00:00I know that you've got some overlapping experience with Minister Nazara.
00:04What can you tell us about his likely approach to fiscal policy
00:07and the sorts of reforms that we might anticipate?
00:13Well, yes, I've known Sua Hasil for some time now,
00:17back to the days when we were still in the Faculty of Economics.
00:20He's a very solid economist, very knowledgeable,
00:25and especially the last 10 years, he has been dealing with fiscal policy,
00:30both as head of the fiscal policy unit in the Ministry of Finance
00:34and, of course, the last seven years as the vice minister of finance.
00:38So he's very experienced, so we expect that he will ensure fiscal discipline
00:44as well as coordination with the monetary policy side.
00:51The new governor of the central bank is also someone that has worked very well with him
00:56in the recent past, as well as, of course, they also have worked together well in the past.
01:02So we expect fiscal discipline, communication of policy messages
01:09that are hopefully clear on our growth and stability agenda
01:14and better fiscal monetary policy coordination.
01:19Well, now, the 2027 budget is probably well underway by now in terms of preparation.
01:25With that in mind, can we expect Finance Minister Nazara to make any meaningful imprint on it?
01:34I think we do hope that he will continue what has been the recommended path.
01:41As you know, as you know, this year, the deficit will be higher than projected
01:47because of the higher oil prices.
01:50And for next year, the budget deficit is estimated or projected to be at 3.4 percent,
01:58which is lower than, sorry, 2.4 percent, which is lower than the 2.85 expected next year.
02:06So what we hope will happen next year is that there will be a lower budget deficit
02:13and the budget, the fiscal discipline below 3 percent will be maintained.
02:16But the lower budget deficit will come from not necessarily cuts in the budget,
02:22but more efficient or better spending of the budget.
02:26And including the use of digital technology and government digitalization program,
02:35as well as increasing on the spending side.
02:38These are reforms on the compliance side,
02:42as well as reforms on the use of government technology
02:46to better efficiently focus on the spending side,
02:51as well as better governance on some of the government programs that are in place.
02:57Now, speaking after his appointment, Nadzara said,
03:01look, this is a constant continuation, not necessarily a change,
03:05which invites a couple of questions.
03:07First of all, if it's a continuation, why is he there?
03:11And secondly, he was the third finance minister in two years.
03:16How much confidence can foreign investors have
03:19that he's still going to be there this time next year?
03:24I think, I would say investors should be confident
03:27because we now have an experienced person
03:31who is going to handle the fiscal, very challenging global situation,
03:36as well as domestic economic situation.
03:39And his main focus will be on ensuring fiscal discipline,
03:44so stability in the face of, you know, increased volatility of oil prices,
03:51as well as interest rates that will go up.
03:54So the macro conditions are going to be very challenging.
03:58That's why it's very important to ensure fiscal discipline,
04:01clear communication on policies,
04:03and coordination with the central bank on monetary policy.
04:08And investors should be confident that he can carry this forward,
04:13given his experience and his relationship also with the central bank,
04:19because we really do need this to happen.
04:22The macro stability is very important to safeguard the rupiah,
04:27pressures on the rupiah.
04:29And that next year, you know, growth will really depend,
04:32cannot depend too much on government.
04:34It will have to depend on increased investments from the private sector.
04:38And this will require us to ensure confidence in the macro situation,
04:44as well as doing the other reforms on the investment side,
04:49on the structural reforms.
04:52Well, you're quite right to point out the very challenging macro backdrop here.
04:56How much confidence do you have that Finance Minister Nazara
05:00can keep the deficit to within 3% of GDP
05:04without needing to resort to austerity measures?
05:10I'm confident, because part of this is continuation.
05:15You know, this year we already reduced the budget
05:19on the food nutritious program by 100 trillion,
05:22and that was approved by all the way up to the president.
05:25So there is a willingness to make the budget more efficient,
05:30but at the same time improve the governance,
05:32which is about better spending, right?
05:35So I think if he can continue that process,
05:39and I think the other thing about besides being a good economist
05:42and having a fiscal policy experience,
05:45he has a huge experience dealing with Indonesian economic institutions,
05:50including, you know, dealing with up to the president,
05:55as well as with the parliament,
05:57which are obviously very important stakeholders,
06:02not stakeholders, but important in terms of ensuring
06:05that we can navigate these challenging times
06:09and ensure macro fundamentals are safeguarded.
06:14At the same time,
06:15I think he will also be able to oversee some of the reforms
06:19that will be needed to ensure
06:20that we can increase tax revenues on the tax side,
06:24which is about improved compliance,
06:26improved administration,
06:28and ensuring the core tax,
06:29which is the digital tax system that was set up last year
06:34to make sure that it's really implemented effectively.
06:40Now, Marie, you have a number of interesting roles,
06:42one of which is being on the board of DSI,
06:44you know, the new state commodities exporter.
06:47What do you expect that agency to look like in 2027?
06:50Is it going to be the sole exporter of those key commodities
06:53like palm oil, coal and nickel?
06:58Yes, I think we are now setting up the platform,
07:03and it will be a platform which will address
07:08under-invoicing and transfer pricing,
07:10and it will connect the customs and the tax systems,
07:15and it will be a transparent system,
07:18and it will be professionally run,
07:20and it will be a digital system that will connect all the information
07:25so that we can minimize under-invoicing as well as transfer pricing.
07:31So, in fact, we hope that if this is going to be implemented effectively,
07:38in fact, we can also see an increase on the revenue side
07:42from non-tax revenues coming from the commodities.
07:47Before we let you go,
07:48I'd just also like to get your views as well on the forest fires
07:51which are occurring in Indonesia at the moment,
07:53the most severe that we've seen since 2015,
07:56casting a lot of haze across the region as well.
07:59Do you feel Indonesia is taking enough action
08:01to prevent and control these fires?
08:07Yes, recently the president has undertaken some measures
08:12to make sure that we enforce those
08:16who have been seen to be causing the forest fires
08:21and really increasing the surveillance.
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