Kelas Menengah Digempur Ketidakpastian - Chatib Basri | Endgame #216 (Luminaries)

Summary

In this engaging episode of Endgame, Gita Wirjawan discusses crucial topics with Chatib Basri, focusing on the challenges faced by Indonesia's middle class amidst economic uncertainty and global shifts. Chatib Basri shares insights into his life and education, highlighting the importance of investment in human capital and structural reforms to support economic growth. The conversation touches on geopolitical issues, education, and the digital age, emphasizing the need for Indonesia to adapt and evolve in a rapidly changing world. Strategies for improving educational systems and aligning with global economic shifts are explored to foster a resilient middle class.

Highlights

• Chatib Basri discusses the misconceptions about focusing only on poverty alleviation and emphasizing the importance of the middle class in economic policies 💼.
• The significance of education and training to uplift the middle class is explored 🎓.
• The need for structural reforms to ensure investment and economic growth in Indonesia 🚀.
• Chatib's personal insights into the importance of legal certainty in economic development ⚖️.
• The conversation navigates through the impact of geopolitical dynamics on Indonesia’s economy 🌏.

Key Takeaways

• Governments often overlook the middle class, focusing primarily on the poor and the rich 🤔.
• Investment in education and training is crucial for economic development 🎓.
• Indonesia needs to improve legal certainty and investment climate for better economic opportunities 🌍.
• More comprehensive tax management and digitalization can boost Indonesia’s economic stability 📊.
• Adapting to global economic changes is essential to overcome the challenges faced by the middle class 🌐.

Overview

In this episode, Gita Wirjawan engages in an insightful conversation with Chatib Basri, shedding light on why Indonesia's middle class is often left out of economic policies. Basri argues that while the government focuses on poverty alleviation, the middle class, which is essential for economic stability, remains unsupported, leading to potential economic disparities.

Basri emphasizes the significance of education and training in empowering Indonesia's middle class. He shares personal anecdotes about his educational journey, highlighting the need for systemic changes in Indonesia's educational infrastructure to prepare citizens for future economic challenges. Investment in human capital, he argues, is a cornerstone for national growth.

The discussion also touches on geopolitical shifts, where Basri and Wirjawan explore how Indonesia can strategically navigate through international dynamics. They highlight the importance of legal certainty and adaptive policies to attract foreign direct investment, ultimately benefiting the middle class and fostering economic resilience.

Chapters

• 00:00 - 02:00: Introduction and Guest Background Chatib Basri points out the issue of governments focusing mainly on the poor while the rich benefit from development, neglecting the middle class. He emphasizes the lack of specific policies for the middle class and suggests that this oversight leads to dissatisfaction and religious tendencies among Indonesians who have to navigate governmental interactions.
• 02:00 - 13:00: Importance of Education and Personal Journey This chapter delves into the critical importance of education in navigating the complexities of modern governance and economic development. With a focus on what is termed 'government 4.0,' it highlights the challenges posed by rapid advancements and the risk of governments lagging behind in technological and economic spheres. Furthermore, the chapter discusses the pressing issues of disparities in opportunity, wealth, and income. It raises concerns about centralized economic development and considers strategies to address these disparities, emphasizing the role of education in enabling individuals and societies to adapt and thrive amidst these uncertainties.
• 13:00 - 23:00: Challenges in Higher Education and International Representation The chapter discusses challenges in higher education related to quality discussions and intellectual engagement. It highlights the lack of a critical mass in the audience, which is necessary to foster an atmosphere of intellectuality and ensure hope for the country.
• 23:00 - 36:00: Economic Challenges and Government Policies In this chapter, the discussion is introduced with a friendly interaction between the host and Chatib Basri, a distinguished public intellectual. The conversation begins with a brief mention of Chatib's background, including his date and place of birth, as well as a prompt for him to share about his educational background and experiences in various social institutions during his childhood.
• 36:00 - 53:00: Global Economic Trends and Impacts The transcript seems to be more of a personal narrative rather than focusing on global economic trends. It mentions the speaker's family background, specifically their parents originating from West Sumatra and moving to Jakarta. The speaker was born and raised in Jakarta and attended Trisula Elementary School.
• 53:00 - 64:00: Middle Class Challenges and Inequality The chapter explores the challenges faced by the middle class and issues of inequality. It starts with a personal anecdote about attending schools close to home, which suggests a certain socioeconomic stability in being able to access quality education nearby. However, the narrative quickly shifts to address how this very stability and access can contribute to stereotyping and inequality. The discussion implies that while convenience and quality education options are available to some, they are not universally accessible, thus perpetuating social stratification.
• 64:00 - 84:00: Technology and Future Challenges The chapter "Technology and Future Challenges" reflects on the evolution of certain societal structures and family traditions. It particularly focuses on how knowledge about distant places became more accessible over time. A specific family is discussed, where the father worked as a 'Segen' in the workforce—a term linked to the Ministry of Manpower, which underwent several name changes before settling on 'Department of Manpower, Transmigration and Cooperatives,' between 1967 and 1978. These institutional roles and changes are echoed through a personal lens, emphasizing a familial tradition of having dinner together, highlighting how technology and societal shifts intertwine with personal and communal practices.
• 84:00 - 107:30: Geopolitics and Global Strategies This chapter discusses the daily routine of a family during dinnertime, where the father, who is a soldier, shares stories with his children. The time is specifically mentioned as around 7 o'clock, indicating a structured daily practice of coming together and sharing experiences.
• 107:30 - 123:00: Political Climate and Global Shifts The chapter discusses the influence of biographies in shaping perspectives and inspiring individuals, referencing personal stories and interactions with historic figures like Peron and Mao Zedong. The narrative reflects on how these stories indirectly motivate interest and provide inspiration, especially to younger audiences.
• 123:00 - 130:00: Conclusion The chapter titled 'Conclusion' briefly mentions the narrator's father's younger brother, Asrul Sani, who is identified as a director and writer.

Kelas Menengah Digempur Ketidakpastian - Chatib Basri | Endgame #216 (Luminaries) Transcription

• 00:00 - 00:30 Chatib Basri: The mistake is that governments in many countries in the world always focus on the poor. Then the rich enjoy development but there are no specific policies for the middle class. So even though they are given tax freedom, they don't enjoy it. One of the reasons why many Indonesians are religious is because they have to deal with the government.
• 00:30 - 01:00 because the uncertainty is so high. What I'm worried about is government 4.0. Government will definitely be left behind. But yes, the aftermath is a certainty. How do we address disparities in opportunity, wealth, income, and centralized economic development? what about economic development?
• 01:00 - 01:30 Education, training, no longer possible. The intellectuality or atmosphere at the university in quality discussions does not appear because the audience is not there. Therefore, a critical mass must also be raised to ensure that this country has hope.
• 01:30 - 02:00 Hello friends, today we have my close friend Chatib Basri who is also an extraordinary public intellectual. Well, thank you very much for visiting. Thank you Git for being invited, it's an honor. Lu was born on August 22, 65 in Jakarta. Tell me about your life journey. The education process at home, at school, in other social institutions, what was it like when you were little?
• 02:00 - 02:30 What is this probably called? Maybe this is a stereotype of people who grow up and live in Jakarta. So my parents are father and mother from West Sumatra, but they then went to Jakarta. I myself I was born in Jakarta and grew up in Jakarta. So when I was in elementary school, I was at Trisula Elementary School.
• 02:30 - 03:00 yes, near the house in the South area. Cool school. Just calm down. Lenteneng yes. Then he went to middle school at Kanisius Middle School. You were in PL, right? Wow, cool. Canisius High School. Continue then study at FEUI. So it's always in the neighborhood or when the school is no more than 5 kilometers from the house. So that's why it's stereotyping. So maybe also what is it called?
• 03:00 - 03:30 Knowledge about places further away only emerged later. Well, uh in that family uh that father uh used to be Segen uh the workforce. At that time, the Ministry of Manpower was called the Department of Manpower, then it was changed again to the Department of Manpower, Transmigration and Cooperatives. That was from 67 to 78. Well, one thing that probably stuck with me was that we had a tradition of having dinner at home.
• 03:30 - 04:00 Now. So at night we are just kids, we can go play but around 7 o'clock we have to sit down, we eat together. Well, there he tells a lot of stories because what is his name? as he is also a soldier yes.
• 04:00 - 04:30 Okay. Hey, it's time to retire, Major General. So he tells a lot about characters, his friends, that's something that I think indirectly gives inspiration. So I'm interested in reading about the biography. Wow. Because he told me about, for example, uh, a meeting he had at work with, for example, uh, what was his name? eh Peron, Evita Peron yes. Wow. Then what year was Mao Zedong in 60? So for small children, like me at that time, this is something that is very inspiring. That's why I'm very interested in reading biographies.
• 04:30 - 05:00 Well, my father's younger brother is Asrul Sani. Director and writer yes.
• 05:00 - 05:30 This is a person who has influenced my life a lot and these people are the opposite of each other, which is Hmm. This father is a typical military person, very strict, everything is according to the corridor, according to the rules. Meanwhile, his younger brother has no rules. So, for example, one day I said I wanted to go to school, then he asked me something like this, what do you want to go to school for?
• 05:30 - 06:00 Then I told him to pass. That's what he said was a consequence of school, that's not the purpose of school. So if you don't understand what you're going to school for, you're better off not going to school. Confused, right? Hmmm. When I came home I met my Babe, he said don't listen to him. So your father's younger brother. Dad's younger brother. Oh yes. So this comes with another perspective. So when I went to school, I left, took a master's degree, he said he gave me a message at that time.
• 06:00 - 06:30 You go to school, the textbooks are the same everywhere, yes, you learn the same, but what's different is the environment. If you then can't learn and live intellectually in that place, there's no point in just looking for learning materials. So the aim of school is actually only to train us to think systematically. Ready. Because at work you won't use rote memorization. How are you doing? Um, I'm an ordinary housewife, but someone who is very obsessed with education.
• 06:30 - 07:00 Yes. Oh, that. This is interesting. So when I finished FEUI, he really wanted me to do a master's and PhD. Because he said that if you could become a teacher, that's really something, right? that's very noble. So that's still typical of Hmm. That's your mother, not your father or uncle. No, Dad.
• 07:00 - 07:30 That's from that Mrs. And what is this Git called? I'm probably not a good example of being ready. That's right. Regarding what people have a goal in life that has been clear since childhood. Hmmm. What I mean is, maybe I don't know if this happens in the current generation, right? At that time, I was in high school and frankly I didn't know what I wanted to be.
• 07:30 - 08:00 Yes. Then I got involved in the theater too, right? Yes yes. Yes, because frankly I don't know what I want to do. So because I'm more interested in theater, I'm more interested in literature. At that time I thought it would be better for me to study at IKJ. It's fun, yeah. It was studied because of the influence of Om. Wow, this. Is not it? Continuing to study theater, I became an astrada of all kinds. But in those days, my Babe was a soldier.
• 08:00 - 08:30 So he said if you want to go to theater school where do you live? This isn't the current era where people can make money in creative industries, right? That's right. At that time he said he couldn't, if you wanted to be someone, the definition of someone was an engineer, an engineer, a doctor, or an economics or law graduate who went to school like that. Yes So that's why I have to go in, can't IKJ, I have to go in to take a major like that. Well, I'm not interested in economics. I'm really not interested in economics, I'm serious. That's why I say this is a lot in life that goes to Hmm.
• 08:30 - 09:00 But I believe in evolution. Ha ha ha. So I'm not interested in economics. So I think because I don't like economics, because for me economics is something where everything is calculated by profit and loss. Hmmm. This isn't humane. Meanwhile, people in the theater world feel like that, right? The human is taller.
• 09:00 - 09:30 So I thought it would be better if I majored in psychology or politics. Well, here is the list at that time, his name was Pemaru. Okay. List of bruisers. I put politics as the first choice. At that time, you had to choose two faculties. Hmmm. So, then I'm confused about what the second option is? A friend said to you, what do you want to choose second? I don't know, maybe I'll take economics. Then he said like this, that can't be done. FEUI has high competition.
• 09:30 - 10:00 So if you want to prioritize you don't take it into account. Well, if so, if you enter politics, if you don't get politics, you certainly won't get economics. Wow, my God. So he said you should just change your priorities first to the economy, then second to politics and he said please don't accept that either. I'm me and I also believe that he won't accept me, right? So I circled the economy, then went crazy. the second policy is accepted.
• 10:00 - 10:30 Accepted at FEUI, my first reaction was death. I'm going to school for something I don't like, right? I'm dead. Wow. What is this like? So, from there I then tried to learn how to make economics so that I could understand. This is because my cognitive abilities stopped in 6th grade. Ha ha ha. So I have to make it simple, understandable so that I can make it more human. Well, that's my way of making economics something interesting and I like that.
• 10:30 - 11:00 But you have confidence that you can survive in the economy because maybe your foundation is actually very strong. Is not it? Yes, hopefully yes, but it was that time. Frankly. But at that time it came together. Is not it? Once you've entered there, you can't fail, right?
• 11:00 - 11:30 So you have to survive. It's like there's no choice. Yes, no choice, right? If not, what was your GPA below? Two come out, right? If I go out, I won't be able to take responsibility for my mother and father, right? It's tough for that. So you have to fight there. In the end, what I did was make it something relatable. For example, like this, sorry if it's a bit technical.
• 11:30 - 12:00 Mathematics yes. Yes. I believe mathematics is a language, it's a language. Ready. So it's just the way it's delivered is different. What's the easy way? There we see the cause and effect of everything. Well, for example, there is one model, yes, the reason why you fall in love is because you meet often. In Javanese, it's "Witing tresno jalaran soko kulino." So, if I created the model I imagined at that time, if the dependent variable was falling in love with Y, then it would be determined by the frequency of meetings X, Y is a function of X, right? If the beta coefficient is half, I just meet twice and I will fall in love.
• 12:00 - 12:30 Well, the danger is that if the beta is X over X plus 1 it is asymptotic. That's what people might call friendship. Yes Friendship, yes, never got it. Well, that's how I understand it.
• 12:30 - 13:00 That's right. How long is the gap between taking S1 and S2? Wait how long? Nine two finished S1, nine four took S2. Three years, yes. Okay. Yes Well, don't use it, don't use it, that's another story later. That's important too. Are you talking to you directly after you graduated from BA or during that gap? Uh, after graduating from S1. He said you have to go to school he said. You have to be a teacher, he said. Wow. But you need two or three years to make the decision to advance to second grade.
• 13:00 - 13:30 Actually, at that time it was more because scholarships weren't available. Okay. Yes, so we had to wait and at that time there were no more scholarships for economics in America. At that time, it was only taken for the environment because it was still new or eh fields like urban planning or whatever. Okay. Okay. Iwan Jaya Azis really looks up. Yes, yes, yes. Hmmm. Not a lookup.
• 13:30 - 14:00 I'm an assistant. He sometimes talks about you like that, you're his protege, he's really the best. Yes Both of us are members of the MAS, Mutual Admiration Society. So he scratched my back, I scratched his back like that. Ha ha ha. But he didn't want you to go to America at that time? So here's the story. That's when Iwan left at nine or three or about nine after I graduated. Ready. He went there and the scholarship at that time was still very limited, there was no LPDP yet. So if we want to go, the only possibility is Fulbright from AMINEF.
• 14:00 - 14:30 Okay. Yes, uh the Ford Foundation and that at that time didn't exist for the economy. So I got a 93 scholarship, actually Git. That was the end of England. Ready. No school, the school hasn't got it yet, but the scholarship has got it. But there were requirements at that time. Once again I say this is not a good example. There was a requirement at that time to have a course for about two months or three months, for something like orientation, you know.
• 14:30 - 15:00 English varies at the British Council. That's every day at 7am. I have a hard time getting up in the morning. Ha ha ha. But never mind, there's no choice, do it again.
• 15:00 - 15:30 Just for fun, I met Mari Elka Pangestu. He used to be a lecturer at FEUI. Yes He says where are you going? I've received a scholarship from the UK. What school? Not know. Then he said, "Why don't you go to ANU?" Because that was his previous school. Yes Then I said, is it nice there or not? Yes, okay, why try? I applied like that. I don't know why I was accepted and it's an accelerated program. So you can go straight to the master.
• 15:30 - 16:00 The problem is there is no scholarship. But in Australia there are no scholarships, but there are schools. The UK has a scholarship, there isn't a school yet. Now. Then we met Mbak Mary again with Mr Anwar Nasution. I was accepted at ANU too, what do I do? Yes He said, eh, just try looking for a scholarship. How to do? There are people at the Asian Development Bank.
• 16:00 - 16:30 Ready. His name is Peter McAwley who is an Indonesian expert. You try sending a letter to him asking for a scholarship. I said I didn't know Peter. He said just try it, you're already starting to try and like writing, he said. Just send the written material. So I wrote a letter to Peter McAwley, without knowing him, he said that I had been accepted at ANU and wanted to go to school but there was no scholarship yet.
• 16:30 - 17:00 So, keep giving him a collection of writings so he can read in Indonesian. Send it to him. Suddenly one day Git has DHL. Wow. Letter from DHL. At that time, I also didn't know why DHL had to unflop it. Hmmm. So what is this look at from the Philippines? I opened a letter from Peter McAwley, he said, eh, we are interested in paying for your scholarship. Why don't you go to ANU?
• 17:00 - 17:30 Wow. So you can, right? Thank God. Well, on the other hand, I'm too lazy to wake up at 7 o'clock in the morning, right? So I took a decision that was not systematic at all, random. That's why I'm amused sometimes. If economics always assumes what is it called? economic agents are rational. In fact, many decisions are made impulsively. So then I said oh I've got a scholarship, it's okay, I wake up at 7 every day. I decided to go to Australia. Stop. Continue straight to S3. Uh, in Australia I finished my master's.
• 17:30 - 18:00 S2. Then we met Hal Hill. Hey eh. Professor Hal Hill. He was interested and then he said to me, "Hey, why don't you do a PhD here at ANU? I'll be happy to be your supervisor." So then he wrote a letter, I'm looking for another scholarship, he told house eight that he wanted to be my supervisor. Well, I only waited about a year because I went home for a year and then the next year I started my PhD.
• 18:00 - 18:30 This is what happens in the future so that there will be more Chatib Basri. How can we scale up? What we often say through this platform is how small Indonesia's representation is. As a student or teacher outside.
• 18:30 - 19:00 This is part of the process for us to internationalize the narrative. Yes, when we were drinking coffee in America, there were almost 400,000 Indians, almost 400,000 Chinese. Indonesia only 8500. In England 200,000 from China. There are only 4,000 schools in all Indonesian campuses. How do you institutionalize them? Good question because like this, there are several factors.
• 19:00 - 19:30 Hmmm. I used to think that the problem was the availability of funding. Ready. That's why, if you remember at that time, we together in government allocated a budget for the LPDP, right? Yes 2013 was the first time LPDP existed. Because we think about how good children can be accepted into top schools.
• 19:30 - 20:00 It was already running Git at that time. I remember when I was a visiting fellow at Harvard in 2015, after finishing as Minister of Finance, I invited students and Indonesians at Harvard to eat at Yukaku in Harvard Square. It was quite a restaurant because there were only 11 of us in total. Imagine it, right? Yes. That's enough, I definitely like eating there. Well, I'm even cheaper. Yes
• 20:00 - 20:30 even cheaper. My budget is lower than... Well, yesterday, last April, I went to Kennedy School. There are already 20 Indonesian children accepted this year. Only at Kennedy School. Not at Harvard Business School, not at anything like that. So this means that the numbers have started to increase. But then this question arises from people who have privilege and are actually smart.
• 20:30 - 21:00 Yes, so he is provided with scholarship facilities, his English is good, his SAT is good, his GRE is good, he can go there. The problem is that not everyone can have it. So, this is the difference between us and China, you mentioned China or India. He nurtured them, he prepared people to enter top schools. This is what is possible in the future, in my opinion, LPDP must think about not only providing scholarships, but also preparing people to enter top schools.
• 21:00 - 21:30 Trained for the SAT, GRE, these are questions, practical questions actually, right? So that more and more people can get in there. That's one stage. The second is why this is a strong atmosphere, uh, the intellectual or atmosphere at the university in discussions that I don't know is the definition of strong quality. It doesn't appear because the audience isn't there. Hey. Yes. Lo spent as a fellow at Stanford yesterday when we met as fellows at Harvard.
• 21:30 - 22:00 If that's the case there, every day we encounter an environment that forces us to continue reading, to continue discussing, right? Yes, whether we like it or not, we don't want to look really stupid, so we have to read, so we have to...
• 22:00 - 22:30 We can't smoke. You can't smoke it, right? Yes, right? Because there will be a challenge. Well, we don't have milieu or an environment like that. Therefore the critical mass must also be raised. Such an atmosphere must be created. Now it's much better, where there are Brown Bag seminars on campus that have started to take place.
• 22:30 - 23:00 But what is upskilling, uh, for, what is it called, for uh, to scale up, yes, it's not easy here. Because the factor is not only funding, but the environment. Earlier you mentioned about Mas Iwan, Iwan Jaya Aziz. He went to Cornell probably because he needed an audience, right? Yes, because here it might be difficult for him, right? He's far away. Well, exactly. Yes, right? He needs to be at Cornell if that's how he can grow.
• 23:00 - 23:30 That's what we have to do. Well, in my imagination at that time, but this... politically it wasn't easy. That's what we have to think about if Indonesian children go, maybe one day, yes, they will also be allowed to have networks and work outside so that our diaspora can emerge like that. So we could have a lot of representation, more of us are entrepreneurs at Stanford, at Harvard, you know. That's actually our ambassador. Hey. Yes. Hopefully it's like that.
• 23:30 - 24:00 But I also think about how we should civilize it. This is what I see. You are very lucky in your household. Education is a topic that is discussed almost every day at the dinner table. And if we look, 88% of households in Indonesia, the head of the household does not have a bachelor's degree or above. So for us to hope for a massive discourse regarding the importance of higher education is rather small, unless there is luck or an anomaly.
• 24:00 - 24:30 Well, like it or not, this has to be disrupted. Yes, right? In social institutions. If they leave the house, there is a conversation about being able to prioritize any culture. If it's outside, it's called political culture that exists in social institutions, at schools, like in places of worship, like or if you can bring it back to the household.
• 24:30 - 25:00 So that's so that the competitiveness or competition is like what we see in India, in China, in South Korea, Singapore, Taiwan, Japan. How's that? In this case, yes, this is me not because I was invited to this podcast, yes, I'm serious but about this.
• 25:00 - 25:30 We also can't use our perspective from the past to the present. I just have teaching experience, for example. I told my students that you don't need to be serious, let's take a photo, sir. This means the tools are different, right? So, in an era like this, the role of conversations like this in podcasts is very important. Yes.
• 25:30 - 26:00 Because they might see figures and understand that discussions are no longer like in our time, when we go out to meet people. But he hit it digitally. He learned from Endgame. Endgame already has its own segmentation, seriously. I asked my students if they wanted to study seriously and they took Endgame. So what actually needs to be done is to increase media like this. Yes, and it's actually much more effective.
• 26:00 - 26:30 Hey. Yes, it is much more effective to create a condition or environment where people talk about things that really need to be talked about. Yes. Regarding education, regarding inspiration for the future and now, with everyone, almost everyone has digital access, that information can be obtained well. Of course I read your interesting paper, the paradox of the internet. On the other hand, yes, the information that appears can also be chaotic.
• 26:30 - 27:00 That's why the role of education here is also important. Frankly, I don't have a good answer to this question, but I see that the potential for discussions like this is very important. Yes, I'm going head over heels to find out how we can cultivate a culture that is connected to superlatives.
• 27:00 - 27:30 Yes, right? And if you look at China, Singapore, India, the competition is very high. And with the current situation, I see that the only or one of several ways to disrupt education is whether we like it or not, it has to be outside the household.
• 27:30 - 28:00 Yes, right? And if it's outside the household, it starts at school, right? So, in my opinion, it starts with the teacher. I'm in the camp that believes more that I can get a storyteller. He can convert his students to become physicists better than if I recruited physicists who couldn't tell stories. Yes, right? He might be able to convert his students to become physicists, but not as much as if the teacher was good at telling stories. The cognitive minimum can also be accounted for.
• 28:00 - 28:30 Well, it seems that in the future it is important for us to look to increase the number of more qualified teachers. It's already mor country. Because if we want to talk about higher education, yes, or teachers. If you want to get good quality education, it's at a university from its faculty members.
• 28:30 - 29:00 That's right. Just look at all the good schools that have good faculty members. Likewise with high school, with this actually it is easier to be said than done, but the key is exactly what you say. Here, I want to do a test. To what extent do you believe in the interests of democratizing ideas or education. That Indonesia accepts or embraces even the concept...
• 29:00 - 29:30 for our friends in Sumedang, in Lahat, in Bukittinggi, in Tarakan, in Merauke. That means they are open to accepting the coolest teachers from anywhere to teach any subject. Even if he is from Ethiopia, he is the best to teach whatever is needed. Is Indonesia capable of accepting such a concept, such openness?
• 29:30 - 30:00 OK, good question. Because even at UI, what happens is that people who graduate from there teach. Yes, there's a lot. Maybe it has started to open up, let alone imagine people from outside, but... now it has started, it has started that we have to be more open, we have to look for the best one that is available. Indeed, all this time what has happened is that at universities in America, for example, if we graduate from that university...
• 30:00 - 30:30 unless there is nothing like this, no, you can't refuse it anymore, you have to go first to teach at another university and then after a few years you can go back there so you can have a different perspective. We haven't yet, but it's starting now. So, for example, at UI we can start to recruit or accept other people. It's starting slowly, but the idea is very important, in fact, if it can be someone from outside, yes, who has extraordinary skills or understanding.
• 30:30 - 31:00 That would be very helpful. Sometimes we are funny too, aren't we? So there was one time when there was an exchange student. Yes, from Indonesia from UI at Harvard. At that time he wanted to take a lecture on political economics in Andre Schleifer's class.
• 31:00 - 31:30 The funny thing is that when you want to count it as credit on campus, you are questioned as to whether the accreditation is the same or not. What I mean is that when we talk about theories, they are the ones who produce them, right? Apart from that, the topic of the lecture is the Indonesian economy.
• 31:30 - 32:00 So things like that are still a problem, right? This, this is openness. Yes, this kind of openness is important there. In fact, Harvard is very open to inviting you to teach there. Why aren't schools in Indonesia that open to inviting anyone from anywhere as long as the spirit is the best person for the topic I want to teach? I still see this as perhaps an impediment that must be addressed in the future if we really want to scale up and improve the quality of education.
• 32:00 - 32:30 I've started, I've started now and it's much better. But this really has to go further now that foreign campuses are also allowed to start entering Indonesia, right? Yes. Yes You are optimistic that campuses in Indonesia can reach the top 20 rankings in the world. Good. Okay. Now it's like me, I want, I want to flip the narrative, okay?
• 32:30 - 33:00 If we really have ambitions or aspirations, there's nothing wrong with aiming for the top 20 as long as I'm equipped with A, B, C, D, E. I rarely find that. Teachers, educators or school administrators in Indonesia who think like that. The realism is too high, God willing, if we can, we'll go to number 150.
• 33:00 - 33:30 Heeh, heeh. Well, actually you have to play it back. Well, this is what I smell with schools, you don't have to go all the way to Singapore. That's right. Is not it? I was involved there too. So, why isn't it like that? How's that? This, this is indeed a cliché answer when you say it's complex, right? Yes.
• 33:30 - 34:00 Singapore is very serious about what they are doing. By chance, I sit on the governing board of the Lee Kuan Yew School of Public Policy. That's why they are willing to recruit the best professors to teach there. Yes. Just look at the Lee Kuan Yew School of Public Policy, Danny Quah is one of the best economists in the world. Andrew Rose at his business school is one of the best economists in the world. And they are willing to provide endowment, then support to make the school eh...
• 34:00 - 34:30 LKY is probably number six in the world for School of Public Policy. In our case, funding is still a problem. The second thing I said earlier is the limitations of faculty members. Yes, this is the case, but this can't be an excuse for why we don't want it, right? In fact, if you look at the potential, there are already many good Indonesian children in top schools, which should actually be provided. The scheme for them then is whether they stay there to network here or we also ask them to teach here. For example, split like that. Yes, in a year he can be half here like that.
• 34:30 - 35:00 How long do you think it will take us to enter the top 20? If we don't do anything it might even take a long time...
• 35:00 - 35:30 But if the mindset is changed in that way, Singapore can do it quickly, you know. Yes Yes, the issue is not necessarily a matter of funds. Hey. Yes, because if you look at it from this, it's like this, if you look at the education fund, it's a matter of where the allocation goes, right? Yes, about where the allocation goes. The amount for education funds is large, but some of it is taken for regions and various things.
• 35:30 - 36:00 Actually, if it's allocated well, just start with a few pilot projects, maybe it can be done in a relatively short time, like... above, great. Yes Okay. Enough of education. Let's move on to the economy, shall we? I get nervous when... This is an area of ​​expertise, you know. How do you see? Hey, let's start with the global economy first.
• 36:00 - 36:30 Okay. Yes, right? Lu wrote about Trump or the impact of his policy posture. I also chatted about that. Are you worried or not? Near term, mid term, long term. Okay. Hey. Firstly, there is an opportunity, but there is also a risk that must be managed. Okay. Yes. Let's start with Trump's police. Maybe he is, I think he is a very pragmatic person.
• 36:30 - 37:00 Very pragmatic and in the sense of the word it can be transactional so something unexpected may arise from the policy. Hey. If it's profitable then he can change it. The good thing about something like this is that it can somehow be rational, right? Well, but let's assume that what is discussed in the campaign will be implemented.
• 37:00 - 37:30 Yes Start from there. The first thing he wants to do is deport the illegal undocumented, yes, undocumented, yes. But don't forget that in America, unskilled jobs are dominated by this group. So if these are then deported then the implication is that the supply of labor in America will definitely decrease, especially for positions where things like that and there are no substitutes in America.
• 37:30 - 38:00 Yes, there is no substitute. If that is then taken away then inevitably production costs will increase. In fact, as you are fully aware, the cause of yesterday's high inflation in America was the tight labor market, right because some did not return to the labor market while demand rose rapidly.
• 38:00 - 38:30 Well I can see one risk of this is that the interest rate may no longer fall as we expected eh what is it called eh hmm the decline. Or even if inflation rises, the Fed will have to increase interest rates again, right? Then secondly, Trump promised to cut the tax rate. The implication is that the spending deficit in America will increase. If the spending deficit in America increases, inevitably it will have to be financed by debt.
• 38:30 - 39:00 This means he has to issue bonds. If the issue issues bonds, the bond price goes down, the yield will go up. If yields rise for the Fed, it won't be easy to lower interest rates. So the first implication from here is that Indonesia and many emerging markets must be prepared for a situation where a strong dollar will occur.
• 39:00 - 39:30 This is not because the rupiah is weakening, but indeed the XY or dollar index is strengthening against all currencies. Well, this can't be overcome, for example, if we want to continue to intervene in the forex market, what is the limit, right? So, so we will be faced with an exchange rate that may weaken. Then the second is that the interest rate cannot yet go down.
• 39:30 - 40:00 Well, I see all central banks around the world working at the mercy of the Fed. So they can only lower interest if the Fed lowers it. If not, the risk is that the exchange rate will hit. Hey. Yes, right? Well, of course this is an option if we just want to lower it and it doesn't matter if the rupiah depreciates, yes, that possibility is there, but what do we have, we have a trauma of 98 every time the rupiah...
• 40:00 - 40:30 eh falls, people think about the Asian financial crisis. So the implication is that there is limitation or space for monetary policy. because BI may not be able to reduce the exchange rate too far. In these conditions, what the government must be able to do is fiscal. If it's monetary, it's not fiscal. The problem is that our fiscal space is limited. Yes. Well, our tax ratio is still around 10-11%.
• 40:30 - 41:00 At the same time, this year in 2025, eee amortization, what is called interest payment, yes, the interest on debt installments that must be paid may be around 800 trillion. So, if the government has to issue bonds again to pay off this debt, yes, the supply of insurance, what's called the government's bonds, increases, the yield will also increase, so it will be difficult for Bank Indonesia and our cost of funds will be expensive, right? So there is not much room for fiscal expansion.
• 41:00 - 41:30 So, in this condition, the only option available is to carry out structural reform. What is structural reform? Legal certainty, investment climate. I always say that one of the reasons why many Indonesians become religious is because they have to deal with the government. Yes, because the uncertainty is so high, when we apply for something, we never know when it will be finished. The only thing we can do is pray until one day we say, OK, here it is, it's approved, right?
• 41:30 - 42:00 You are the former head of BKPM, I am the former head of BKPM, we know the problems we are facing. So those are the issues we have to address. What are the opportunities with the eee trade war? between the US and China, like it or not, people will think about moving the production base from China.
• 42:00 - 42:30 Well, this is an interesting number. I calculated that the correlation between imports from China in Vietnam and Vietnam's exports to the US is very strong. This means that what is happening is rerouting. Yes. I did the same thing to him for a while. Yes, right. Well, that's what he's going to get. I saw the same one with a surplus of over 100 billion dollars.
• 42:30 - 43:00 Exactly. I see that the same thing doesn't happen to Indonesia. So actually there is room for relocation to move here, right? Yes, keep going. But how can people want to move here if the legal certainty of the investment climate is so high? That's what I think must be addressed if we want to take advantage of the opportunity. If not, what happens? We don't get the investment. China can't enter the US market, it will come here.
• 43:00 - 43:30 Yes. You are a minister of trade, you definitely know the implication is that our imports from China will increase. So, in that sense, I see that on the one hand, there is an opportunity if we want to improve ourselves, but if not, it will be pressure for us. This is the FDI that I often say that enters Southeast Asia every year, which is 200 billion dollars.
• 43:30 - 44:00 From there, Singapore consistently gets 100 to 140. Indonesia 25 to 31. Vietnam, Thailand, Malaysia, the Philippines are 10 to 20. Yes, just use the Tanah Abang approach, if Indonesia wants to increase economic growth, you don't need to talk about monetary, you don't need to talk about fiscal, we just talk about the letter I. Yes, that's right. And if you want to look for 3% above our baseline of 4 and a half to 5%, that's approximately 40 billion dollars of GDP of 1.4 - 1.5.
• 44:00 - 44:30 Yes, actually it rose from 31 to 71, the figure of 71 billion FDI dollars is also still far below what Singapore has received. But yes, the aftermath is a certainty. Yes Will I be okay or not if I put in the money. That's right. And in the investment community, they are not too absolutist. Today doesn't have to be perfect. The important thing is that tomorrow is better than today. The day after tomorrow is better than tomorrow. Next week is better than the day after tomorrow.
• 44:30 - 45:00 That's what they're looking for, directionality. Actually, there is a solution, right? There is. And I really want to believe in reshoring, friendshoring or offshoring. But I see that China is already too massive as an industrial base. And their marginal productivity is very stable.
• 45:00 - 45:30 Then the rare earth capabilities are very well established. Even if we can, we can get the least. Yes, right. I'm not too worried about the rules of origin for rerouting, which is the correlation between Vietnam and incoming and outgoing from China and out to America. But in the end, we have to fix things first, that's right. Yes, it is true.
• 45:30 - 46:00 That's right. Kudu mor country. The key there is actually because I said earlier that monetary policy has limited fiscal space. So if you want to grow, the only solution is FDI. Yes Especially if we want to look for domestic capital formation. Yes, the money supply to GDP ratio is only 45%. Well, that's very limited.
• 46:00 - 46:30 That's right. This is a good very good very good point yes. Because if we look at it like this, it's stupid to count tails, right? Ready. Our tail is now about high. So if we want to grow by what number? 7% say. We need it to be around investment over GDP of around 48. Yes, if our GDP is now 23,000, we need investment of around 11,000.
• 46:30 - 47:00 The problem is that our domestic savings are at 37%. 37% 40 means around 8,000. This means that domestic resources are not enough. So if you really want to grow it has to come from the outside. That's it, that's it, there's no other option, right? So even though we have tried to do this, the source of eee financing is limited here. What should we do to increase the tax ratio.
• 47:00 - 47:30 Okay. There are two sure ways. Yes. The first is to increase rates. Rates increased. The second is administrative reform. Well, I want to tell you this about a study that I happened to do with Eee what's his name, a friend, Benjamin Olken and Benjamin Olken from MIT with Rema di Rema Hanna from Harvard, we published it in the American Economic Review.
• 47:30 - 48:00 The first option could increase the rate. So the tax has increased. But the additional revenue is still not that much. Why? Because the tax base is not that wide. So even if you increase the eee what's called the price, even if you increase the rate, the addition isn't that much. If we then lower the rate in the hope that the tax base will expand, that won't happen because compliance is low.
• 48:00 - 48:30 So there is a study from the World Bank which shows that our problem with low tax ratios is largely due to compliance. Yes. Most of the problems are compliance issues. So now the question is how to address compliance issues. So, I'll try to share the study I did with Olken and Hanna. So we conducted a study to see what could be done to increase tax revenues without increasing the tax rate.
• 48:30 - 49:00 Well, what's interesting is that when it comes to taxes, sorry for being technical, but here's what it's called so it's clearer. In the tax there is something called a person who takes care of the tax called AR account representative. Okay. In a small tax office called KPP Pratama. That's one AR from our study that holds 4000 tax payers. Or 150 one-person companies, he has to check his tax files. Maybe he didn't check? It's impossible what he did. He's just looking for maybe 100 tax payers.
• 49:00 - 49:30 Yes, it's the top one, right? Or out of 150 companies, he just looks for 10. So the burden from the tax office in this small office is borne by these 10 companies or 100 people.
• 49:30 - 50:00 Because he doesn't have the capacity to check everything. Okay. So what happened? Companies see that the more they pay taxes, the more data they provide, the more they are scrutinized, there is no incentive for them to grow. Yes So if they reach a certain level he splits. So what's the solution then? We will see that then the top taxpayers are moved from the simple pratama tax office to the intermediate tax office.
• 50:00 - 50:30 Where there are more tax officers, the tax office's burden can be shared among more companies. Well, if that is done it could increase taxes quite significantly. And the cost is very small. So, we pitched this idea and actually MOEF has started to adopt this idea.
• 50:30 - 51:00 So in 2022, if I'm not mistaken, in 2023 they will start adding the Intermediate KPP. Around 38. But this must continue to be added. So in this way there will be more people who are eee doing eee, so the tax office is not just hunting in the zoo, but that's one thing, then the second thing is about compliance. The problem with compliance is data.
• 51:00 - 51:30 Yes. Now the tax exam is good, with the appearance that in the early stages there will definitely be problems with the cortex. So he uses an IT system where the business process becomes more measurable and can be called, eee, automated. But this must also be combined with data access to others. People selling Samsat cars eee e-commerce activities so they can exchange data.
• 51:30 - 52:00 You are an expert on this, okay? Now in an era like this, data is the new oil, right? Profiling is very important. Actually, it can be done because if we can do identification from profiling data on people's behavior, that's right. There's a lot we can do to increase compliance. So from the banking exchange you can cross check if he reports tax X but his banking account Y doesn't match then that can be done.
• 52:00 - 52:30 Well, if this compliance is carried out gradually, I believe the tax ratio can increase. But the condition is that digitalization must be carried out. Is there any hope for this to be done robustly so that you dare to predict that in the next 5 or 10 years this will probably or most likely increase by a certain percentage. The good news is that this idea has been submitted to the government, eee, yes, and the government eee wants to do it and will form something called koati, eee, digital integration.
• 52:30 - 53:00 Where later all data exchange will be carried out, of course this is not an easy process, because each ministry can have sectoral egos. But this process has now started. In fact, the request from the president is that before August 17, the team has started to be formed. Yes, it was just a coincidence a few days ago that Dan met the president to talk about this.
• 53:00 - 53:30 15 20%? Is the tax ratio achievable? According to the World Bank, our tax gap is 6.4% of GDP. So if we are now around 11s to 17s then it will be 17s.
• 53:30 - 54:00 In. Well, this depends on the speed, how fast, if this is committed, everything should be done in how many years. It's enough to align the interests. Yes yes. True, true. But the key is digitalization without that it can't be done. That's right.
• 54:00 - 54:30 What is the extent of EA's development? We are still weak, especially in analytics. I can imagine that yesterday's tax amnesty data could actually be used to detect behavior and everything, right? Yes, actually, one day, for example, I can imagine what a platform that sells food is called.
• 54:30 - 55:00 That one day maybe he will be able to have insurance because if we order Padang food he can know who is at risk of high cholesterol, right? From there the premium can be set. Is not it. Or if we want BLT, for example. People are poor if they hold a cellphone and according to Susenas 90% of Indonesia has a cellphone. The mobility can be detected with Google mobility, right? And what is typical for poor people is that they don't have much mobility because they don't have money, right?
• 55:00 - 55:30 It's impossible for him to go to Bali, he just doesn't have that much mobility. He bought a limited SIM card. So profiling can be done. For tax collection purposes. Exactly. Exactly, right? Exactly. Yes, and it's not just for tax collection, it's also for targeting spending.
• 55:30 - 56:00 So I'll give you an example like that. Electric yes. PLN electricity has data by name by address, otherwise it wouldn't be able to do billing. So if he has data by name by address he knows which households are poor and which are not poor. If this is the data then cross tab with Susenas with e-commerce they have a single ID. We can profile whether people in this household are poor or not. Later, the assistance can be made directly so that these households don't have to pay.
• 56:00 - 56:30 So BLT but directly to households in the form of electricity bills. So actually it's possible. Quite passionate about the challenges of the middle class. Why is this and what will happen in the future? OK, I think this is a serious issue.
• 56:30 - 57:00 So in 2003 the percentage ratio of the middle class in Indonesia was 5% of the total population in 2003. In 2014 it rose to eee eee 18%. So the increase was very sharp from 2003 to 2014 and this continued to increase until 2018.
• 57:00 - 57:30 19 23. 23 yes. In 2019 it fell to 21%, after that in 2023 it became 17. Well, okay, people can argue about how do you define the middle class, but I have one thing that concerns me. So, when we look at the data, we have to be granular, now we can't do it in a general way. So there is an income group of 10% at the bottom, 20%, 30%, 40%, like that. What's interesting is that for the period 2019 to 2023, the income growth for the 0 to 40% income group is still positive.
• 57:30 - 58:00 Although it is decreasing over time. Income class 50 to 80 so deciles 5 to 8 are negative growth experiences. Class 80 to 100 means that the richest 20% grew by 4% in real terms.
• 58:00 - 58:30 So we are dealing with what Branko Milanovic calls the elephant curve, like an elephant. So from the top here it goes down to the middle class then goes up again to the top. Well, this actually explains why people are confused about Indonesia, on the one hand, saying that the purchasing power is weakening, the middle class is shrinking, but on the other hand, there is full consent. People buy iPhones because those who buy iPhones are in the 80s and above, those who spend more than 12 million a month and above. Okay.
• 58:30 - 59:00 But deciles 5 to 8 are classes whose spending is between 800 million and 99 million. This is a negative growth experience where purchasing power has actually fallen. Those who are poor in decile 0 to 4 are why they live relatively well and get BLT.
• 59:00 - 59:30 Yes, there are various types of social protection, there is PKH, so government assistance focuses on the poor and the rich enjoying development, while the middle class doesn't get anything. Yes, classes can actually be in the form of facilities but it is not enough to encourage their growth. The government can say we will give taxes. The problem is that in classes 800,000 to 99, most of them are non-taxable income.
• 59:30 - 60:00 So even though they are given tax freedom, they don't enjoy it, right? So this is an issue that I think is serious. Well, if I may continue, yes. So last September at the Harvard Ministerial Forum I happened to share a session with former Chilean president Michelle Bachelet. He talked about Chile's success. So Chile was the country with the highest economic growth at that time in Latin America. Income per capita is highest in Latin America. Its Human Development Index is the best in Latin America.
• 60:00 - 60:30 but 2019 was almost a revolution. when the government increases the fair by a few cents. at that time. The question is how to explain this phenomenon. Well, that's Sebastian Edwards, right? Then explain this phenomenon with what is called The Chilean Paradox. Well, the mistake is that governments in many countries in the world always focus on the poor. Then the rich enjoy development but there are no specific policies for the middle class.
• 60:30 - 61:00 Hmmm. So, I then said that we have to look at this issue carefully, that's why. Hey. Yesterday, VAT was about to be increased. One of the ideas that was proposed and I support was providing discounts on electricity. for households 2200 watts and below. Because this is a group in deciles 5 to 8. So if he gets his electricity bills it's free. In the end the government gave 50%. Those few months will help their purchasing power.
• 61:00 - 61:30 As I see it, there is a fairly universal economic phenomenon related to inequality. Inequality of wealth, inequality of income, and inequality of opportunities. But also in many places what has happened is that economic development has become increasingly centripetal.
• 61:30 - 62:00 Not centrifugal. Yes yes. So the acceleration of income growth per person in primary cities. Yes. it is higher than those in secondary cities, let alone those in regional areas. What's the medicine like? Because of this, I'm trying to connect via the internet. That should help to democratize capital. But it didn't happen as it should.
• 62:00 - 62:30 What is happening is precisely the elitization of capital. True, true. Is not it? Hey. And increasingly oligopoly appears, the power of the internet where they control capital and also for the purposes of distributing capital. I've always been trapped for decades in happiness or the illusion of happiness that financial inclusion is everything.
• 62:30 - 63:00 But financial inclusion is not connected to the democratization of capital. Should. Yes, this is in the world of branch head banking. At the center the limit is much higher than at the branch head on Rote Island. So the capital outlay or loans there are much smaller than at the center, both have customer accounts. But access to capital is disproportionately different.
• 63:00 - 63:30 Continue to be compounded with EAE, in my opinion, which will increasingly elitize the pre-existing order which is already elitist. How to treat inequalities of opportunities, wealth, incomes, and centripetalism of economic development? This is such a cliche answer, but it's true.
• 63:30 - 64:00 Education, training. I can't do it anymore or not. Agree. Yes, education, training. The key is that. So like this, we talked earlier about what AI is called. Hey. Yes, regarding disruption. Yes That's inevitable. Let's talk about disruption. That back office will be gone. Yes Yes, in the future it will definitely disappear and be replaced by AI.
• 64:00 - 64:30 The call center that was previously in Bangalore is now available in Manila 24 hours a day. He will be able to do it accurately with AI. That's it now. It's already started, right? Hey. So, now the question is what to do with these people with relatively lower skills. So the solution is to reskill, right? Must train. Well, this may be true, the view that says that in the future digital technology, AI will eventually create a new equilibrium where more labor will be required.
• 64:30 - 65:00 But the problem is what kind of adjustment. Yes, if Keynes said in the long run we are all dead. Yes, if the adjustment is 20 years, we won't be able to afford it. So the solution is reskilling and training. Well, this is also a problem, for example like this. If we want to retrain people, which is more efficient? We recruit new people.
• 65:00 - 65:30 Or people we have worked with, we retrain. People like me, if I were told to study again, the marginal gain wouldn't be much, the marginal benefit wouldn't be much, would it? That's about it. But if a new person is recruited, maybe he will be more. Well, this has implications in planning regarding human capital in companies, all kinds of things will have. That's one yeah. So we have to improve it in reskilling training.
• 65:30 - 66:00 The question is whether the government can do that or not? I'm frankly skeptical. Yes Almost the majority of people who graduate from the government training center from BLK have to be retrained again. Why? Because the tools are not enough. I don't know if this is just joking. Just joke. Maybe you're still using Lotus and WordStar?
• 66:00 - 66:30 Meanwhile at the company it must be. Yes yes that makes sense. Yes, it's discrete like that. For example, like that because money is limited. So what only the private sector can do is this.
• 66:30 - 67:00 You know, Citibank used to be familiar with something called EDP, right, the executive development program. Indonesian bankers in the 80s were all Citibank alumni. Yes Yes, all of them were Citibank alumni in the 90s. Why? Because they have an educational pattern. So, in my opinion, what should be done here is
• 67:00 - 67:30 actually asking the private sector to provide training. Yes, on the job training. Well, of course they don't want to. So, so that they want to give double deduction for tax if they do training. So, for example, instead of us making an AI that doesn't just ask what it's called, uh, from Google or where to do the training, give it double deduction for tax. I see that industrial policy with incentives like this makes sense. So, that's what training is called reskilling. This last one is the most troublesome. I actually don't need to worry too much about industry 4.0.
• 67:30 - 68:00 What I'm worried about is government 4.0. Yep. Yes, because you can imagine the government has to make regulations. Maybe in 6 months it won't be relevant anymore because of disruption. Yes, I asked my students. Who among you still sends postcards to girlfriends? There aren't any. Because the post office is irrelevant, right? Yes Is not it? He uses all kinds of WhatsApp.
• 68:00 - 68:30 Well, I'm still thinking about USB. Well, still using airdrop. That airdrop. Now it's also difficult to find out how to turn it on or not. Well, now it's in a situation like that. If we make regulations in 6 months it might no longer be relevant. However, the law cannot be changed easily. Yes, we will always be left behind. Well, this is the hardest one. How to change your mindset from agreeing on rules to agreeing on principles.
• 68:30 - 69:00 Yes So if we make rules. Don't be regulated about how to give basic principles, what do we want, for example? Financial inclusion, there can be no fraud, there is consumer protection. So, I'll solve it with you as to how. The government cannot regulate it to that extent because they will definitely be left behind. Indeed, the solution is agile bureaucracy. But agile bureaucracy is an oxymoron.
• 69:00 - 69:30 It's impossible for a bureaucracy to be agile, right? These are the problems that I think developing countries will face. But I want to double click on AI. Hmmm. Many people think that AI is software. Hmmm. This is actually engineering. And when people talk about engineering. This is talking about scale or scalability. When people talk about scalability. Money right. That's right.
• 69:30 - 70:00 And those who have money, have capital to scale up. That's just the same thing, that's right. Not five or six companies and I have confidence in each of the six companies. They only think about themselves. They won't think about humanity. Is not it? The important thing is that they are Tiong. Well, this will undoubtedly further elitize the already elitist order. And if they say I want to spend capex on building a data center.
• 70:00 - 70:30 He said hundreds of billions of dollars for this. That's right. And if we collect three or four five companies, that is already the scale of Indonesia's GDP. Well, we can't think like that. So I only see AI supremacy. It is domiciled only in China and the United States. Where we are just spectators and as long as we watch.
• 70:30 - 71:00 The risk is that we will not be able to improve our cognition. Not being able to distribute public goods is not small. Is not it? So in the end, we have to earn money. Is not it? How are you? Whether you like it or not, it has to be done because that's the way it is.
• 71:00 - 71:30 If we invest in AI or digital technology, this is capital intensive, very capital intensive. No, if you're half-hearted, you can't play around with that, right? Yes Yes. What I think we can do is think by asking questions like this. Why can India be willing or not before it reaches Silicon Valley?
• 71:30 - 72:00 China is relatively capable because it has a network with the diaspora there. Yes Yes. In the end, people also look at where they can invest. He has close proximity, maybe his location could be far away. Well, that's what I think we can do here. I agree with this. I listened to Endgame many times and you talked everywhere about the storyteller.
• 72:00 - 72:30 Indonesia to ensure that this country has hope. Yes. And we don't need to talk about potential. Everyone's been talking about this all the time. Always being a potential but we never realize it. So that's very important for storytellers.
• 72:30 - 73:00 Then network internationally. Because this money will move, whether you like it or not, this is the reality of life. That's a real club. Yes Yes. If you are part of that club. Hmmm. That's it. So, because there are people here in Indonesia, that doesn't mean there aren't any in Indonesia.
• 73:00 - 73:30 See. If he is part of the network, then he can have access to it. Well, that's what I think the government is saying, it has to be proactive, it has to take steps. And the method can't be conventional. Yes, so that the money can flow here. We have to be part of the network and actually be part of the network. This is related to me, I always get asked about natural intersections for Indonesia or Southeast Asia.
• 73:30 - 74:00 What about China or America? Hey. Yes, in an increasingly multipolar world order. I see China as a source of technology now. But I'm looking at a G7. Including the United States as a source of money.
• 74:00 - 74:30 Yes, it is true. Is not it? And this looks empirical. That's right. The M2 is bigger there than China and China, according to me, since its launch. Dual economic circulation philosophy. Domestication of economic activity will continue to increase and this is a bullet. By the leader there.
• 74:30 - 75:00 i.e. it will implicitly reduce. Portion of exportation to GDP in relative terms. So their capacity to export capital will not be able to increase too quickly or too high. And this is if I look at the data in the context of BRI, Belt and Road. Hmmm. This was planned in 2013 for Southeast Asia, it was 720 billion dollars, if I'm not mistaken. The realization is still below 100. This structurally manifests the limitations of capital exportation.
• 75:00 - 75:30 So we have to be able to play the geopolitical card. Now this may be a bit sensitive but our participation in BRICS. How do you see that? This this this is a tough question. In this sense of the word, we have to see this in the overall geopolitical context. Yep. Yes.
• 75:30 - 76:00 On the one hand, we know that as you said earlier, there are limitations in China's ability to export its capital. On the other hand, we also don't want to enter a circle where it is dominated by the G7 countries and then they take all the profits that way. So I don't, I'm not an expert on international relations. But this might also be a strategy for balancing on that side. So BRICS is being played, and we are also members of the OECD. Indeed, there is a risk that people will question what exactly they want to do and what they want to do. I'm further away, okay?
• 76:00 - 76:30 Actually, there are things that Indonesia must do in this context. Most countries in ASEAN, including Indonesia, our position is eh escaping the binary choice. We don't want Chinese groups, we don't want to go there. But one day it becomes untenable. Because maybe you have to choose, for example, if one day there is a conflict in not or or competition in, for example, the internet of things, yes.
• 76:30 - 77:00 Whether we want to use the Chinese system or the US system, for example, we have to choose. So, before that happens and makes things difficult for us, I think Indonesia must be proactive here. So rather than being a global spectator, the term means you just watch this global situation. Hmmm. We must use our resources for bargaining in this context.
• 77:00 - 77:30 Is it geopolitical allocation, is it critical minerals? What is that, uh, what are the resources that we have? Geostrategic. So what we then have to think about is how to think about creating trilateral cooperation with China, cooperation with the US.
• 77:30 - 78:00 Yes, perhaps such steps. Uh, track one before track two, track 1.5 is where not only the government but academics, business also starts to get involved, right? Then work on thinking about the trilateral between the US, China and Indonesia. Maybe not every day can be digital. You mentioned about AI. Yes. China has limitations in terms of its capital.
• 78:00 - 78:30 Indonesia has the market, America can have this money, this is something that can be done, what kind of scheme and structure can be thought of for that? Then what else can be done about energy? Regarding critical minerals. Yes China is the dominant nickel now.
• 78:30 - 79:00 We are very dependent on them. The problem is that companies that are mostly owned by China can't have access to the American market, right? Yes. So maybe these are things we can do. And this is thanks to your initiative and support when you were Minister of Trade for RCEP, for example. Yes, if we use RCEP, it is actually an effort for ASEAN as a single entity. Facing China, facing the US.
• 79:00 - 79:30 Those are perhaps the steps we might take in conditions like this. I initiated RCEP. Moreover, it is more connected to development. To developing economies. Sentiment. At that time we were presented with another framework called TPP. That's too 20th century in my opinion.
• 79:30 - 80:00 Is not it? Futuristic. It's not that we can't understand it, but at that time the concern was how to sell it to the wider public. Yes, the easiest way to sell it is with an investment thesis. There is food on the table, there is money on the table.
• 80:00 - 80:30 Are you going to invest or not? I understand intellectual property, I understand human rights, I understand government procurement. But I have to provide this. Well, sometimes they don't provide the sentences. So I said I'm sorry.
• 80:30 - 81:00 But RCEP better understands our credit as a developing economy. Well, I see the most natural intersection between Southeast Asia and China or America. That is in the context of the energy transition and AI. Is not it? And the two are connected because every time we listen to people like Johnson Huang talk about the latest GPU.
• 81:00 - 81:30 The H100 or H200 is ten X, thirteen X the pre-existing GPU. What wasn't conveyed was that the energy requirement was 30 times. So where does this newest AI come from? And I have often said that the capacity built is 80,000 megawatts. Electrification is 1300 kilowatt hours per person. Southeast Asia only has 400,000 megawatts built. I'm often a bit confused, how do I square the circles. Because we can only build 3000 megawatts per year. between realism and optimism. What do you think, Sis? Agreed, it comes back to the issue, actually, the financing. Well, talking about talking about the energy transition, I see, if Indonesia just did it on its own, it would definitely be tough, tough, right? There are several things that are possible.
• 81:30 - 82:00 I'm not saying that from the domestic side we don't do anything. Domestic resource mobilization must. There are many things the government can do, for example phase out fossil fuel. Ready. Yes, uh this will reduce demand for uh what is called fossil fuel so that we move towards green. Then from the revenue side, you can use carbon tax, models like that with fiscal.
• 82:00 - 82:30 But this isn't enough. Hey. Yes, I like the paper you wrote about the paradox of sustainability. Why do you use the word paradox too often? Yes, yes, yes. I read that paper. Hey. What's the matter with this? There is disproportionate, there is something that is not proportional between the roles of developed countries and developing countries.
• 82:30 - 83:00 So, if we want to use the term responsibility, developed countries must also have responsibility for this process, right? What can he do? For example, like this. That's what is called a concession loan. Yes Yes, he has to add more. Indeed, now that the SDR has been carried out, the IMF has given it to the regional development bank to be used for this process. But they also want to expand.
• 83:00 - 83:30 The problem is this, increasing capital at the Bretton Woods Institution is almost impossible now. Because if China puts in more money, the US will lose its voting rights, right? So this is politically a bit difficult. So, my point is that here the role of multilaterals to support developing countries, including Indonesia, in financing is important. If there is a concession loan, there is an SDR, we are talking technically. Later, innovative financing with blended finance could emerge where so-called philanthropists or the private sector would be able to enter.
• 83:30 - 84:00 That's all you said about electrification because if you expect it from the government it's very difficult. But Sis, if we want to increase the power generation, heeh, the power will be from 80,000 megawatts to 400,000 so that our electrification will increase from 1300 to 6000 kilowatts. Yes, that's right. Is not it?
• 84:00 - 84:30 If you want to use renewable, it's more expensive than 2 million dollars per megawatt. That's right. Multilateralization is okay. But not quite exactly. I can see that the real money is in the private sector. Exactly. That's why I said that.
• 84:30 - 85:00 Hey. So yes, if I look at M2 in the G7, it is above 100 trillion dollars, while 70 trillion of that is managed by only 7 companies. BlackRock 11 trillion, Vanguard 10 trillion, 15 other transnational investment companies manage the remaining 70. Like it or not, we have to chat with them. Yes, yes, agree. But indeed the aggregation must be multilateral. Right? The validation must be multilateral.
• 85:00 - 85:30 But if I look at multilateralization, the G7, I'm sorry. Yes, I will withdraw. OK, that's 2 billion out of 20 billion. But the indications are that it might slip, right? IPF. Excuse me. Trump seems to have a slightly different paradigm regarding IPF. That's right.
• 85:30 - 86:00 So I think whether we like it or not, we need a more optimal intersection between power and talent. So that who goes into policy making, into academia, into entrepreneurship, even into politics, it's more like in Singapore, you know. That's like in South Korea or like in China or wherever. Second, if you want to increase fiscal space and monetary space, you have to look at the I, right? From outside.
• 86:00 - 86:30 So thirdly, how can we increase the number of Basri kathibs to thousands so that the storytellers can go everywhere. Hey, I can take responsibility for this because the rule of law is getting better. Clarity regarding anything is increasingly accountable.
• 86:30 - 87:00 Our three vectors are Sis, HR, monetary space, fiscal space and then storytelling. I couldn't agree more like that. The problem is like this if we want to talk about it in real terms. I like what eh always says. We all know what to do, we just don't know how to get reelected after we've done it. We know actually, right? Yes Yes. So come back again.
• 87:00 - 87:30 Is not it? Well, the problem is like that. We know that the source of the money is not in the private sector and multilateral. We need, for example, a fiscal framework and support from multilaterals for derisking. So what you said earlier is that money in 17 big companies, BlackRock, Vanguard, all kinds of things want to come in. Because if for example the risk is too big, they consider it commercial, right?
• 87:30 - 88:00 That's right. Yes, that's why blended finance is very important. Schemes like that are very important. So, this requires cooperation from everyone. But on the other hand, it's back to the old conversation. That person cannot substitute incentives with certainty. Yes Yes, you want to give a low tax rate. Certain. If the law is not certain, it can't be done, it won't be possible.
• 88:00 - 88:30 So that condition must be addressed like that. Well, that's what I said, coming back again to the issue of legal certainty, investment climate. That has a lot to do with politics, right? Yes, that's it, in the end, finally it's something that's okay. We have to be realistic, humble by the political reality, what can be done within the constraints like that. We are increasingly multipolar. We are forced or increasingly forced to carry out bilateralization. Multilateralization is increasingly difficult.
• 88:30 - 89:00 It looks like we will be exposed maybe in the next 5 to 10 years. I'm in the camp that believes that the more we have to bilateralize, the more we have to increase our competitiveness. Our productivity. Wouldn't it be nice if multilateralization had a single undertaking principle? If there is a country whose population is only 200,000, he doesn't agree, it doesn't work.
• 89:00 - 89:30 Done Boss. Is not it? The veto is real. But if it's just the two of us in the room, you can sew 10 clothes, I can only sew 5 clothes. I'm naked. Yes yes. Can't do anything about it. Yes, I'm sure, yes, please sir, just take my factory. Yes Well, that has to be addressed too, right? What do you think, Sis? For us to be able to become a good bilateral, hopefully in the future we will be a better pluralist and multilateral.
• 89:30 - 90:00 This is a really difficult question because if we look at the capacity in developing countries, it doesn't benefit from bilateral, because it's exactly as you said. If we deal directly with China or with the US bilaterally, that's the idea of ​​RCEP, actually one of them is to avoid that, right? Because what you said earlier is people's abilities. The ability of eh capital yes.
• 90:00 - 90:30 Yes, competitive baseball is not only comparative advantage, but also actual competitive advantage. So, what's really troublesome now is that this doesn't solve the problem. Now people are changing from the concept of comparative advantage to economic security, right? Yes Yes. We no longer talk about holding stock just in time. But we're talking just in case.
• 90:30 - 91:00 Is not it? Is not it? Instead, if there's a war, there won't be any stock. Yes Yes. We are talking about friend sharing. So, when you talk about economic security, that means you have to have allies, you have to have alliances, right? Well, in this context those are soft skills, what are they called soft power, sorry, soft power in all kinds of negotiations is very important. If not, it will be very difficult.
• 91:00 - 91:30 So it's a matter of me believing that your friends have that kind of capacity. But this is the era, according to me, so far the economy has been ahead. Its foreign policy follows the direction of the economy. Maybe with a model where economic security is important, the real lead is foreign policy, like in developed countries. The economy then supports that. Their decision regarding friend sharing is not based on economic efficiency.
• 91:30 - 92:00 Is not it? But regarding foreign policy, what is he doing? So, we have to be ready in this game and to be honest, it's still a bit tough there. Yes. Which is starting to look cool Indian. Yes, the prime minister and the foreign minister can play this. Omnidirectional narrative, right? They can dance with Russia, with America, with Ukraine, with China, with ASEAN, with Africa, right?
• 92:00 - 92:30 And it all connects to national security interests. That's right. Is not it? They can project their national interests in an omnidirectionally acceptable way. And that's in my opinion, there is no reason why we can't because we have scaled and I see India's awareness to be able to crawl in this global order.
• 92:30 - 93:00 Total pull global order and increase its strategic autonomy. This must be done by a country as big as Indonesia, perhaps in the Southeast Asia region. So I see this in multipolar or multi polarity. We don't need to be cornered or trapped in choosing Huawei or iPhone.
• 93:00 - 93:30 Agree. Is not it? Agree. We are very good at embracing multi polarity and this has been proven over the last 2000 years. We were visited by Buddha, Hinduism, colonialism, Christianity, Islam, freedom, democracy and everything. Just to be safe, I always say that, wait a minute. This death rate based on differences in views or opinions related to race, religion, ethnicity, whatever, is no more than 10 million in 2000 years.
• 93:30 - 94:00 Meanwhile in Europe it was 190 million in the same duration. We already have peace and stability. That's right. That's right. The noble baseline is how we improve the principles of education, culture and so on. This is what I think Singapore has done. Yes, ready.
• 94:00 - 94:30 Southeast. They have been able to embrace a culture of pragmatism but also embrace a culture of superlative principles in the future, right? That's what I want to look for. How can this be done wholesale, retailed? This is really important, yes, in my opinion, we really learn from India, you said earlier. He has the ability, on the one hand, maybe people see him as annoying, right? He plays the same there, he plays the same here, yes, in the case of Ukraine, his position is not clear regarding Russia, he can still do Turkey and do things like that.
• 94:30 - 95:00 It seems that we really have to learn. Well, maybe this goes back to the previous question, maybe these are the steps we want to try to take. Yes To be able to play with various parties and in my opinion this really has to be done, because in a situation like this it's unavoidable because if we get caught up in bilaterals it's a hassle. That's Indonesia.
• 95:00 - 95:30 Yes That's dealing with that, you are the expert regarding RCEP, right, because your role was very instrumental. But one of the reasons is that we think that there is no country in ASEAN that can be linked with China if it is bilateral, right? That's why ASEAN must emerge as a single entity, right? So what you said was I couldn't agree more, that's what you have to do. Well, but again, here's the problem, the answer is wrong again. We don't have anyone to do it like that, right?
• 95:30 - 96:00 I'm at the school where I teach now. That's when I'm teaching, almost every time someone who dares to ask is an Indian. After all, it's the Jews. Is not it? But if I study China, Japan, Korea, Taiwan, Indonesia, Singapore, India, Europe and America, the cognition is all the same. But I don't know how this India is so good. Yes yes. Taste.
• 96:00 - 96:30 That's right. Is not it? I really wish Indonesians were good at swiping. But it's backed up with Cognition, right? And I often think that in Asia, perhaps the people who are the best at telling stories are Indians. Number two is probably Singaporean. Yes, if you are in Sydney, in London, in Beijing, in Tokyo or in Washington, you want to know about Southeast Asia which is called the Singapore Ambassador. Because there is a predisposition that Singaporeans are smart.
• 96:30 - 97:00 There is a predisposition that Singaporeans can tell stories. But when will the Ambassador of Brunei, the Ambassador of Laos, the Ambassador of Cambodia, Myanmar, Thailand, Malaysia, Indonesia be called to be able to tell stories about Southeast Asia? Yes, I see this. Maybe in that case, Singapore on the one hand, they are very good at storytelling, right?
• 97:00 - 97:30 But also on the other hand, he delivers in his product, so that what is being told is that people see the evidence, right? Connect. Yes. Don't let us be good at telling stories but we're not. That's right. Yes, right? In the end it was a loss. Well, this is what happens when it comes back like that. In my opinion, abilities in articulation are also formed from critical thinking. So this goes back to your question AI. I shifted a little because I suddenly remembered.
• 97:30 - 98:00 What is the future of schools with AI if we ask students? There's no point because there's no answer that can be smarter than ChatGPT or Google search. No one will be smarter. Well, I actually didn't think for a long time that AI would one day exist. But I started doing experiments in class like this.
• 98:00 - 98:30 When I make exam questions, one question is a question, not an answer. This just so happens to be relevant here huh. Because if the answer is possible, AI will give an extraordinary answer. But how to get people to ask cool questions.
• 98:30 - 99:00 The AI ​​answer may not be perfect. So if we use ChatGPT the prompt is correct. Yes, that's why if he came up with a question like that, it would be a true research question. Because if you want to come up with a good idea it comes from asking questions, right? Very contrarian. Yes, and whether a person looks smart or not depends on the question. For example, if we are invited to Endgame like this, we will feel smart because the person asking is smart, right? Is not it?
• 99:00 - 99:30 But it can be seen from there. So that's why in class I said you ask questions. If that was the student's question, I never thought about it. Yes This will be it. Well, that's what I think then, maybe India, Singapore, you mentioned earlier. He can come up with a question that maybe the people there who have money say, how come they never thought about this? Absolutely.
• 99:30 - 100:00 Is not it? Wow, this is true. I've never thought about this. Yes That's what we're not used to. Because we are trained to answer, give answers. Even though now this answer has been provided by others. Well, if we don't change the method, it will be a problem. I have confidence that if we gaspol, we will have lots of storytellers, sir. Like you. If you have it, you don't need 1000, just 50 like Kathib Basri. So Indonesian goods will be really cool.
• 100:00 - 100:30 Minimum in our lifetime hopefully soon. And hopefully because I went to school it wasn't on purpose, actually. It's been more than an hour and a half now. I want to ask the last question. Okay. You've been very generous with your time. If I pay attention, it's the world political calculus. Hey. It increasingly slides to the right. Hey. I think this is because I'm anxious about the gaps. That's right. Yes, right? And the more the gap increases the easier it is, even easier, for people on the right to campaign. That's right.
• 100:30 - 101:00 Because those on the right are campaigning based on fear and or intimidation. But if he is on the left, his campaign is based more on a message of hope. Yes But if you sell hope, you have to have credibility. Yes But if your credibility is really questionable, that's it. It's better on the right.
• 101:00 - 101:30 That's right. And we've seen it in America, in India, in Italy, so we don't need to say in other countries. This will be a lot. Hey. Dutch too, right? Yes, no need. So what do you do? Is it good? Is it okay? Is it bad? Is it something that In my opinion, at that time I was chatting with Fukuyama, we were talking on one panel.
• 101:30 - 102:00 Indeed, there have been two distortions of liberalism, our friends on the left. The first is called neoliberalism. This neoliberalism should do noble things such as distributing capital. That's right. But it doesn't happen in an apologetic, commensurate or fair or proportional manner. Hey. Second, he said the distortion was woke liberalism. Yes I support friends who are woke. But sometimes over identification. That's right. Woke to certain identities.
• 102:00 - 102:30 It seems as if we can't differentiate between roots and fruit or fruits versus roots. Its roots are liberalism. Don't confuse fruits with roots. So, in my opinion, those on the left have been greatly influenced by such distortions. I'm curious, what is your view? I agree and I'm frankly worried about this. Yes Yes. Frankly, I don't have a solution, but what I can share with you is a matter of concern. I wonder why?
• 102:30 - 103:00 You were talking about neoliberalism, which truly believes that globalization is the source of prosperity.
• 103:00 - 103:30 You see now, the source of conflict is globalization, exactly the opposite of what was said in the 1990s. Now people see that the source of uncertainty is interdependence. Yes. Russia suddenly stops its gas exports to Europe. Europe is in chaos. In fact, in the past we were taught that if you don't have gas, don't make it yourself. It's better to import than from Russia. So what was previously referred to as neoliberalism of all kinds then became something that people were worried about. Yes Yes. Then,
• 103:30 - 104:00 you talk about various things, I use the term wokisme, right? Ready. Yes That's wokism, right? Which then runs to a certain identity which is very extraordinary. So issues that may be more
• 104:00 - 104:30 concrete, more pragmatic for many people are not addressed there. Meanwhile, the right one comes with a narrative that is closer to many people. Yes Yes. After Covid, America was flooded with immigrants because Americans weren't interested in working. So many immigrants.
• 104:30 - 105:00 Trump came up with something concrete, he said, look, our jobs were stolen by the people from there. Yes, right? This gives rise to sentiments called populism, economic nationalism of all kinds emerging. Even immigrants, for example in America, who have found work are also worried about their friends, right?
• 105:00 - 105:30 That's right. Yes. Well, this is then compounded by the uncertainty caused by globalization so that people then run away, which you said to me, on the right side of the spectrum. He will look for his own group, populists will appear. Well, the situation is made worse by this. I really agree with what you wrote regarding social media now. The post truth.
• 105:30 - 106:00 That then changes the objective data to no longer be relevant, but what is relevant is something that can touch emotions, right? Yes Yes. In this context, this has indeed caused extraordinary unrest and this is not only unique to Indonesia in America in all countries today. Yes This happens in all countries.
• 106:00 - 106:30 One day oh how many years ago I was discussing this with uh I forgot his first name. Uh Friedman he is not Tom Friedman. He's a professor at uh the School of Government at Harvard, right. So uh Jeffery sorry Jeffery Frieden. Okay. Same as Jeffery Frieden. So, let's try to discuss at that time how, from the election results in many countries, why the strong unquote conservative group won.
• 106:30 - 107:00 He also took America as an example. And he said his argument was exactly like what you said, namely inequality, the gap then becomes a trigger for people to look for instant answers.
• 107:00 - 107:30 What is the most instant answer? Identity. Yes Yes. Identity, economic nationalism of various kinds. Yes Even sentiments such as those against other countries have emerged. Well, if you ask, I can only convey my concern in this matter because this is a real issue that must be discussed together. Yes. This is for friends who are young, because if you're like us, we're the young people who watch it. That's right. If it's like us, what's the job called, if there is one like that, it's how to prepare the next generation, right? I just want to say this really. People sometimes like to be judgmental towards Gen Z, for example. Yes And I think it's actually not fair to see them from our perspective.
• 107:30 - 108:00 This generation also has its own challenges, difficulties and opportunities. Well, if there is anything I can advise them, the most important thing is actually how to make the best use of the learning process, including learning from the mistakes made by our generation, right? So this is what I think might be a good lesson learned, that's why this isn't a promotion for the Endgame podcast, but yes, because their medium is something like this. So the selection of information is very important.
• 108:00 - 108:30 That's right. Yes. Because this is like an echo chamber. We often speak in an environment where only we want to hear it, making it difficult to sort out false information from true. In an era where so much information can be obtained, the ability to learn to filter it becomes very important. Maybe that's all I want to say.
• 108:30 - 109:00 Post modernism is characterized by more opinions than facts.
• 109:00 - 109:30 And many young people don't have enough facts and it's easier to give opinions. You said it in clearer language. That's what I mean.
• 109:30 - 110:00 Thank you very much. You're welcome Git, thanks for the invitation. Those friends are Dede or Chatib Basri. Thank you very much.