agus d w martowardojo : the future of asia ’ s finance – financing for development welcoming remarks by mr agus d w martowardojo, governor of bank indonesia, at the joint imf - bank indonesia conference “ the future of asia ’ s finance : financing for development ”, jakarta, 2 september 2015. * * * • honorable managing director christine lagarde, the co - host of this conference ; • honorable minister bambang brodjonegoro, • honorable governors, deputy governors, ambassadors, representatives from regional and multilateral institutions, business community, our colleagues from academics, distinguished panelists, • ladies and gentlemen, good morning and warm welcome to all of you. 1. it offers me great pleasures to welcome you to this conference jointly co - hosted by bank indonesia and the imf with the topic of “ the future of asia ’ s finance : financing for development. ” the topic is indeed crucial considering wide financial gaps still exist in the region. in this regard, searching for an optimum financing would be challenging in the midst of current circumstances. 2. before i share my views on financing issues, allow me to discuss the global economic development. asia ’ s finance is now facing great challenges. in the near term, we may still confront an episode of heightened capital flows volatilities as consequences of unfavorable global economic condition. sluggish global economic growth continues to depress production and outlook. strong u. s. dollar following partial u. s. recovery and easing in europe and japan have tested some of asia ’ s economic buffers. weak commodity price has significantly hurt exports of some key regional economies. and more recently, china ’ s decision to rejuvenate its moderating growth through exchange rate policy has made the risk of external funding intensified. in fact, the increasing, yet again, global financial volatility, in a tune of 2013 global tantrum, is happening as we are sitting here, and it has led to a pull - back in capital flows from some emerging markets, including in asia. 3. while asia has remained broadly resilient to the risks, and it has led global growth for the past thirty years, its role to support global economic recovery seems to be weakening a little bit. a number of emerging market economies in the region are experiencing a declined economic growth and facing increased financial vulnerability, mostly related to capital reversal. 4. asia definitely needs the right policy mix to secure growth and

. when asean economic community is finally established at the end of this year, we should start thinking beyond 2015, and among ultimate objectives of post - 2015 asean financial integration in my opinion should be the creation of the best ecosystem of financing for development in the region. 15. that said, central banks in asia have challenging tasks, i. e., to balance the need to deepen the financial market and to ensure the financial stability. deepening capital markets and fostering financial inclusion would expand investor base and providing alternative financing. financial inclusion should change the face of finance to become more people - centered, supporting investors with more outlets, small and medium enterprises with more funds to tap, and consumers with mortgages and other credits to smooth consumption. however, we should remain cautious as more dynamic capital market may also invite risks related to commitment and composition of capital flows. distinguished guest, ladies and gentlemen, 16. now allow me to provide you with a glimpse on indonesia. the current administration has put great attention on boosting infrastructure investment to facilitate stronger and sustainable growth. the government in particular places priority on strengthening of physical connectivity, primarily in marine connectivity as well as integration between marine and land connectivity such as railway and digital connectivity. improvement in these nodes will profoundly lower the logistical cost, increasing competitiveness, and lead to cost efficiency across the nation. in the next five years, the government aims to build 5, 000 km of railways, 2, 600 km of roads, 49 dams, 24 seaports and power plants with a capacity of 35, 000 megawatts. 17. on the financing side, the government has committed to conduct fuel subsidy reform. the government ’ s decision to reduce fuel subsidy in 2014 created a fiscal space of approximately us $ 19 billion for infrastructure investment. furthermore, various measures have been undertaken such as providing fiscal incentives for investment with a better - targeted system, providing social safety net for the poor, continuing the financial deepening program to mobilize domestic savings for private and public investment financing, and increasing private sector involvement through enhancing ppp framework and establishing ppp center. yet, with the immense magnitude of financing needed, more initiative is needed to materialize our plan comprehensively. distinguished guest, ladies and gentlemen, 18. as a final note, i would emphasize that today ’ s conference is very important as it will discuss the key opportunities for asia ’ s development financing now and in the future. it is also a good avenue for authorities and private sector to share their bis