solving the problems faced by Indonesian citizens, or even global citizens. Huge profits are being made, massive wealth is being generated, and all the while we’re being asked to believe that “trickle-down economics” – that is, help the rich get richer first, and hope that poor people eventually benefit in some small way – is the best way forward.

It’s not the best way forward. Trickle-down economics is a lie, and this approach is devastating to the lives of those not wealthy enough to influence the market.

Many economies are fuelled by constant issuing of new debt – and Indonesia is no exception. The constant bombardment of advertising, often for products which are not needed, has led to a cycle of consumerism and wastage which is not only destroying the Earth, it is also decaying the minds of our species.

The market has been in control for so long that it dominates our imagination and restricts our view of ourselves. The market is short sighted and short-term. It’s time for a change – putting the market to work for people, not putting people to work for the market.

2.1 The Role of The Market

That’s not to say the market is a bad thing. It’s a great thing, when used in a way that puts the interests of citizens first.

We need more access to the local market for those desperately trying to escape poverty – and we need to make the market work for them.

We need our country to develop its own internal markets, in order to be able to trade effectively with the rest of the world.

And we need our markets to efficiently deploy capital to the areas it’s most needed.

Currently, many Indonesian citizens are denied the help they need, because the way the market is run results in it being considered “uneconomical”.

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2.2 Building from the Bottom Up

A strong economy needs a strong foundation, and in addition to being the rightful beneficiaries of a strong economy, Indonesian citizens are that foundation. Take away the people, and economic activity would drop to zero. The work of Indonesian citizens is what drives our economic performance, and to improve the economy, we need to improve the lives of our citizens. They must come first.

Throughout this document, we will lay out our plan – JARI IBU – to reinvigorate the Indonesian economy in a way that benefits ALL Indonesians, in a fair, socially just, and profitable way.

2.3 Our Approach to Economic Decisions

Our approach can be summarised as the following:

1) The economy belongs to everyone, and should benefit everyone 2) All citizens should have equal opportunity to grow and develop 3) Investments in the economy should be made from a Social Impact perspective 4) Economic actions should combine both public and private sector best practise 5) The purpose of the economy should be to eliminate poverty and inequality 6) The economy should be sustainable, profitable, and not ruin our planet 7) The economy should be highly efficient and operating in a harmonious way

These are our economic resolutions for The New Indonesia.

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The Earth is our home – home to more than seven billion fellow humans and over nine million other species. It sustains our lives – providing the air we breathe, the water we drink, and the food we eat. It’s vital that we take good care of it.

Indonesia covers just one percent of the Earth’s total land area, yet contains ten percent of the world’s known plant species, twelve percent of mammal species – including endangered orangutans and critically endangered Sumatran tigers and rhinos – and seventeen percent of all known bird species.1

And there is more to be discovered – the Indonesian Ministry of the environment estimates that more than half of Indonesia’s species are still unrecorded. And many of these species are not found anywhere on Earth, except Indonesia.

In addition, Indonesian waters host more marine species than any other country. Indonesia is one of the Earth’s great gardens, and the Indonesian people are its caretakers.

Yet Indonesia currently produces the second-largest amount of ocean waste globally – 3.22 million metric tonnes per year - ten percent of all the world’s marine pollution.2

Across Indonesia, non-biodegradable and chemical waste is pumped, thrown, and discarded into rivers, canals and waterways which make their way across the land, through towns and cities, polluting the country and poisoning its inhabitants.

Plastics leach cancerous toxins, and after being consumed by marine species, end up in the fish we eat. In some parts, plastic is being burnt as fuel – sometimes used by those in extreme poverty to cook food – slowly killing those breathing in the toxins.

Some Indonesian cities are among the most polluted in the world. Every year, huge swathes of Indonesian rainforest go up in flames, which destroys some species, critically endangers others, and damages the global ecosystem. In the monsoon season, floods and landslides – often fatal – strike across the archipelago.

Any economic plan which does not account for, and protect, our greatest physical asset – our planet – is not a good plan, and will lead to disaster.

Our planet, and its inhabitants, are at the heart of JARI IBU.

3.1 Food, Farming, & Fisheries

Over 40 percent of Indonesia’s population of 255 million people contribute to the agricultural sector, either through direct employment, or informal crop-growing and animal rearing. Yet it remains one of the most inefficient, under-funded, volatile and unreliable sectors of the Indonesian economy.

1 Source: https://www.ran.org/indonesia_s_rainforests_biodiversity_and_endangered_species 2 Source: http://www.channelnewsasia.com/news/asiapacific/commentary-indonesia-vows-to-tackle-marine- pollution/3581498.html

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Prices for producing farmers are decreasing in real terms (after inflation has been taken into account), and yet retail prices for individual citizens are increasing quickly. Seasonal surge-pricing is a regular feature, primarily due to insufficient crop planning, inefficient distribution, and a lack of proper management at government level.

National monopoly positions and mafia-style local administration are leading to a haemorrhaging of value throughout the supply chain, benefiting a very small minority of well-connected middlemen whilst punishing the large majority of small-time farmers and all the citizens of Indonesia who are purchasing their produce.

A lack of education, and a focus on driving profits – which includes a tendency to do things the cheapest way, rather than the best way – have resulted in critical levels of deforestation, soil degradation, and pollution.

In some parts, bombs are used to kill fish before sweeping them up in nets – an illegal practice known as ‘blast fishing’. It destroys the surrounding ecosystem, and needs to stop.

A lack of proper storage, and poor logistical infrastructure, result in a relatively low quality of produce which is not of a high enough standard to export to the most lucrative international markets.

For Indonesia’s economy to strengthen and grow in a sustainable way, of equal benefit to all, a new pathway must be implemented.

We want to go back to traditional agriculture and fishing methods, but complement these techniques with the use of modern technology which does no harm to humanity or our natural environment.

We want to empower our farmers to produce quality, healthy food products without destroying our planet.

3.2 Harnessing Science & Technology

New technology provides the opportunity to quickly, cheaply, and efficiently reorganise economic activity to provide a greater common good. In many cases, it doesn’t even need to be “new” technology – it already exists, it just needs to be deployed in the right place, to the right people, in the right way.

Not so long ago, “new technology” meant advances in industrial machinery – expensive components and facilities which resulted in a business case for sweeping economies of scale, centralising production and processing into a relatively small number of large factories and processing plants.

Now, the new technology is software based – cheap, easily scalable, simple to use, and if implemented correctly, a fantastic provider of equal opportunity. The agricultural sector is a prime candidate for reform – and can benefit hugely from sensible implementation of modern technology.

The agricultural sector, via all its interconnected companies and activities, has just one key function – providing food for people (and animals) to eat. It also needs to generate sustainable profits, to encourage inward investment and innovation, and provide a fair income for those reliant on the sector for their livelihoods.

The simplest way to engineer positive change to the sector is an integrated approach to education, crop planning, modern farming techniques, and distribution – and this can all be delivered via modern technology.

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It is now possible to educate anyone, anywhere, using the internet and integrated applications for smartphones. Techniques for boosting crop yields, information on what types of crops are best suited to certain geographic regions, and information on pricing can be quickly distributed to those who need it.

Rather than relying on a disparate, unfair, and repressive distribution network to get produce from rural individual farmers to retailers and exporters, modern technology allows us to replicate the same best practices used by large national and international companies – specifically the use of the futures markets for commodities – and provide the same benefits and assurances to small producers as enjoyed by large producers.

A national “agriculture app”, showing the market pricing for different agricultural products in different regional markets, along with an educational support hub to help farmers maximise value, would help to rebalance the agricultural sector – not just in terms of a fairer distribution to all involved in the sector, but also to manage national supply and demand, as farmers can at any time check the future value of any crop, and plan accordingly.

The result would be a reduction in the price gap between farmers and individual food-consuming citizens – raising income for farmers through increased productivity, yet reducing prices for citizens through increased market efficiencies – as well as a reduction in supply volatility, a higher crop quality, increased tax revenues (firstly through increased economic activity, and secondly through the automatic tax calculation and collection which could be integrated to the “agriculture app”), and a strong foundation from which to grow exports to other countries.

Technology, combined with education, will help Indonesia to implement integrated planning, seeding, harvesting, distribution, and storage.

In turn, this approach will make it easier, cheaper, and more efficient – and of course more profitable – for Indonesia’s financial institutions to provide financial services, such as credit facilities and insurance, to the farmers and fishermen and women who desperately need it in order to grow and contribute more to the Indonesian economy, helping it to grow.

3.3 Managing Our Natural Resources

Our natural resources – all the natural resources of Indonesia – are assets which belongs to all the people of Indonesia. They need to be managed and utilised in a sustainable manner, in a way that protects and preserves the environment for future generations of Indonesians.

In addition to protecting the environment, we also need to protect the citizens who work in our mines, oilfields, and forestry sites. Many employees in the sector are looked after well, but many others are overworked, underpaid, and badly mistreated. This needs to change.

All our business operations which involve our natural resources will be run in accordance with the two principles above.

3.4 Waste & Recycling

Reducing the amount of waste that we produce, and being more careful about how we dispose of it, will have a significant positive impact on both the environment and the economy.

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JARI IBU agrees with the worldwide movement to Reduce, Reuse, and Recycle waste – as opposed to simply dumping it somewhere on our land or in our ocean.

To fix this, one of the most elementary – and yet highly effective – ways to do this, is simply to make it possible: provide the facilities for sorting and recycling waste, to give people the opportunity to recycle.

In addition, educating the population – both in terms of the dangers and cost of handling waste badly, and the benefits of handling it well – will help to reverse the current trend of the Earth being ruined.

3.5 Jogja Green City

As part of the plan to rejuvenate Indonesia, JARI IBU supports the US$1 billion Jogja Green City project to transform Yogyakarta into a modern, environmentally-friendly, sustainable city.

Centred around the development of the New Jogjakarta International Airport, the associated infrastructure, transportation, and commercial developments provide the opportunity for Jogjakarta to lead the rest of Indonesia and the world towards a brighter, healthier, more sustainable future which benefits all.

The people of Indonesia need an example to follow. Jogja Green City is that example.

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Everything is energy – and everything needs energy. Without it, we’re dead. The provision of energy for all of Indonesia is at the core of the JARI IBU philosophy.

4.1 The Demand for Energy

Indonesia’s economic and population growth over the past few decades has seen its energy use soar. The high demand places tremendous strain on the power grid – power cuts are common in urban areas, and approximately 25% of the population don’t even have access to mains electricity at all.

Despite a wealth of natural renewable energy sources – as well as a wealth of high-carbon fossil fuels – Indonesia is a net importer of energy, and therefore subject to global market prices for the energy it uses. Combined with volatile primary commodity prices, which are Indonesia’s main export, the government budget is often put in a precarious position.

Indonesia exports a lot of unrefined oil, but imports refined petroleum products. When global oil prices rise, Indonesia’s poor are hit the hardest as their fuel bills increase. When prices fall, the government loses significant revenues and scales back its spending – often hitting the poorest in society again. It’s a lose-lose situation for them, and holds them back from fully contributing to growth of the Indonesian economy.

For Indonesia’s economy to reach its full potential, it is vital that sufficient energy is produced, stored, and distributed throughout the archipelago. With ambitious plans for growth, this is even more acute – Indonesia needs to generate significantly more energy than it currently does.

The demand for energy will continue to grow – through population growth, economic growth, and technological advances which require more power to operate. JARI IBU recognises this as a critical requirement for Indonesia – we need to act now.

4.2 The Economics of Energy

By some estimates, Indonesia’s poor spend more than 50% of their total income on energy.3 In developed economies, this figure is closer to 5% - for the poorest in those countries. Our aim in this regard is two-fold: help those in need to increase their income, and help everyone in the country reduce their energy bill.

The current situation is keeping Indonesian citizens in poverty. Despite numerous efforts by government, NGOs, and international development partners, only relatively small improvements have been made. We need a new plan to fix this problem and make energy poverty a thing of the past.

3 http://asiapacific.anu.edu.au/blogs/indonesiaproject/files/2014/10/20140924-Energy-Poverty-and-Poverty- Alleviation-in-Indonesia-by-Maxensius-T.pdf

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4.3 Keeping It Clean

JARI IBU aims to protect and preserve our people, our country, and our planet. For this reason, we need to ensure that the energy we generate is clean and sustainable, and is not damaging the Earth or its inhabitants.

It’s not possible to instantly change from a high-pollution process to a low-pollution process – but it is possible to instantly reverse the trend.

JARI IBU points Indonesia in a new direction – a better direction, with continuous research and development of new methods and technologies for renewable energy. Constant improvement should become the new normal. Over the coming years, this new energy plan will transform Indonesia from a net importer of energy, and a high polluter, to a net exporter of energy, whilst preserving and protecting our environment and planet.

4.4 Geothermal: Indonesia’s Natural Renewable Energy Source

Geothermal energy comes from the heat generated and stored in the Earth. It is cost effective – the cheapest form of energy per unit when compared to other major sources of energy – as well as being reliable, sustainable, and environmentally friendly.

Indonesia’s geographic position on the Pacific ‘ring of fire’ makes it ideally suited to geothermal energy production, and is currently the third-largest producer globally.

JARI IBU fully supports the development and expansion of Indonesia’s geothermal capacity to enable clean, sustainable access to energy for all of Indonesia’s citizens and businesses. Specifically, we want to acquire and expand the Chevron Salak and Darajat geothermal sites, as well as those at Cibuni, Kaldera Danau Banten, and Telaga Ngebel.

4.5 New Solutions to Old Problems

In addition to increasing geothermal capacity, JARI IBU supports the development and implementation of new technology to extract extra value from existing energy-generating projects and processes.

For rural areas where it is inefficient to link to the national power grid, localised biomass plants – which turn waste into power – are already in operation in some parts of the country and should be expanded.

Cheaper, renewable energy leads to cheaper production costs, which will help to fuel entrepreneurship and productivity. It will create a significant multiplier effect to the overall economy, as well as having a significant positive impact to life quality for the citizens of Indonesia and of other nationalities who choose to make Indonesia their home.

Indonesia’s huge coal industry can – and should – upgrade its capabilities and efficiencies by looking to new techniques, such as the Nedol coal liquification process, engineered in Japan. Indonesia must look all over the world for the best ideas, and partner with the best ones to bring the application of the technology to the domestic market.

Innovation is not a one-time thing, it is a way of life. By choosing to become an innovative country, Indonesia can become a top 5 economy by 2050.

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Indonesia’s financial system is still underdeveloped and a long way from benefiting all of Indonesia’s citizens. The latest official figures show that despite Indonesia’s population of 255 million people, there are only around 100 million bank accounts.

Additionally, the average number of accounts per person is 2.5, meaning that only around 40 million people – around 15% of the population – actually have direct access to banking services.

Microfinance has bridged some of this gap, but it is only one part of the banking system, and is still a relatively small industry when compared to the potential market size.

The banking and finance sector in Indonesia is riddled with inefficiencies, yet is highly profitable – but this profit is not “trickling down” to the most in need of financial system support.

5.1 An Integrated Approach

The financial system is the skeleton of the economy, upon which all other financial organs – banks, insurance companies, investment funds, microfinance and other lending institutions – are based. Money is the blood which keeps the system alive – and the reason that some parts of the economy are struggling, and some citizens are cut off from the financial sector, is because it is not reaching the extremities of the country.

Indonesia’s geography, economy, and diverse population present significant challenges to the sector. Following the established western approach to the private sector financial economy has resulted in many financial institutions, all competing for the same small segment of the Indonesian market – those rich enough to be considered bankable.

This is a result of a “profit first” mentality – which works in a country where everyone is wealthy enough to generate profits for the financial institutions which serve them. To be of benefit to the people of Indonesia, and to grow the Indonesian economy, we need to put the people first – and profit second.

The model of JARI IBU is to implement an integrated approach, efficiently connecting all areas of the financial sector into a functional framework which maximises value creation, strengthens the country to prevent and overcome external shocks, and ensure that everyone benefits from it.

Through the Suryawukukala Program, we will demonstrate how different parts of the financial apparatus can work together more harmoniously, delivering much-needed opportunity to everyone across Indonesia, whilst still delivering consistent and attractive financial returns.

Our hope is that this model will be replicated throughout the private sector, and as such has been designed to enable other companies and financial institutions to ‘plug in’ and join the program.

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5.2 Banking

In our opinion, banking is more than a profit-making enterprise – it is a fundamental necessity required by everyone in order to function and participate in the wider economy. The key initial objective is to provide everyone with access to a bank account.

New technology means that the old barriers to entry of a wide branch network and huge head office operations are no longer the problem they once were. Technology is already being utilised, in Indonesia and elsewhere in the world, to facilitate mobile and internet banking at a fraction of the cost previously incurred through traditional banking.

Indonesia’s demographics and culture – very community and family based – are a very good fit for a technological approach, as the social structures for monitoring the use of credit facilities and reference- checking are already in place throughout Indonesia’s geographically diverse communities.

Yes, there are significant costs involved in setting up the required technological infrastructure, but the economic benefits of moving from 40 million banked citizens to 255 million banked citizens are huge.

5.3 Microfinance

Perhaps the most pressing financial need for the poorest in Indonesian society is access to credit – for entrepreneurial activities, rather than consumer purchases. Indonesia is a country full of entrepreneurs – simply walk down any urban street in Indonesia and you’ll see a very large number of small, often family-run businesses.

The ones you see are primarily funded through savings, or more frequently, via loans from family members and friends. Most are cash-based, not registered for tax (and not registered for anything at all, in most cases), and have pretty much no prospect of expansion due to a lack of capital.

Microfinance businesses in Indonesia are making inroads to the rural economy, but this is not happening fast enough, and is still relatively inefficient. The distribution network is often a long chain of people, each needing to take a cut for their work, and therefore interest rates are often very high. This takes money away from the people who need it most, whilst supporting a chain of middlemen who add no economic value.

Despite this, microfinance sector in Indonesia is still profitable, and still helping many small businesses to prosper. It just needs to be expanded, and made more efficient. Interconnectivity to other areas of finance are therefore the way forward – but this alone is not enough.

A farmer growing crops on her small plot of land doesn’t just need credit facilities to buy seeds etc – she also needs help and education to maximise her potential. She needs to know what are the best crops for her land, how best to manage her available resources, how to get her goods to market, and how to protect against crop failure. She needs a business consultant.

Some microfinance providers offer help and support, but most don’t – most are simply loan sharks, issuing new loans to “repay” interest on the old one. Local wholesalers dictate crop prices – invariably the price is low when they’re buying – and then sell it on to larger wholesalers at a significant profit. Most of the people caught in this trap don’t even know they’re being ripped off.

By integrating the provision of credit with the other areas of the program – access to knowledge and education, insurance, products which will help boost crop yields etc – we can build Indonesia’s economy

15 from the bottom up, helping those most in need of help to drive economic growth for themselves and for the whole country.

5.4 Insurance

Insurance penetration in Indonesia is still less than 5% - meaning 95% of the population do not have any form of insurance protection. The potential for growth is huge – but this will not happen quickly under the current system.

Distribution networks for insurance sales are messy, inefficient, and under-educated. Regulation of the industry in Indonesia is complex, changeable, and generally perceived to be geared towards protecting the insurance companies rather than protecting the citizens of Indonesia. Perhaps this is because the regulatory body is run by the owners of the insurance companies…

This largely results in sub-standard or expensive insurance policies, which do not always offer the protections they promise in their respective marketing materials – which in turn results in sub-standard and expensive options for Indonesia’s poorest citizens.

Until now, the main markets for insurance in Indonesia are medical insurance, life insurance, and accident insurance. A quick comparison to products available in some other countries – the developed countries – will quickly highlight just how bad they are.

Indonesia also needs commercial insurance to become available to the poor – insurance to protect against crop failure being among the most urgently required.

Currently, insurance is seen by some as a cost – a cost which can be avoided by simply not having any insurance. However we believe that it is one of the missing pieces of the puzzle that is the Indonesian financial system – one of the remaining missing links which will help minimise and mitigate risk.

5.5 Fund Management

Indonesia’s fund management industry is very large – there are nearly 1,000 different registered mutual funds – yet 99% of these all focus on the same things: Indonesian listed stocks, and Indonesian listed bonds. Most of the trading activity which takes place offers little or no economic value – trading volume is high, but the amount of new capital raised is relatively low. And the capital that is raised is quite often either an exit strategy for the owners, or a refinancing of existing debt, rather than new financial stimulus to the Indonesian economy.

A huge amount of cash is tied up in inefficient investment funds, which artificially inflate asset prices rather than drive economic growth. We believe that our integrated approach will deliver significant value, not just to investors, but also all citizens of Indonesia.

5.6 Money Transfer Services

One of the simplest financial requirements for many is the ability to send money to someone else – usually back to family in a rural area. Some services already exist for this, but they are expensive. When done digitally, the cost is zero – as long as there is access to cash or goods/services at the receiving end.

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Indonesia already has a large informal – but effective – network for distributing ‘phone credit’ for pay-as- you-go mobile telecommunications via small retailers – i.e. a guy selling coffee by the side of the road – and it doesn’t take a huge stretch of the imagination to foresee a cashless society in rural areas, once the technology is implemented and distributed.

Whilst not a specific business in our portfolio, the ability to send money – at no cost – to another person is a fundamental requirement for economic growth, and a core commitment or our business plan.

5.7 Our Financial Model

Our plan is to acquire a bank – Bank Victoria – which is already licensed and engaged in microfinance and SME lending across Indonesia. A new operational software system is to be implemented, utilising the best new technology available, to create an efficient system with minimal human input required, which can be accessed by all bank customers for their basic banking needs.

This system will also be utilised by the insurance company we acquire – run separately, but able to ‘plug in’ together with the bank to enable distribution of insurance products through the same channel. Similarly, access to investment funds will also be offered through the same platform.

Most investment funds currently require minimum investments of a much higher level than what most Indonesians can currently afford. The reason for this is purely profit-based thinking – there’s no money to be made in taking a $10 investment into a mutual fund. The costs, under the current model are simply too high, and the existing financial institutions have little or no interest in providing a service to the poor.

But technologically, once the digital infrastructure is established and operational, there is actually no cost at all – everything can be done electronically. A $10 transaction costs the same as a $1000 transaction – nothing.

Yes we need better financial products, and we will develop them. But more importantly, we need a better financial distribution system. Only then can any products, good or bad, reach the full population.

When looked at from the perspective of a citizen – any citizen, rich or poor – their financial services needs are as follows:

1) Access to banking facilities to safely store liquid cash and process transactions 2) Access to short-term low-risk non-liquid financial products, such as fixed interest term deposits 3) Access to longer-term, medium risk liquid financial products, such as mutual funds 4) Access to insurance products to protect them and their family and/or business 5) Access to credit to help them engage in profitable enterprise

Currently, financial institutions tend to start from the perspective of a business case – by looking at what is the best use of their available capital in terms of generating the highest return on equity for their business.

Our approach is to start from the perspective of a business case for each individual citizen, and the economy as a whole, then making sure that the available capital is deployed in the best way to grow the economy and look after each citizen.

Our bank will provide numbers 1, 2, and 5 (above), our insurance company will provide numbers 2 & 4 (above), and our investment fund(s) will provide number 3 (above).

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Our integrated technology will, with consent of the individual concerned, be able to link together the distribution and management of all areas together in one package. It can also be used to connect other parts of the JARI IBU plan – for example education and healthcare information – to the end user in a quick, easy, and cheap fashion.

We will start with a focus on the poorest in Indonesian society, but we believe that our level of service, ease of use, and most importantly cost and efficiency will result in many of the wealthier citizens choosing to use our model for their financial lifestyles.

We hope that this model will be replicated throughout the private sector, bringing much needed balance, integration, efficiency, and of course economic growth, to Indonesia and its citizens.

5.8 Our Financial Structure

Through the way we internally structure our companies, we will pioneer a new way of structuring interconnected financial institutions and businesses.

Our long-term approach and holistic view of the Indonesian economy allows us to manage each component part in the way that delivers the most benefit for the whole group, rather than only looking at what’s best for each component part. This will deliver huge benefits overall – and even huge benefits for each component part, as they will all work together harmoniously.

At its core is what’s best for the citizens of Indonesia, and for the overall Indonesian economy. This will lead to sustainable economic growth, which in turn will benefit each component part – there will be more customers, more wealth per customer to spend on products, services, and investments, and therefore more profitability for each component part as well as the whole group.

In order to be truly successful, we cannot do this alone – we cannot operate a model closed to external companies. Funding for the Indonesian economy comes from a variety of sources, and each of those sources needs to be able to ‘plug in’ to our model easily.

Our bank will take deposits from individual citizens and businesses nationwide, and make loans for commercial enterprises – including microfinance – nationwide. In addition, it can also make loans to our insurance company to cover short term cashflow volatility if needed.

Our insurance company will distribute protection insurance products through the banking system and network, and issue investment products such as medium-term insurance-backed term deposits. To capitalise the insurance company, businesses with strong long-term stable cashflows – such as our power plants and hospitals – will be held as an asset by the insurance company, strengthening its balance sheet and providing the cashflows required to finance operations and claims.

Our investment funds will tap into the already large market for mutual funds and allocate the capital to more beneficial uses, in particular helping to get businesses operating in a sustainable, socially-just and profitable way on to the Indonesian stock market where they can easily attract new investment, both domestic and foreign.

Finally, all of our financial businesses will work together with domestic and international organisations to make sure that we’re not just financing the economy, but also financing it in the right way – making sure that the businesses we fund are operating in a fair, sustainable, and profitable manner which benefits the citizens of Indonesia rather than treating them unfairly.

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What’s more important than your health? Not much. Yet today, healthcare in Indonesia is not great – the World Health Organisation ranks Indonesia in 92nd place, just below Lebanon, Libya, and Bangladesh.4 Indonesia can do better.

6.1 Prevention Is Better Than Cure

It’s important to remember that whilst it’s good to heal people when they’re sick, it’s better for them to not be sick at all. Currently, the healthcare system is predominantly focused on providing medical procedures and drugs to those who fall sick – but this doesn’t make economic sense. It is far cheaper to prevent a problem than it is to fix a problem.

Healthier and more nutritious food, reductions in the levels of pollution, and regular screenings and check- ups from medical professionals – including specialists, such as psychologists and chiropractors – will help to prevent some future health problems, and therefore reduce the cost of future healthcare, because any issues will be highlighted – and fixed – at a much earlier stage.

In addition to the obvious healthcare benefits of preventing medical problems, the economic benefits to this approach are huge – less time off work due to lower levels of illness, increased productivity due to healthier minds and bodies, and less demand for state-financed medical treatment.

6.2 The Role of Medical Insurance

Generally, if citizens want a medical insurance policy to include preventative treatment, such as an annual health screening, they must pay extra for it – or buy a more expensive insurance policy to have it included. Why? Because many insurance companies are structured to sell as many insurance policies as they can, and then minimise claims by coming up with reasons not to pay out. This is a big problem in Indonesia.

Unfortunately, things like annual health check-ups cost money. Even worse for the insurance companies, they sometimes highlight healthcare issues which need to be fixed – which also cost money. When looked at from a short-term profitability perspective, it’s easy to see why insurance companies would rather people didn’t go for that check-up.

Of course, from a long-term perspective, it’s far cheaper to pay a small amount now, to fix a small problem now, than it is to pay a large amount later on, to fix a large problem (which used to be a small problem, but wasn’t noticed until it became a big problem).

However, most insurance companies – most companies, in fact – are not managed in line with the long term best interest. Management personnel change regularly, and often the quickest way to get a promotion is by producing great financial results for a year or two, not by preventing a problem in 20 years’ time.

4 Source: http://www.who.int/healthinfo/paper30.pdf

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JARI IBU proposes that all medical insurance policies include – or perhaps even demand – an annual health check-up for the insured persons.

6.3 Mental Health

One of the biggest challenges facing many people throughout the world is also one of the most ignored health issues – mental health. The United Nations estimates that 25% of people suffer from this invisible disease in both developed and developing countries.5 In particular, depression is ranked third in the global burden of disease, and is projected to rank first by 2030.

Persons with mental and psychological diseases often face stigma and discrimination – in part because the disease is often misunderstood, and those suffering are often reluctant to speak about their suffering.

In Indonesia this is particularly acute. In 2016, Human Rights Watch uncovered widespread instances of mentally ill citizens of Indonesia being chained up to the walls in overcrowded and unclean facilities, against their will, and being subject to continuous physical, mental, and sexual abuse.6

This is truly despicable and needs to stop. All our brothers and sisters across Indonesia – and the world – who are suffering from one of the most terrible diseases need to be helped, not locked up and abused.

Mental health needs to be a key cornerstone of the Indonesian healthcare system, not just to help those suffering, but also to prevent future suffering as much as possible. Of course, this needs to be funded – but that’s easily possible, if we take a holistic approach to the economics of healthcare.

6.4 Combining Better Medical Care with Improved Economics

As is often the case, solutions to problems are already available – it is often just a change in perspective required to realise it.

Across the world, medical research and testimony from sufferers of illnesses – particularly mental illness – are demonstrating that the current beliefs of many people in relation to medicines and other remedies are not actually true.

Ketamine, an anaesthetic often used recreationally, has been found to cure depression.7 It is currently illegal in Indonesia, and many other countries.

LSD, a psychedelic drug often used recreationally, has been found to cure depression.8 In Silicon Valley, USA – the birthplace of so many great ideas – it is reported to be widely used because it enhances creativity9, and similar evidence is also gradually being discovered in the UK.10 It is currently illegal in Indonesia, and many other countries.

5 Source: https://www.un.org/development/desa/disabilities/issues/mental-health-and-development.html 6 Source: https://www.hrw.org/news/2016/03/20/indonesia-treating-mental-health-shackles 7 Source: http://www.bbc.com/news/health-39501566 8 Source: https://www.theguardian.com/science/2015/mar/05/psychedelic-drugs-like-lsd-could-be-used-to-treat- depression-study-suggests 9 Source: http://www.telegraph.co.uk/news/newstopics/howaboutthat/12019140/Silicon-Valley-professionals-are- taking-LSD-at-work-to-increase-productivity.html 10 Source: http://www.bbc.com/news/health-39516345

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MDMA, or ecstasy, a popular recreational drug, has been found to cure depression, trauma and stress.11 It is currently illegal in Indonesia, and many other countries.

Psilocybin, the active compound in ‘magic mushrooms’, has been found to cure depression, anxiety, and PTSD.12 These mushrooms grow naturally in almost every village in Indonesia. They are currently illegal in Indonesia, and many other countries.

Several countries and states have now decriminalised the use of marijuana – cannabis – because all the scientific evidence suggests that this plant has healing properties – it is a medicine.13 It grows naturally in Indonesia. And yet currently, Indonesia considers this particular plant illegal, rather than a gift from God. Why?

People are dying because they are prevented from using this natural medicine, and people are being arrested for helping those who need it.14 This is madness.

Indonesia needs a new perspective. Indonesia needs a new plan.

Indonesia’s approach should be threefold: Regulation, Education, and Taxation.

Regulation, to ensure that substances are not mislabelled – many people have died by consuming a substance which they thought was something else.15

Education, to ensure that citizens are informed and aware of how to remain safe regarding substances – many people have died because of a lack of knowledge on how to prevent and/or treat problems with substances.

Taxation, to ensure that Indonesia maximises its tax revenues, rather than the money flowing to illegal mafia operations.16 In 2013, this figure was estimated at Rp57trillion (US$4.4billion) per year.17

With the increase in revenues, Indonesia must also protect citizens who become addicted to substances – both those currently illegal, and legal, such as alcohol or nicotine/tobacco. According to official estimates, more than one million Indonesian citizens are addicted to crystal methamphetamine. Currently, these citizens are more likely to be sent to prison rather than helped to overcome their addiction.18

It's time to change the laws, and change this sector of the Indonesian economy from being a net cost to the state, to being a significant profit-generator through simply bringing it into the tax system. And, of course, use the proceeds to fund significant improvements to healthcare for all citizens.

11 Source: https://www.theguardian.com/society/2016/sep/16/mdma-ptsd-therapy-trauma-maps-medical-study 12 Source: http://time.com/4338947/magic-mushrooms-for-depression/ 13 Source: http://www.businessinsider.com/health-benefits-of-medical-marijuana-2014-4 14 Source: https://coconuts.co/jakarta/news/indonesian-man-grows-marijuana-treat-wifes-rare-disease-gets-caught- wife-dies-32-days-later/ 15 Source: http://www.tdpf.org.uk/resources/benefits-legal-regulation 16 Source: http://www.asiasentinel.com/politics/executed-indonesia-drug-dealer-story/ 17 Source: http://www.antaranews.com/en/news/89943/illegal-drugs-cause-rp57-trillion-loss-to-indonesia 18 Source: http://www.aljazeera.com/news/2016/08/crackdowns-cutbacks-indonesia-drug-policy- 160802081040575.html

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6.5 Research & Development

Indonesia has the potential to become a world-leader in medical research, but needs the political will to implement these changes before this can happen. Big pharmaceutical companies monopolise the global medical industry, yet specifically divert funding away from plant-based medicines which grow naturally - many of them exclusive to Indonesia – in favour of chemical-based remedies which they can patent protect, and therefore sell at a very high price.

JARI IBU seeks to maximise healthcare, not maximise profits. Therefore, Indonesia needs to provide the regulatory framework to enable domestic and foreign medical research companies to carry out their research inside Indonesia, to find more ways of healing the sick in a sustainable and healthy way.

Indonesian universities and research facilities would then be able to attract some of the best medical scientists from around the world, finding new medical cures, and educating the next generation of Indonesian scientists, if this framework is put in place.

This approach would not only improve the healthcare provided to Indonesian citizens, it would also facilitate huge growth in Indonesia’s economy, helping to turn Indonesia into one of the world’s top five economies.

6.6 Medical City, Sentul

As part of the overall commitment to improving public health, JARI IBU includes the plan of the Suryawukukala Foundation to build a new US$700million Medical City at Sentul, Bogor.

Medical City will be the largest medical facility in the country, completed to the highest international medical standards, with an operational program which puts into practise the interconnected approach of JARI IBU in terms of prevention, cure, and healthcare education.

In particular, Medical City will lead the way in researching and developing new medicines and treatments derived from the natural environment. Indonesia has all the resources needed to be a world leader in botanical science and its application to healthcare. And when Indonesia eventually, inevitably, decides to end the harmful, repressive, and expensive ‘war on drugs’, and instead declare ‘war on disease’, Medical City will be ready to lead the way forward.

As with the plan for Jogja Green City (see section 3.5), Medical City Sentul will set an example of the way forward for the medical industry in Indonesia, not just in terms of treatment, but also in the areas of preventative healthcare, research & development, and education. Medical City will drive the evolution from merely potential, to full realisation of its potential.

It is hoped that this new holistic model of providing healthcare, putting health first whilst being profitable (as opposed to maximising profit and hoping to cure people along the way) will be replicated throughout the Indonesian archipelago.

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The importance of a good education is widely recognised around the world, and Indonesia’s education system is the fourth-largest in the world. Yet primary school enrolment rates are below 60% in poor areas, around 66% at junior secondary level, and just 45% at senior secondary level.19

In addition, Indonesia ranks among the worst in terms of educational quality, as measured by the OECD (PISA).20

The result of this is a relatively low level of education throughout most of the Indonesian population – not just the young, most of whom are currently receiving a sub-standard education, but also most Indonesian adults, who have received a sub-standard education in the past.

The economic impact of this is huge – productivity is low, businesses are managed inefficiently, and the ability to compete internationally is severely limited.

7.1 Workplace Education

Leading innovative companies, such as Google, are renowned for their policies of encouraging their employees to spend a portion of their time on projects which interest them – which may not be directly related to their job role.

Some of these side-projects have resulted in major commercial successes – Google’s AdSense is one example – but this was only possible because a) the company offered the time, and b) the employees were educated to a high standard and were therefore empowered to innovate.

Right now, Indonesia is unlikely to benefit economically overall if all workers were given more free time to invent or develop things – the overall potential gain is unlikely to exceed the overall potential cost in terms of lost economic activity.

However, the same model can be applied to Indonesia – it just needs to be a locally adapted version.

Working hours, for those who have employment, are long – usually nine or ten hours per day, six days per week – and in addition to the long work day, many Indonesians cannot afford to live in the more expensive areas close to the places of employment, and therefore spend several hours per day travelling to and from work (often on an uninsured motorbike, along pot-holed roads, in the rain, in the dark, whilst exhausted from either a long work day or a short overnight sleep).

There’s very little free time for those in employment to pursue any form of further education – and are therefore trapped in their current situation with little hope of improvement. In addition, for most sectors, there is no legal requirement for Indonesian companies to offer any training to their staff – not even training related to their role.

19 Source: http://www.worldbank.org/en/country/indonesia/brief/world-bank-and-education-in-indonesia 20 Source: http://www.oecd.org/pisa/

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7.2 Making Education a Constant Process

In addition to training and educating staff in relation to their job, Indonesia needs to facilitate further education among its adult population – on any subject.

In our businesses, we will make sure that all employees have the opportunity to pursue formal and informal education, training, and development, by granting them the time, and, where possible, the facilities to help them reach their potential and follow their passions. We believe that we will quickly be considered as one of the best companies to work for – thereby setting an example for other businesses to follow, and setting a standard for others to aim for.

Making education a constant process for all Indonesians is most certainly required for Indonesia and its citizens to reach their full potential.

7.3 Integrating Education

We would like to see a diverse, yet fully integrated educational system in Indonesia, where education is delivered as a combination of formal (school and university-based), community-based, and private business initiatives, across a broad range of subjects – going above and beyond the national curriculum for children, and continuing throughout life for adults.

We will need specialist training delivered to our staff, but also want to deliver specialist education to the local communities in which our businesses operate. Even something as simple, and as cheap, as empowering technical specialists at our geothermal power plants to deliver some rudimentary lessons in the geothermal process to children of local communities could spark an interest which leads to a successful career, or even a significant scientific discovery. Indonesia has huge potential, it just needs that spark. JARI IBU is that spark.

It is hoped that by leading in this area, we will encourage others to follow our path. Over the coming years, specialist education centres, co-operated by local communities and local businesses, each with different areas of specialisation, could become the norm – not just to teach specific skills, but also to open a world of possibilities to those who have not yet even realised that there is an alternative to poverty.

Currently, many Indonesians see education as merely a way to achieve employment. We want to help them change their perspective, to see education not only as a way of gaining and progressing through employment, but also as a way of following their passions and achieving self-actualisation.

By providing a diverse range of educational opportunities, delivered through a diverse range of educational methods, across a very diverse country, Indonesia will not only find unity in its diversity, it will also be able to set a fine example for all developing nations to follow.

7.4 Learning Through Teaching

Overall, Indonesia’s education level is low – but there are many exceptions, and even the least-educated people have knowledge worth sharing. By encouraging our employees to spend some time teaching others – their colleagues, their community, or even strangers – on any subject, we are also encouraging learning.

Indonesia would benefit hugely by becoming a nation of learners – and to do this, we need a nation of teachers. Everyone can teach, and everyone can learn. The desire for knowledge is already here – we just need to facilitate it. JARI IBU will begin that process.

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Everybody needs a place to live – and yet there are many who do not have a home. Millions of others are living in homes which are not suitable for human inhabitants, are not big enough for the families who occupy them, and in many cases are simply dangerous, such as those precariously perched over a river.

Many do not have access to the national power grid, do not have running water, and do not provide effective shelter in the monsoon season.

We believe that everyone should have access to a clean, safe, functional home, with access to the basic utilities needed to function in our society. It’s a basic human right – but currently, millions of Indonesians are not provided with this basic platform from which to reach their full potential.

8.1 Homing in on Economic Growth

Indonesia needs to embark on a massive housing project just to fix this problem – and can use it as a springboard to drive exports, and therefore increase economic prosperity. By improving housing quality, qualify of family life also improves.

Advances in technology, coupled with new ways of thinking, are already proving successful in other countries. High quality pre-fabricated houses, built in sections at factories, and assembled on-site, are already common throughout Europe, and are cheaper, quicker, easier, and more environmentally friendly than traditional house-building techniques.

Funded by either the public or the private sector, house-building factories will create a lot of jobs – ranging from entry-level low-skilled labour through high-skilled labour to senior specialist positions. Abundant natural resources are already in place. And a huge labour market of primarily young, enthusiastic citizens, with a passion for learning and development, ready to help.

It’s not just Indonesia suffering from a housing problem – many countries are also facing the same challenges. If Indonesia can develop this industry and become a world-leader in the sector, the potential export market is huge.

The current lack of adequate housing is not a problem which will be fixed overnight – but there is a solution which can be started today.

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Indonesia already attracts millions of tourists each year, but is nowhere close to fulfilling its potential. The JARI IBU plan contains a number of initiatives to boost the economy through tourism activities.

9.1 SHD Bali

Bali is already established as one of the world’s premier tourist destinations, and therefore it makes economic sense to expand its appeal. Currently tourism on the island is focussed on the southern coast, near the existing international airport.

The SHD (Sang Hyang Dampal) Program comprises three parts:

1) Bali Holy-Day in Paradise: Part theme park, part educational centre, and part holiday resort; Celebrating and highlighting the many diverse ways humanity shows their appreciation for God, and promoting peace through understanding different cultures and traditions. 2) Syahbandar Whis-Sy Port & Resort: A new port and holiday resort, bringing commercial activity and tourism to northern Bali. 3) Batara (Bali Utara) International Airport: A new airport to service North Bali, removing some of the strain of the existing South Bali airport and facilitating easy access to the northern part of this beautiful island.

9.2 New Yogyakarta International Airport

Serving Yogyakarta and the surrounding areas, this much-needed new airport will make it easier to attract both domestic and international tourists to this beautiful and historic area, close to existing historic attractions such as the majestic Borobudur and Prambanan temples.

The New Yogyakarta International Airport (NYIA) is part of the ‘Jogja Green City’ initiative (see section 3.5).

9.3 Medical Tourism

Through the development of Medical City, Sentul (see section 6.6), we aim to promote medical tourism as a key driver of tourism activity.

Many potential visitors require specialist care on an ongoing or regular basis, such as dialysis, and whilst they are able to travel, they need access to first class medical facilities whilst on holiday.

Our aim is to provide the facilities and environment to make Indonesia a fantastic choice for vacations for all people of the world, including those with disabilities or illnesses.

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In addition to propelling Indonesia into the top five economies, we also want to develop Indonesia’s international image and reputation as a well-known and highly regarded country.

10.1 Pertamina Energy Tower

In 2015, Indonesian state-owned energy company Pertamina began a project to construct the 99-storey Pertamina Energy Tower on a 52,000sqm plot in Kuningan, one of Jakarta’s premier commercial districts.

Upon completion, the building will become the tallest in Indonesia, third tallest in the world, and an internationally-recognised Jakarta landmark.

Its iconic design as a zero-energy building, generating as much energy as it uses, and encompassing several environmentally friendly renewable energy sources including a geothermal deep well underneath the building and a wind funnel above it, fits perfectly with the JARI IBU sustainable clean energy policy and will set a new standard in construction techniques.

Due to the drop in the price of oil, Pertamina has suspended its plan and is now actively looking for a partner to complete the US$1.6billion project.

JARI IBU recognises the strategic value of this project to Indonesia’s international reputation and is committed to the realisation of this project.

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Indonesia needs to trade freely and competitively with the rest of the world for mutual benefit, but needs to move beyond primary resources as its major export.

To achieve this, two key initiatives are required.

11.1 Implementing Export Discipline

In order to compete internationally, Indonesia needs to improve its productivity and production quality to bring it up to international standards. Whilst domestic consumption will remain the main focus for most domestic businesses, it is only by raising the standards which will enable Indonesia to compete effectively on the world stage, and generate increased wealth.

Whilst we cannot force all businesses to adhere to this, we can set an example. For our businesses, we will run them with the aim of being among the best – not just the best in Indonesia, but the best globally. It is our hope that others will follow our example, and we believe that by implementing the JARI IBU plan, we will raise the standard, raise the average, and raise the ambition of Indonesian business.

11.2 Developing Specialisations

No country can be the best at everything – and the same is true of Indonesia. However, we can develop our strengths to become leaders in the sectors where we have a natural advantage.

In addition to the obvious advantages – plentiful natural resources and a large population – there are also many other plus-points.

Approximately 60% of Indonesia’s 255 million citizens are ‘millennials’ – born in 1982 or later – many of whom are highly tech-savvy and are a key driver of online activity and transactions. Indonesia can, and should, be a leader in the application of online interconnectivity.

With over 17,000 beautiful islands, immense biological diversity, and some of the most stunning scenery on the planet, Indonesia can become one of the most popular tourist destinations worldwide.

With huge potential for geothermal and other renewable energy sources, Indonesia can deliver enough power not just for our own citizens, but can also supply its neighbouring countries.

A quick glance at some of Indonesia’s stunning heritage sites, such as Borobudur and Prambanan, demonstrates the high-quality of artisanship which has been passed from generation to generation for centuries. Indonesia can – and does – produce stunning art, crafts, and bespoke furnishings.

Finally, Indonesian culture – true Indonesian culture – is a beautiful combination of tolerance, mutual assistance, and respect. In some ways, that culture has faded as the pressures of modern life have made it

28 seem more beneficial to pursue a ‘me-first’ approach, most notably demonstrated by the high levels of corruption currently evident in Indonesia.

Through JARI IBU, we will recapture, nurture, and grow the true Indonesian spirit, encapsulated in the philosophy of Pancasilla, and use it as the foundation to work together towards a New Indonesia which benefits all citizens.

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Indonesia’s infrastructure capacity is in desperate need of expansion and upgrading, which is a key objective of the JARI IBU plan.

12.1 Key Aims

Through our infrastructure program, we aim to put in place the following basic provisions across the archipelago:

1) Access to affordable energy for all Indonesians 2) Access to the internet and telecommunications for all Indonesians 3) Access to banking and insurance services for all Indonesians 4) Access to quality healthcare for all Indonesians 5) Transportation capacity to allow our cities to operate effectively, such as MRT 6) Increased airport capacity to take the strain off existing airports and allow for new domestic routes 7) Increased port capacity to help get Indonesian products to international markets

12.2 Funding Infrastructure Development

Whilst some of the above are to be funded directly through the Suryawukukala program, we will work with the government of Indonesia, the domestic and international private sector, and international development agencies such as the UNDP, ADB, IMF, and the World Bank to facilitate further investment to strengthen the Indonesian economy.

Our position makes us ideally placed to help bridge the gap between private and public sector requirements, and forge a new path for public private partnerships which go above and beyond the current best practises.

12.3 The Importance of Digital Infrastructure

Often a lot of emphasis is placed on physical infrastructure – which is of course desperately required – but we also need to make sure that our digital infrastructure is up to international standards to be able to compete and trade with other countries, and get all Indonesian citizens on the path to economic prosperity. More details of our digital infrastructure plan are included in a separate document.

12.4 First Class Infrastructure for a First Class Economy

For Indonesia to reach its potential and become a top 5 economy, we need to set the bar high in terms of installed infrastructure capacity in every key aspect. All of our infrastructure plans include the most modern technological advances available and great care is being taken to ensure that as technology continues to advance, our projects are able to be updated at minimum cost and minimum disruption to services.

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Now that Indonesia has successfully executed the Tax Amnesty program, it is vital that taxation policy and implementation are modernised to maximise effectiveness and make it a fairer system for all.

13.1 Increasing the Tax Base

Currently, out of Indonesia’s 255 million citizens, only around 27 million – just over 10% – are registered as taxpayers, and in 2014 less than one million people paid what they legally owed.21 This is often cited as a key cause of the relatively low taxation revenue flowing to the state treasury.

But simply registering new tax payers is not enough. More than 50% of Indonesians currently do not earn enough to reach the tax threshold of Rp 50,000,000 (US$3,750) per year. To increase the tax base, Indonesia also needs to increase the incomes of its poorest citizens.

Chaotic and inconsistent tax collection systems, arcane rules and loopholes, and a lack of reward/punishment for those who follow/break the rules are all part of the problem.

It is vital to the health of the Indonesian economy that a fair, transparent, and consistent tax policy is implemented and adhered to. But the country does not need to simply continue with its current taxation system, nor does it need to blindly copy the systems in place in other countries. Indonesia needs a new plan.

13.2 A New Perspective to Taxation

Currently, like most other countries, Indonesia operates a system of varying tax rates for different types of economic activity. Individual citizens are taxed on their income – their revenue – whilst corporations are taxed on just their profits.

Where Goods & Services Tax (GST) is added, it is paid for by the end user – usually an individual citizen – yet is considered tax deductible when incurred by a company.

This system is not fair, is not efficient, and is not sustainable.

13.3 A Fairer System

By simplifying the tax system and aligning it with economic activity, taxation revenue can be increased without harming any currently profitable enterprises.

Instead of individual citizens just paying taxes on income, and companies just paying taxes on profits, all income – revenues – could be taxed at a very low amount (perhaps even as low as 1%), and all profits (increase in wealth) taxed at a higher amount – but still lower than the current tax bands. Together, this would generate a significant increase in tax revenue for the state.

21 Source: https://www.bloomberg.com/view/articles/2016-03-28/indonesia-needs-more-taxpayers

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If this was implemented alongside a reduction in the applicable tax rates (lower income tax rates for individuals, and lower corporate profit tax for companies), it would reward profitable value-adding companies, and penalise value-destroying companies who have a high turnover but declare low profits, and therefore currently pay little or no tax.

Any economic trading activity would be taxed – every time an asset changes owner, whether that is a house being sold from one individual to another, a shipment of produce from a farmer to a retailer, or sheets of metal being purchased by a factory – at a very low rate, therefore ensuring that the state receives a small payment from every transaction, not just a cut at the end if all this activity was profitable (and if reported, and if collected).

It would then be possible to bring the tax brackets for individuals and companies in line – there really is no justification for an individual citizen to pay a higher rate of tax than a company. It’s only that way because that’s the way it was yesterday – but we need a plan for tomorrow, today.

A simple and fairer system for everyone means that everyone – individuals and corporations – pay one fixed rate of tax based on revenue (economic activity), and one fixed rate of tax (which could include the progressive banding structure) based on any increase in wealth (profit)

13.4 Improved Collection of Taxes

The current tax collection setup is woefully under-resourced, unnecessarily complex, and not fit for purpose. Simplifying the tax rules would make it easier for individuals and companies to adhere to, and utilising technology for calculating, reporting, and paying taxes would make it quicker, easier, and cheaper – resulting in higher efficiencies and therefore higher tax revenues.

Paper-based systems spread across multiple physical offices provide easy cover for corruptors, are difficult to track and examine, and in cases of dispute lead to legal challenges lasting several years. This is madness. It’s time for reform.

13.5 Improved Spending of Taxes

In addition to electronic tax collection, a similar approach using technology to track government spending would also deliver substantial increases to tax revenues, indirectly. Estimates of the amount lost to corruption and other inefficiencies vary, but all estimates are relatively high.

Full transparency on how tax revenues were being spent would a) prevent many instances of potential corruption, as it would be easily tracked and discovered, and b) instil confidence in the tax system, leading to higher levels of participation.

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It’s often said that government should act more like a business, and in some ways, we agree. Our democracy entitles each citizen one vote – but no direct share in the economic profits. In a business, each share not only carries one vote, but also the right to one share of any profits.

The successes of any individual or business are in part dependent on the actions – or inactions – of everyone else in the country. When citizens follow the agreed rules and laws, they create a stable environment which enables businesses to generate profits. When society breaks down, everybody loses out, and it is much more difficult – or even impossible – for businesses to survive, let alone generate increasing profits.

All the individual citizens, all the communities, and all the businesses across Indonesia are collectively creating the environment in which all economic activity takes place. All are contributing through their actions and inactions.

Every citizen who chooses to vote in an election, instead of fighting on the streets, is helping to create a stable environment which benefits everyone, instead of a climate of fear which supresses economic activity. It is clearly more profitable to operate in a stable environment than an unstable one.

Logically then, it follows that if everyone is contributing directly, everyone should benefit directly. Those who add the most economic value should get the most economic reward (through profits, earnings etc), but at the same time, those who contribute to Indonesia’s economic success in some small way should also benefit in some small way.

Currently, the richest citizens and largest businesses benefit the most from a stable society – because they have more assets, they have more to lose from any social unrest, and more to gain from social cohesion.

JARI IBU proposes that everyone benefits, directly, by having a small share of the profits generated from all economic activity throughout Indonesia.

14.1 A National Dividend

Just like a business pays a dividend to its shareholders, Indonesian citizens should receive a dividend from the commercial activities of the Indonesian state.

Currently the Indonesian government owns and operates 141 State-Owned Enterprises (SOE’s) across a very broad range of sectors. Whilst not all are currently profitable, they could be – and should be.

Where government owns and operates businesses, it should be to the benefit of all citizens, because they are owned by all citizens.

Everyone has an opinion about what the government should spend its money on. By paying a national dividend, citizens can themselves choose what to spend that money on – they can use it for whatever they think is best.

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Almost all of the money paid out under this scheme would re-enter the economy immediately, generating more economic growth and generating more tax revenues – whilst directly benefitting the citizens of Indonesia, especially the poorest.

Of course, for this to work, all citizens will need a bank account to receive the payment – our plan for this is outlined in Chapter 5.

14.2 Working Towards a Universal Basic Income

As technology relentlessly develops, it’s not hard to imagine a world where most tasks and functions can be automated – using robots and computers. It’s vital that we begin to prepare for that now.

The first, most pressing problem, would be the loss of many jobs. If left unchanged, the current system would force millions into poverty.

There is already a worldwide movement to bring in a citizens income, a universal basic income, which would pay out an unconditional amount each month to every citizen, using similar logic as described above.22

When this is implemented, it will raise millions of Indonesian citizens out of poverty. It will give millions of Indonesian citizens a much-needed helping hand towards the financial pressures felt by most citizens. And it will give millions of Indonesian citizens the financial security to follow their passions – allowing people the flexibility to give up work for a while to further their education, or start a business, or simply spend a bit more, thereby boosting the economy.

“Trickle-down economics” doesn’t work – it is a lie. This is clearly evident by considering spending habits – give a rich person an extra $1,000 and their spending habits will not change at all – there is no economic value in doing so. But give a poor person an extra $1,000 and it will all get spent – through necessity.

This is how to drive sustainable economic growth: increase the wealth of everyone, starting with those at the bottom – the poorest in society – and they will become the foundation for future economic growth.

A universal basic income for all citizens is the natural evolution from a national dividend, and the solution to many different problems.

JARI IBU is the plan to make that happen – a new plan, for a New Indonesia.

22 Source: http://economia.icaew.com/en/opinion/april-2017/universal-basic-income-is-an-idea-whose-time-may-have- come

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“Berikan aku seribu orang tua, niscaya akan kucabut Semeru dari akarnya, berikan aku satu pemuda, niscaya akan kuguncangkan dunia”

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