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Remarks at American Chamber of Commerce in Indonesia, Jakarta, Indonesia

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Wednesday, May 26, 2010

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Commerce Secretary Gary Locke
Remarks at American Chamber of Commerce in Indonesia, Jakarta, Indonesia

Related remarks at Townhall Meeting, University of Indonesia

Good afternoon. 

It is wonderful to be here in Jakarta and to be speaking in front of an organization that has done so much to expand U.S.-Indonesian trade over the years.

I’d like to welcome some of the distinguished attendees we have with us in the audience today.

And I’d also like to welcome the students from the U.S. Marine War College who are with us as well. 

Ambassador Hume, I want to congratulate you for making bilateral education partnerships your mission’s number one priority, and I understand you have a group of Indonesian education agents leaving this weekend on a mission to the United States to better acquaint themselves with the abundance and diversity of our higher education opportunities.

I also want to recognize the corporate social responsibility activities of the major U.S. IT firms here in Indonesia.  Because of your donations, in partnership with an Indonesian firm, 10 middle schools in five provinces are now outfitted with state-of-the-art IT labs. Representatives of these firms are seated here today and we thank you for your contributions.

I'm here – along with 10 American clean energy companies – on the heels of the announcement of President Obama’s National Export Initiative, which aims to double American exports by 2015 and support 2 million jobs. 

The firms with me aren’t all the same size, and they operate in different industries.  But together, they represent the best that America has to offer in clean energy, energy efficiency, and electricity storage, transmission and distribution.

I’m eager to help them do more business in Indonesia, a country that has the potential to be one of the world’s leading producers and users of clean energy.

And although energy cooperation between the United States and Indonesia is our focus this week, it is just one of many mutual interests that are increasingly bringing our countries closer together. 

In a couple of weeks, President Obama will be here to sign the U.S.-Indonesia Comprehensive Partnership, which will be a blueprint for cooperating on a host of issues. From trade and investment to education and the environment.

The United States and Indonesia share core values – both culturally and economically. 

We are two of the world’s largest democracies. 

And while Indonesia is the largest Muslim-majority nation on earth, the United States also has a vibrant Muslim community that plays a critical part in our democracy and our economy. 

Since assuming office, President Obama has been committed to fostering better ties with Muslim-majority nations and communities around the world. 

It was no coincidence that Secretary of State Clinton’s first official trip abroad included Indonesia. 

And exactly one month ago, the President convened a summit in Washington, D.C. with hundreds of nonprofit and business leaders from Muslim-majority nations to discuss:

  • How entrepreneurship can help spur social and economic development in Muslim-majority nations and communities; and
  • How encouraging private sector innovation can help the world tackle some of its most pressing challenges.

And energy is certainly at the top of that list.

Energy is the defining challenge of our time. . .

. . . the one issue, more than any other, that will shape the fate of our planet, our economies and our nations.

Today, I want to talk about how the U.S. and Indonesia can help meet this challenge, and how, in the process, we can grow our economies and create jobs for our people for years to come. 

It’s useful to begin by defining what exactly is our “energy challenge?”

To begin with, we need more of it – a lot more. 

And Indonesia is a perfect illustration of that fact.

Only two years ago, Indonesia had to withdraw from OPEC largely because it began consuming all the fuel it had previously exported abroad. 

At roughly the same time, the Indonesian government began an initiative to provide electricity to an additional third of its population by 2020.

This is unequivocally a good thing.  More access to electricity means expanded economic opportunity and better health for Indonesian citizens. 

But this rapid development in Indonesia and elsewhere around the world will challenge the world’s physical and intellectual resources as never before.

By mid-century, global energy use is likely going to double. 

To meet that demand, we’d have to turn on two new 1,000-megawatt power plants every single week for the next 30 years. 

But we’re not looking for any old kind of energy.   

This new energy has to be clean to avoid catastrophic climate change.  And it has to be cheap to keep our economies growing.

Meanwhile, we’ll need to do more than just find massive quantities of energy.  In the next few decades, we need to rebuild and reinvent virtually every industrial activity – from power generation and transportation, to manufacturing and construction. . .

. . . to run efficiently and economically with drastically reduced carbon output.

If we don’t meet this challenge, the United States, Indonesia and the entire world will pay the price.

When sea levels rise and new deserts blossom, you had better believe climate change is going to be:

  • bad for business;
  • bad for job creation; and
  • bad for the quality of our lives, and the life of our children and grandchildren.

Make no mistake; this is what’s in store for the world if we keep using energy for the next 30 years like we have the previous 30.

But if we can change direction, we won’t just be preventing environmental disaster. . .

. . . We could also unlock one of the greatest economic opportunities of the 21st century. . .

. . . an opportunity that could help put millions of our people to work in high-skill, high-wage jobs.

Worldwide, energy is a $6 trillion market.  And the fastest-growing sector is of the cleaner, greener kind.

The question, of course, is how do we seize the opportunity?  How do we get from here to this promising energy future?  

The first step must be immediate and resolute action by our governments.

I’m proud to say that President Obama has already done more to mitigate climate change and invest in clean energy than any president in U.S. history. 

In just the last year, he signed a Recovery Act that included $80 billion in clean energy investments and implemented tough new efficiency standards for automobiles, appliances and consumer electronics.

Meanwhile, Indonesia has taken serious steps on energy as well.   

At least year’s G20 meeting, President Susil Bambang Yudhoyono promised to reduce Indonesia’s greenhouse emissions by at least 26 percent by 2020, and 41 percent with foreign assistance.

And Indonesia’s most recent national energy policy calls for increasing renewable energy production from 7 percent of Indonesia’s generating capacity to 15 percent by 2025. 

These are big, important steps.

But it is only the beginning of what must be done.

Even with these historic efforts, coal and other fossil fuels still provide the majority of American and Indonesian energy.

To get clean energy to scale, we’re going to have to mobilize and incentivize the private sector like never before.

Government has a critical role to play in shaping the energy marketplace. 

But we must look to entrepreneurs and private companies to deliver the energy innovations we need.

While some of these innovations may be years away, American companies already have cutting-edge solutions that can be tailored to the Indonesian marketplace right now.

Indonesia is home to 40 percent of the world’s known geothermal resources.  So far, only about 4 percent of that capacity has been developed. 

Indonesia also has tremendous potential to tap biomass, hydropower, wind and solar resources.

These technologies are ideal for smaller scale, localized generation, which is especially important when you consider that Indonesia has citizens living on 6,000 different islands.  This reality demands custom solutions that take into account the unique geographic and demographic profiles of Indonesia’s diverse communities.

Fortunately, this is a particular specialty of the agile, innovative American companies on this trade mission.

In addition to clean power generation, there is also tremendous potential in helping Indonesia more efficiently use all of its energy sources. 

Energy efficiency is truly the low-hanging fruit of Indonesia’s – and in fact the entire world’s – energy challenge. 

Recently, McKinsey did a study estimating that fully half of global energy demand could be met with efficiency.  And it could be done with existing technologies.

American companies have efficiency solutions that can meet Indonesia’s needs:

  • From more efficient building materials like drywall, cement and insulation;
  • to more efficient motors and turbines;
  • to more sustainable architectural designs for residential, commercial and industrial construction.

These technologies are not 10 years away.  They are here now and available from many of the companies sitting in this room with me today.

And when an American energy or efficiency company grows its business in Indonesia, it makes a huge economic impact in both of our countries.

Consider the example of what happens when an American company sells a wind turbine in Indonesia.

A single commercial wind turbine typically contains more than 8,000 parts, 200 tons of steel and 13 tons of fiberglass.

Someone has to design those turbines.  Someone has to make and assemble the nuts and bolts, the gear boxes and electric components. 

Some of that is necessarily done in Indonesia, which creates opportunity here.

But much of this work is also done in America.   

In fact, some of the companies with me on this trip produce over 90 percent of the component parts in the U.S.

And when these American companies find success in Indonesia, it creates economic value throughout the supply chain in Indonesia and in manufacturing towns across America.

That is the definition of a win-win for the United States and for Indonesia.

And it’s why government policies need to be focused on:

  • making it as easy as possible for private sector businesses to develop new energy solutions; and
  • bringing them to market.

In today's global economy – where new innovations can come from anywhere – we need to do everything we can to keep markets open and allow for the free flow of capital and ideas across our borders.

Unfortunately, this is an area where American companies operating in Indonesia do continue to have substantial concerns.

As I talk to American business leaders, the overriding concern that I hear is that there is often not enough government transparency. Businesses frequently don’t know what the rules are, how they will be enforced or how decisions are made.

This is particularly true at the local level, where permitting authorities create bureaucratic bottlenecks that lead to years-long delays, or produce vaguely written government tenders that make it almost impossible for companies to know how they are being evaluated.

Especially in the energy sector, where upfront capital investments can be in the hundreds of millions of dollars, this uncertainty has the potential to inhibit foreign corporate investment here.

In addition, the Indonesian government also has policies that make operating difficult for clean energy companies.

Heavy subsidies for fossil fuels continue to make dirty transportation and generation cheaper than clean alternatives.

And then there is Indonesia’s “Negative Investment List,” which limits foreign investment in a variety of sectors and projects, including in power plants producing less than 10 megawatts of energy. 

I have been told Indonesia is working to amend this law, and I do hope the government will continue to roll back this and other anti-competitive regulations.

The “Negative Investment List” may have the laudable goal of nurturing a stronger innovation ecosystem in Indonesia. 

But in practice, laws like this limit foreign direct investment and imports from abroad that can deliver new products and services to the Indonesian people and enhance innovation within Indonesian partner companies.

Ultimately, all the United States seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business.

I have been discussing these and other concerns with my Indonesian counterparts.

As you might expect, we do not always agree.

But I believe we can continue to address matters of disagreement with a spirit of trust and cooperation.

I think it speaks to our shared values that Indonesia’s national motto “Bhinneka Tunggal Ika” or “many, yet one” is so familiar to Americans. 

On the back of every coin in America is a motto adopted by our Founding Fathers – “E pluribus Unum” – which means “out of many, one.”

This core belief that we are strongest when we act together with a common purpose lies at the heart of both of our societies.

And it’s an attitude that must guide our efforts to address our energy and environmental challenges.

Working together, Indonesia and the United States can help one another power our factories, airplanes, cars, motorbikes, “bajaj” and homes with cleaner and more efficient technologies.

In the process, we will create new opportunities for both our peoples. 

And we will help lead the world away from the brink of environmental disaster.

This is our chance to join together to write a new chapter – a better, more hopeful chapter – in the world’s story.

Let us seize the opportunity.

Thank you.