Tough lessons: Indonesian finance minister on learning from crises

Over an extraordinary career, Dr Sri Mulyani Indrawati has seen more than her fair share of economic shocks.

A two-time Indonesian finance minister and former managing director of the World Bank Group, Mulyani has guided Southeast Asia’s largest economy through some of the most challenging economic conditions in the country’s history. And she’s quietly become one of the most powerful women in the world in the process.

Despite the serious challenges she’s experienced, Mulyani remains positive about her country’s future. Visiting Australia to receive an Honorary Doctorate from The Australian National University (ANU) for her contributions to economic development and reform, she shared some of the lessons she’s learned along the way with ANU graduating students.

“My journey in public service has been an extraordinary privilege and profound honour. It has been a journey of collective effort, shared aspiration and commitment to a brighter future for all Indonesia,” Mulyani said at Llewellyn Hall last Tuesday.

“Experience is the best teacher and the worst experiences teach the best lessons.”

Dr Sri Mulyani Indrawati

But the future hasn’t always looked so positive, especially during economic shocks which have “laid bare the frailties in Indonesia’s economic foundation, governance and financial regulatory institutions”.

The challenges have included implementing institutional reforms and creating fiscal consolidation in the aftermath of the Asian financial crisis in the late 1990s, stabilising the country’s economy after the global financial crisis and then “walking a tightrope” in preventing the spread of COVID-19 and managing the pandemic’s economic impact.

For Mulyani, these crises provided valuable lessons about how to improve governance and reform financial institutions.

“Experience is the best teacher and the worst experiences teach the best lessons,” she said.

Currently the head of one of the largest finance ministries in the world, with around 62,000 employees, Mulyani spoke about her government’s ‘Vision 2045’ – a goal to reach high-income status and near-zero poverty by the centenary of Indonesia’s independence.

To reach high income status by 2045, the country’s economy must grow by at least six per cent annually, according to government figures. But Indonesia has grew by around five per cent, just shy of this target, in 2022.

“As COVID-19 dissipated, we are confronting more complex international and global challenges,” Mulyani said.

“The pandemic has left an indelible mark on the global economy including slower and uneven growth.

“Even though moderating, inflation globally remains relatively high prompting higher-for-longer interest rates.

“Furthermore, the escalation of geopolitical tensions has evolved into a challenging global economic landscape.”

Still, Mulyani is “filled with gratitude for the support of my fellow friends, citizens and a deep sense of optimism for the task that lies ahead”.

“Beyond economic numbers, we believe pursuing high income status is also about inclusivity. Indonesia is committed to social inclusion, including gender equality, implementing policy to reduce poverty, addressing income inequality and ensuring the benefits of economic growth are shared equitably.”

She noted that key structural gaps need to be filled, including in human capital and infrastructure development, as well improving institutional and regulatory conditions to create a more competitive investment climate.

“A robust investment in human capital, especially education, skill development and health care are critical.

“That is why Indonesia is sending a lot of students [to study abroad], including here at ANU, and I am very proud to see many Indonesian students studying here at this university.”

Dr Sri Mulyani Indrawati received her honorary doctorate in December 2023 alongside 3,384 ANU graduates.