Former Trade Minister of Indonesia H.E. Mr Gita Wirjawan delivered his Keynote Address on the second day of the 6th Asia Think Tank Summit organised by the Economic Research Institute for ASEAN and East Asia (ERIA) and the Think Tank and Civil Societies Program (TTCSP) of the University of Pennsylvania in Bali, Indonesia on 22 November 2018.

1. 2018 ASIA Think Tank Summit
November 22, 2018
Nusa Dua Beach Hotel & Spa, Bali
Gita Wirjawan

2. 1
An Ever Changing World

3. 2
An ever changing world
• Climate shift
o Population growth
o God forgives, people often forgive, nature never forgives
o 3,000 Gigatons of Detectable Carbon on Planet Earth

4. 3
An ever changing world
• Economic shift
o Decline of the price of money (demographics and quantitative easing)
S&P500
Pharaoh Tutankhamun
1332-1323 BC

5. 4
An ever changing world
• Economic shift
o Rising gap between inflation of financial vs real assets
o Reduction of meaning of globalization
o Catalyst of populist narratives
Source: Goldman Sachs
The great disconnect
Real economy prices

6. 5
An ever changing world
• Economic shift
o Gap between Moore’s law vs humanity
o Infusion of Info-tech and Biotech
o Control of Data

7. 6
An ever changing world
The last major trade wars in 1930 Smoot-Hawley
Tariff results in increased 900 import tariffs
by an average of 40 to 48 percent.
• Economic shift

8. 7
An ever changing world
• Ideological Shift
o From Defined Benefit to Defined Contribution
o Decline of Centrality with ever-growing populist narratives
Communism
Fascism
Liberal
Democracy
?
Socialism with
Chinese
characteristics
Liberal
Democracy
Pancasila

9. 8
An ever changing world
• Peace and stability
o No continuation of global economic growth without peace and stability
o 2,000 years of peace and stability in ASEAN

10. 9
Where is Indonesia?

11. 10
Where is Indonesia?
Sources: OECD, CIA World Factbook, World Bank
Indo-
nesia
Malay-
sia
Viet-
nam
Singa-
pore
Thai-
land
Laos Myan-
mar
Brunei Cambo-
dia
Philip-
pines
China
Roads (km) 496,000 144,000 206,000 3,400 180,000 40,000 34,000 3,000 44,700 216,000 4,106,300
Electricity
consumption
(kWh per
capita)
730 4,345 1,272 8,689 2,465 300 153 7,603 234 606 4,039
Lending
rates (%)
12.6% 4.6% 9.5% 5.4% 6.8% N/A 13.0% 5.5% 11.7% 5.8% 4.4%
Deposit rates
(%)
7.0% 3.0% 5.8% 1.0% 2.0% N/A 8.0% N/A N/A N/A 1.75%
Interest rate
differential
(Lending vs
deposit
rates)
5.6% 1.6% 3.7% 4.4% 4.8% N/A 5.0% N/A N/A N/A N/A
Banking
penetration
(% of 15yo+
with
accounts)
36% 81% 31% 96% 78% 27% 23% N/A 22% 31% 79%
Connectivity and financial inclusion

12. 11
Where is Indonesia?
Connectivity and financial inclusion
Indo-
nesia
Malay-
sia
Viet-
nam
Singa-
pore
Thai-
land
Laos Myan-
mar
Brunei Cambo-
dia
Philip-
pines
China
Population
(thousand)
264,510 31,164 95,415 5,740 68,298 6,858 53,550 429 16,005 103,797 1,388,233
Internet
penetration
(%)
50.4% 78.8% 67.1% 81.2% 83.5% 21.9% 25.1% 75.0% 25.6% 55.5% 53.2%
Smartphone
penetration
(%)
20.7% 64.1% 26.4% 85% 40.5% N/A 80% N/A N/A 23.3% 51.7%
Smartphone
users
(thousand)
54,494 19,967 25,162 4,890 27,628 5,829 42,840 538 12,483 24,173 717,310
Number of
universites*
(unit)
693 103 4193 60 167 92 163 12 56 1,9233 2,845
Number of
student**
(thousand)
689 1,236 1,4063 424 2,000 76 8901 12 2163 3,3183 23,9102
Remarks:
* Number of university and college
** Number of tertiary student
1 Data in 2004
2 Data in 2012
3 Data in 2014

13. 12
Where is Indonesia?
Notes:
Labor Force: World Bank; Productivity: GDP at Constant Prices per Worker using 2013 PPP – Asia Productivity Organization (APO) Databook 2018
Productivity Growth: CAGR 2005-2013 – Asia Productivity Organization (APO) Databook 2018
GDP (PPP) per Capita as of 2017 (IMF); Bachelors: Bachelors Degree Holders as % of Population Aged 25+ (UNESCO Statistics)
Productivity
GDP (PPP)
(US$/capita)
R&D Spending
(US$/capita)
Bachelors
(% of Population
Aged 25+)
Labor Force
(millions)
PPP adjusted
(US$/person)
Growth
(%)
Singapore 3.4 131,900 1.3% 89,100 1,608.9 28%
Brunei 0.2 161,900 1.3% 75,300 N/A N/A
Malaysia 15.4 56,400 2.0% 27,300 256.9 16%
Thailand 39.1 28,300 3.5% 17,400 52.7 11%
Indonesia 127.1 24,900 3.6% 11,900 8.1 7%
Philippines 44.6 18,700 3.8% 7,860 5.4 17%
Vietnam 57.5 10,200 4.5% 6,510 9.9 7%
Laos 3.6 11,500 5.3% 6,580 N/A N/A
Myanmar 25.4 10,600 2.6% 4,750 N/A N/A
Cambodia 9.3 6,200 4.9% 3,940 N/A 2%
Total ASEAN 325.6 23,400 3.0% 11,700 N/A N/A
vs China 786.7 24,000 7.1% 15,500 298.6 3%
Marginal Productivity

14. Where is Indonesia?
• Democracy in a Muslim-majority nation
• 12 Muslim Nobel Prize winners worldwide (1.4%) out of more than 900 Nobel
Prizes (1901-2018)
13
Largest Muslim populations
Muslims in
millions
Percent
Muslim
1 Indonesia 203 88%
2 Pakistan 174 96%
3 India 161 13%
4 Bangladesh 145 90%
5 Egypt 79 95%
6 Nigeria 78 50%
7 Iran 74 99%
8 Turkey 74 98%
9 Algeria 34 98%
10 Morocco 32 99%
11 Iraq 30 99%
12 Sudan 30 71%
13 Afghanistan 28 99%
14 Ethiopia 28 34%
15 Saudi Arabia 25 97%

15. Where is Indonesia?
Judicious spending on education and healthcare in 2019
14
487,9
444.1
419,8
419,8
390,1
20192018201720162015
122
65,9
92,3
104,9
111,1
20192018201720162015
 Fund will be allocated to 49 gov’t hospitals in
160 cities
 Indonesia healthy program will accommodate
96,8 million people and 10 million family by
providing health insurances and coverage
 Indonesia Smart Program will provide
scholarships up to 20.1 million of students and
471.1 thousands through Bidik Misi program.
 27 Thousands students will be given
scholarships to pursue higher education in top
universities globally.
 The budget will also allocated for teachers’
training and compensation
BUDGET ON EDUCATION
(IDR Trillion)
Sources: Presidenri.go.id

16. 15
How can Indonesia compete?

17. 16
How can Indonesia compete?
Country Global rank*)
R&D Spending
Nominal
(US$bn)
R&D Spending
US$/capita
Singapore 2 8.7 1,609
Japan 6 170.8 1,344
Hong Kong 7 2.7 373
Taiwan, China 15 32.4 1,384
Malaysia 18 7.6 257
Australia 21 23.3 987
Korea, Rep. 21 91.6 1,518
China 28 409 299
Thailand 32 3.6 53
Indonesia 37 2.0 8
Philippines 47 0.5 5
Vietnam 56 0.9 10
Laos 83 N/A N/A
Cambodia 90 N/A N/A
Myanmar 131 N/A N/A
Asia Pacific Most Competitive Economies
Source:
Global Competitiveness Report 2015-2016, *) out of 140 economies; Gross Domestic Spending on R&D as of 2010 (OECD)
Indonesia (both the government and the private sector) must invest more in
research and development

18. 17
How can Indonesia compete?
Indonesia needs to modernize its educational system, with a particular
focus on STEM as to embrace technological innovation

19. 18
How can Indonesia compete?
• Resolutely sticking to the narrative of human capital development and
connectivity development
• Cumulative GDP (until 2045): US$150 Trillion
• Cumulative spending (until 2045) for human capital development: US$ 5 Trillion
• Cumulative spending (until 2045) for connectivity development: US$ 5 Trillion
755.1
893 917.9 912.5 893.3 860.9 923.3 1,016 1,069 1,125 1,186
6.2%
6.5%
6.0%
5.6%
5.0% 4.9% 5.0% 5.1% 5.2% 5.3% 5.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
Indonesia GDP nominal and growth
14,000
2045

20. 19
How can Indonesia compete?
Ride-Hailing/
Fintech
E-Commerce
Indonesia is getting a taste of technological innovation/disruptions

21. 20
How can Indonesia compete?
• Importance of sustaining democracy/Pancasila
o Maintaining peace and stability
o Ensuring sustainable development
o Embracing technological innovation, while eschewing data dictatorship

22. 21
The Future
• With self-efficacy (mentally un-colonized), perseverance, and luck,
Indonesia/ASEAN is on a path to greatness
MAFGA (Microsoft, Amazon, Facebook, Google, Apple) at US$4 Trillion would be
the World’s 5th largest GDP
2018 2030 2045
Indonesia/ASEAN, 4
Top 10 GDP at PPP by 2030 & 2045

23. 22
The Future: Indonesia in 2045
• Economic Equity
o Robust GDP US$14tn (nominal)
320 Million Population
US$43,000 (per capita)
100% Trade/GDP ratio
o Connectivity/human capital 25% Tax ratio
development  50% Debt/GDP ratio
 100% Market capitalization/GDP
 100% Bank/GDP ratio
2 Million Km of roads
1 Million MW electrification
95% financial inclusion
150 Million tourist arrivals/year
4 Doctors per 1,000 people
4 Hospital beds per 1,000 people

24. 23
The Future: Indonesia in 2045
• Political / Geopolitical / Social Equity
o A thriving democracy 3rd largest democracy
30% Gini Ratio
Peace and stability
Data protection
o It’s all about soft power Top 5 nations in Olympics medal
tally standing
10 Nobel prize winners
Soccer World Cup Champion
Dangdut-ization of the world

25. Thank You
Gita Wirjawan
Chairman, Ancora Group
gita.wirjawan@group-ancora.com