Indonesia’s president called on all citizens to remain united, vigilant and alert as they face crises fueled by the war in Ukraine and coronavirus pandemic in his State of the Nation address Tuesday.
After two years of remote meetings amid pandemic restrictions, more than half of Indonesia’s Parliament was in attendance as President Joko Widodo told them and top officials on the eve of Independence Day that regional tensions are threatening security.
“We must always remain vigilant, cautious and alert,” Widodo said. “Crisis after crisis still haunts the world.”
He noted that when war broke out in Ukraine causing energy and food crises, the world was still grappling with the health and economic impacts of COVID-19. Some countries are predicted to go bankrupt, while over 550 million people face extreme poverty and 345 million others face food shortages and famine, Widodo said.
“The challenges are not easy for the world and for Indonesia. We must face those challenges with prudence and vigilance,” he said.
Russia's war in Ukraine has exacerbated rising prices in Indonesia amid ongoing supply chain disruptions from the pandemic, causing cooking oil prices to soar while the interruptions in wheat, soybeans and corn have affected the cost of several foods.
In April, Indonesia banned all exports of crude palm oil, a key ingredient in cooking oils, for a month amid a series of student protests against skyrocketing food prices. Indonesia and Malaysia are the world’s largest exporters of palm oil, accounting for 85% of global production.
As the host of the Group of 20 richest and biggest economies this year, Indonesia has sought to bridge divisions between members over Russia’s invasion. Widodo has been guarded in his comments about the war in Ukraine in an attempt to remain neutral.
Widodo was the first Asian leader to visit the warring countries. Ukraine is not a G-20 member, but Widodo has invited Ukrainian President Volodymyr Zelenskyy to the November summit along with Russian President Vladimir Putin, hoping to appease all sides and limit any distractions from the forum’s agenda. Zelenskyy has said he won’t attend if the war is continuing then and has opted to follow the discussions by video link.
The inflation rate in Indonesia has been relatively modest with the shock being mostly absorbed through a budget bolstered by energy subsidies.
Widodo said the state budget recorded a surplus of 106 trillion rupiah ($7.2 billion), allowing the government to provide fuel, gas and electricity subsidies of 502 trillion rupiah ($34 billion) this year to cushion fuel prices.
However, he said the administration must recalculate its energy subsidies to reduce the burden on the budget.
Southeast Asia’s largest economy served as a key exporter of coal, palm oil and minerals amid a global shortage in commodities after Russia’s invasion of Ukraine. Coal exports increased to record levels in March after a brief ban on its shipments early this year to secure domestic supplies.
