Confidence key to generating high economic growth: Long Yongtu

China's economy has been growing rapidly over the past several years and is predicted to be one of the world's giants in the future. Last week, The Jakarta Post's Dadan Wijaksana had an interview with Long Yongtu, former chief negotiator for China's entry into the World Trade Organization (WTO), who is currently the secretary-general of the Boao Forum for Asia, a forum designed to strengthen economic cooperation among countries in the region. He was asked about his views on what Indonesia could learn from China and the prospects in the relationship between the two countries.

The following are the excerpts of the interview:

Question: Unlike Indonesia, China has managed to develop its economy rapidly and gained the confidence of the international business community, as evident in the huge foreign investment in the country. In your opinion, what could Indonesia learn from China?

Answer: I think the focus is to enhance confidence in the country and also enhance confidence in international business in Indonesia, because from my experience, confidence is so important, especially in financial sectors, investment circles and others to boost investment. There will be no increase in foreign direct investment (FDI) or domestic investment if there is no confidence.

But, of course, that confidence building is a very complicated process. It needs good policies from the government and support from the people. Equally important is the unity or consensus building among the general public, because I think we need to accommodation all people and groups across the country. We also need to be patient and believe in what's best for the future of the country.

I think Indonesia is a great country, such a resource-rich country. The consensus building process should be there.

How would you suggest Indonesia reaches that consensus?

I think the foundation of consensus building is to share one aim, or one objective. In China, for instance, we focus on creating high economic growth.

I think there should be a common understanding of what is the most important for the country, and the most important above all is, I believe, economic development.

The turning point in China's economy was sharing that view: that economic development is paramount, so important that we should not engage in endless debates on other things. So it's a matter of priorities, how to determine the highest of your priorities.

In Indonesia, things should be the same. As a developing country, all people in Indonesia want to get rich, all people want to be more prosperous. So without economic development, how can you achieve that goal?

What do you see in the relationship between the two countries in the future?

I think China and Indonesia can forge a strong partnership, because of the mutual cooperation and good relations the two countries enjoy. So, I have full confidence that a closer relationship can be forged between the two countries in the future.

We have developed good cooperation in various areas. China is now quickly becoming the third largest consumer of oil, of which Indonesia could become one of the suppliers. Indonesia is also a big producer of rubber, palm oil and chemical products. China needs a lot of those commodities.

Turning to another issue, there have been rising calls for China to reconsider its policy on the yuan. Many argue that the yuan is currently undervalued, making other products from other countries which have stronger currencies less competitive in the international market. Your comments on that?

I think, that is a wrong perception.

China's high competitiveness is not based on the so-called undervalued currency. The competitiveness comes from its competitiveness in labor cost, a competitive business environment and rapid economic growth. These make China competitive especially with its huge market, which attracts a lot of foreign investment.

This is the basis of China's current competitiveness, not its (currency's) value. So it would not be fair to ask China to do that (revaluing yuan). China should make its own decision regarding the matter.

In Indonesia, we also have relatively competitive labor cost, why has Indonesia failed to emulate China in this area?

Well, of course, you have to look at it in connection to other factors, such as the quality of the labor. The quality of labor in China is good, because every year we produce two million new university graduates. So the quality of labor is important, and also a high degree of discipline, as well as productivity.