Indonesia’s Minister of Finance, Bambang Brodjonegoro: [Speaking in foreign language] I would like to give the floor now to President Kim from the World Bank to explain to the media about his meeting with our President. President Kim, please.
DR. KIM: Thank you very much. It's a great, great honor and pleasure for me to be here in Indonesia for the very first time, and I of course have heard so much about Indonesia from my very good friend and Managing Director of the World Bank Group Sri Mulyani Indrawati. I want to thank President Widodo and the Honorable Minister for their extremely warm welcome for me and I also want to congratulate everyone here for the richness and diversity of the culture, your expanding maritime economy, the dynamism of the democracy here and the natural beauty of the thousands of islands.
In my discussions today with the President, we talked about the many accomplishments of Indonesia, including the substantial reduction of poverty. As many of you may know, the World Bank Group has two main goals. The first is to end extreme poverty in the world by 2030 and it is also to boost shared prosperity, which is trying to boost the incomes of the bottom 40 percent in developing countries. In the last 15 years Indonesia has cut in half the poverty rate from 24 percent in 2000 to 11.3 percent last year. This great country has weathered economic and political crises with grace, dignity and perseverance.
We at the World Bank Group are committed to building on the strong and successful partnership we've had with Indonesia for more than six decades. In fact, Jakarta is where we built our first office of the World Bank Group outside of Washington DC and it remains the largest office outside of Washington DC for the World Bank in the entire world. We built that office in 1968.
In my meeting with President Widodo, we discussed ways to further strengthen our partnership as the Minister suggested and we found that we feel that we can support the vision and mission of President Widodo and this Administration in ways that are very inspiring and challenging for us. I offered to the President as much as $12 billion over the next three to four years to support large investments in both physical and human capital, and as it was discussed, areas ranging from health care and the business environment to tourism, but also in areas that are more basic in infrastructure like energy and roads and ports.
I also reiterated our commitment to continue supporting Indonesia by bringing the very best of international experience. We have gone through a major reorganization at the World Bank Group and in many ways the reorganization of the World Bank Group was precisely focused on being more relevant for Indonesia. Indonesia is a very sophisticated country. They don't need a World Bank to tell them what to do, but the way that we might be able to help is that since we work in so many countries all over the world, we can bring those experiences and then bring them here to Indonesia to see if some of them might be relevant.
After my meetings in Jakarta, I'll be meeting with Vice President Kalla later this morning, I'll be travelling to Yogyakarta where I'll be meeting with residents and discuss some of their most pressing needs, including health care services, water and sanitation facilities, et cetera. I'll be visiting some World Bank Group project sites in Yogya. I'm also looking forward to meeting with the Sultan of Yogyakarta, His Majesty Sri Sultan Hamengkubuwono and the special region of Yogyakarta in the World Bank, it had a very strong partnership. I'll also take a look at the Yogyakarta Reconstruction Fund.
Tomorrow we will see Jakarta's famous ports and the Kelapa Harbour and Tanjung Priok Port. I've been informed that the two ports tell the story of two Indonesias -- one that is modern and resourceful and another that's steeped in traditional ways and constrained by limited resources. We are absolutely committed to building and expanding our partnership with Indonesia.
In my meeting with President Widodo today, I was personally very inspired, not only by his personal story but also by the fact that he has been a successful business person and has vision and mission for Indonesia (that) we think is both inspiring and exactly going in the right direction. Indonesia has had great success over the last few years. We project that Indonesia will have a five percent growth rate this year, which is lower than in the past, but many, many, many, most, the vast majority of the countries in the world would be extremely happy with a five per cent growth rate.
With the focus that President Widodo talked about in terms of improving the business environment, increasing tourism, improving the health and education systems and also building the infrastructure that we know is needed, I walked away from the meeting this morning extremely optimistic about the future of Indonesia. Indonesia has so many natural resources. And with a reform-minded, determined leader like President Widodo and a reform-minded highly competent team that he has, including the Minister, we feel that the future for Indonesia indeed will be very, very bright. Thank you very much.
MODERATOR: [Speaking in foreign language].
QUESTION: My name is Satria and I'm from the Jakarta Post. I have two questions for you. The first question will be the investigation of President Widodo reforms in the global financial landscape which he said during the Asian-African Summit. So how is World Bank's response to President Jokowi's submission, especially as he also mentioned the obsolete roles of international organizations such as the World Bank and the IMF?
My second question will be around - you mentioned that you have committed at least US$12 billion in the next three to four years for Indonesia but how much specifically for this year? As [unclear] the possibility to access the multilateral loans to finance the budget shortfall, and so what's your commitment regarding this year? Thank you.
DR. KIM: Yes. I did read - I read President Widodo's speech and I in fact spoke to him directly about some of the things that he suggested. One of the things that I expressed to President Widodo that I don't think he knew is the fact that I am an activist and I'm a medical doctor and an anthropologist. Twenty years ago I was part of a protest movement called 50 Years is Enough, in which we were, on the 50th anniversary of the World Bank Group, we were calling for the world to close the World Bank. So I was a protester myself against the World Bank Group.
The reason that I protested against the World Bank Group is that I felt that the World Bank Group was too focused on GDP growth and not enough on investment in human beings through health and education. So I told President Widodo that in fact the World Bank Group has changed a lot in the last 20 years. When I heard his points, I understood him in a very specific way, that the institutions like the Bretton Woods institutions that were really formed right before the end of World War II have to now move and evolve in a way that reflects the nature of the world. But I can assure you that that discussion is happening right now on the board at the World Bank Group.
It's a very complicated discussion, it's a very sensitive discussion. But it's one that our 188 member governments are going to have to resolve. It's not my choice. I can't dictate how that happens because we are a multilateral institution. We're an institution that is governed by 188 different countries. Now, multilateralism is very difficult and very complicated, but also very powerful. So my conversation with President Widodo was to simply say we heard you, we know that the world is changing, we know that organizations have to evolve.
I simply informed him of all the changes that I have taken the organization through over the last two-and-a-half years that I think most people don't understand. I hope I was able to express that we've changed in a way that we think, that he will find very helpful to Indonesia. As for the specific amounts, maybe I'll ask Rodrigo to talk about the specific amounts for this year. Yes.
COUNTRY DIRECTOR RODRIGO CHAVES: Thank you, Dr. Kim. The World Bank has lent Indonesia already this calendar year $1 billion. IFC has invested another billion dollars and we are discussing right now with Bappenas (the Planning Ministry) and the Minister of Finance, the Blue Book and the lending for next year. We expect to have - thanks to the close collaboration with Bambang, the Minister of Finance, we expect to have an increase, a substantial increase in our lending envelope, consistent with what Dr. Kim has announced for the next three years. Thank you, Dr. Kim.
QUESTION: Hello. My name Ana from Bisnis Indonesia. I want to ask [unclear] is there any advice from you to our President to [unclear] and share during [unclear] and also the currency war?
DR.KIM: The currency war?
QUESTION: Yes, against the dollar.
DR. KIM: First of all I think that in also speaking with the Honorable Minister and also with President Widodo, we're very impressed that this Administration understands very clearly what the most important tasks are. We know that there is an infrastructure deficit and there is aggressive action to close the infrastructure deficit. But also I was very impressed with President Widodo's commitment to investing in human capital, investing in human beings and education, in health care.
At the World Bank Group we think that there are three critically important aspects of growing an economy in a way that's inclusive, and that you have to have growth, and growth is very closely connected to having appropriate infrastructure, whether it is ports, energy, et cetera. The other part though that I think is underappreciated in most parts of the world, is that investments in health and education are not expenditures, they literally are investments in short, medium and long-term growth. We know that and we see that more and more clearly every year, that you've got to invest in your people in order to grow.
Also, the third element is that you need social protection programs, so that people are not falling into poverty with a little bit of bad luck. My sense is that the plan here is a good one and my sense is that as long as this country continues on the path of financial prudence and with the creation of more fiscal space in the last year, I think that there is much more confidence that budgetary matters will be resolved. And the understanding of what it will take to grow at 5.7 percent now and in future years we thought was very, very clear.
Now, we don't know when interest rates will go up, but we're certain that interest rates will go up at some time, probably over the next year. Again, nobody knows exactly when that's going to happen. Here is the key. In June of 2013 during what was called the taper tantrum when Ben Bernanke simply announced that sometime in the future interest rates would go up, what you saw was rapid currency depreciations in some countries. You saw the movement of capital out of many emerging markets. But it didn't happen to every country; it happened in the countries that were not prepared.
So what we're saying to every single developing country is: get your fiscal affairs in order, have very clear and transparent monetary policy, and most importantly, undertake the structural reforms that you know that you need to undertake. Really go after the things that you know you have to improve. Indonesia has structural reforms that they've already announced that they're going to undertake. We're here simply to say, we like your program and let us bring expertise from all over the world to help you do it more effectively and to do it more rapidly. I left my meeting with President Widodo with great confidence and optimism that this will happen in the months and years to come.
QUESTION: Okay, thank you.
