Finance Minister Sri Mulyani, Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan and Bank Indonesia Governor Agus Martowardojo (left to right) brief reporters after a coordination meeting discussing the IMF-World Bank Annual Meeting 2018 at the Finance Ministry building in Jakarta on Tuesday (13/6). The annual meeting is scheduled for October 12-14 next year in Nusa Dua, Bali.
JAKARTA, KOMPAS — In the first three years of his leadership, President Joko Widodo carried out reforms in several areas. Sustainability and expansion of the areas of reform are needed for a better Indonesia. Yet, such efforts will face challenges in the political years of 2018 and 2019.
“Every government that wants to balance the need for structural reforms and the populist intention will face challenges during political years,” said World Bank acting chief economist Hans Anand Beck at the launch of its June edition of the Indonesia Economic Quarterly Report in Jakarta on Thursday (15/6).
For the World Bank, the Indonesian government has a strong will to carry out structural reforms. This can be seen from the reforms on the State Budget, expenditure and revenue as well as business licensing, among other efforts.
Challenges that face the sustainability of the structural reform agenda are included in the June edition of the economic report. It mentions that the regional elections will be held in 2018, followed by the legislative elections and the presidential election in 2019.
As the elections approach, room to make the structural reforms that are critical for Indonesia is becoming limited. The increasing political competition makes the implementation of structural reform difficult, as it is often the case that structural reform is not populist.
Economist Faisal Basri previously said the government had to continue with the structural reform agenda. Some vital areas have not been reformed, including the manufacturing and agricultural industries.
Faisal also criticized President Joko Widodo, who has lately resorted to political compromise, as this will lead to misguided economic policies.
Separately, Finance Minister Sri Mulyani Indrawati said there were many kinds of structural reform that did not trigger political noise, such as improving the capacity of the Tax Directorate General.
Subsidy program
That meant, Sri Mulyani said, that the government would continue to push the structural reform agenda, there by maintaining good political communication with all stakeholders.
“The government will maintain good relations with political parties and the House. In order to maintain the momentum of growth, we will keep it going so that crucial programs can be implemented,” she said.
One of these programs was the government subsidy for the poorest 40 percent of the population. Each subsidy program, Sri Mulyani added, would be discussed with the House to ensure that good communication would always be maintained.
Sri said that, as the political years of 2018 and 2019 would be marked by uncertainty resulting from political dynamics, the national economy must provide certainty, rather than creating more uncertainty.
Such a motivation has been translated into the draft 2018 State Budget. One of the concrete examples of this was ensuring that macro assumptions were realistic without losing optimism.
“The President wants to convey our optimism. I think we have many reasons to be optimistic. However, it does not mean that we are not being careful. Optimism plus carefulness will bring trust,” Sri Mulyani said.
