Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Indonesian President Joko Widodo said his nation won’t follow a purely open economic model that he blamed for undercutting Latin America’s growth prospects for decades, saying Taiwan and South Korea show the advantage of making the world dependent on them.
Speaking to a business forum in Jakarta on Friday, Widodo said the most industrialized economies in Asia found an alternative way to achieve high-income status that he wants Indonesia to follow. He cited Taiwan’s success in developing its semiconductor chip industry and South Korea’s emphasis on digital hardware.
“They are focused, strategic and competitive, this is the system we need to keep emulating,” the president, popularly known as Jokowi, said. The first lesson he wants Indonesia to apply from that experience: “making other countries reliant on us.”
The president’s remarks come as Indonesia, the world’s biggest producer of nickel and palm oil, is pushing hard for commodities industries to evolve in order to move up the value chain and reduce the economy’s reliance on exports of raw materials.
“We also have products that many countries need, such as nickel, copper, bauxite and tin,” he said.
Jokowi cited Latin America as having chosen the wrong path, saying that “after more than 50, 60, 70 years, their countries were always developing” instead of reaching developed status. In contrast, South Korea and Taiwan rose into the higher-income ranks within a relatively short time.
Indonesia doesn’t want a closed economic model, the president cautioned. But he said complete openness could mean relying on exports of lower-value products.
As part of his efforts to bolster growth in Indonesia, Jokowi has placed temporary bans on exports of raw materials like nickel ore, saying that will help the country lure new investment and foster development of a domestic industry. That move has drawn complaints from the country’s European metals buyers. The World Trade Organization ruled in November that Indonesia’s efforts violated international trade rules.
Jokowi has vowed to appeal that decision and, in his remarks Friday, defended his approach.
“If we follow the footstep of the Western countries, we will always be left behind, we will never catch up,” Jokowi said. “We will keep our economy open, but once again, we need to be able to design it in such a way that other countries are reliant on us.”
(By Soraya Permatasari and Yudith Ho)
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