An economic discussion titled "Dealing with the Changing Economy" was held by the Kompas daily in Jakarta, Tuesday (12/9). Attending the discussion as speakers were University of Indonesia (UI) economics and business department head Ari Kuncoro, Bandung Institute of Technology’s business and management school lecturer Kuntoro Mangkusubroto, Bogor Institute of Agriculture lecturer Dwi Andreas Santosa, Institute for Development of the Economy and Finance researcher Reza Hafiz, Aqua Danone vice president of human resources Pambudi Sunarsihanto and UI economist Faisal Basri. The discussion was moderated by Atma Jaya Catholic University Jakarta rector Agustinus Prasetyantoko.
JAKARTA, KOMPAS — Indonesia is facing stagnant economic growth after the end of the era of primary commodities in 2011. In a bid to bring back 6 percent growth, aside from fixing structural problems, Indonesia also needs adjustments in some aspects because the economy is shifting along with the changes in human lifestyle.
That was the conclusion of an Economic Discussion Panel held by Kompas on Tuesday (12/9) in Jakarta. The discussion, titled “Dealing With A Changing Economy”, was moderated by Jakarta-based Atma Jaya Catholic University rector Agustinus Prasetyantoko.
Speaking as panelists at the discussion were University of Indonesia economics and business department dean Ari Kuncoro, UI economist Faisal Basri, Bogor Institute of Agriculture lecturer Dwi Andreas Santosa, Bandung Institute of Technology school of business and management lecturer Kuntoro Mangkusubroto, Institute for Development of Economics and Finance researcher Reza Hafiz and Aqua Danone vice president for human resources Pambudi Sunarsihanto.
Faisal Basri said macro-economic indicators recorded many positive notes, such as low inflation, increased foreign reserves and a normal current account deficit.
On the other hand, economic conditions have reached a new, lower balance. This is shown by slowing economic growth. In 2010-2012, economic growth was above 6 percent on average. However, in the next period, average economic growth was around 5 percent. Indeed, this year and next year, growth is estimated at around 5 percent.
Reza Hafiz said after the global economic crisis, a majority of the countries in the world, either those with medium or high incomes, tended to use fiscal stimulus to bring back economic growth. Countries with medium-low incomes like Indonesia tried to boost consumption. Meanwhile, the high-income countries tended to choose tax incentives.
Unfortunately, Reza said, the option of expansive fiscal policy in Indonesia was not followed with tax revenue capability. Consequently, government debt swelled. The average growth in loan interest and repayments of new debt in the past five years was 16.8 percent and 26.7 percent, respectively. Meanwhile, state revenues grew 5.5 percent and state expenditures grew 7.16 percent.
“It means debt grew faster than the state’s ability to repay the debt through state revenues,” Reza said.
Ari Kuncoro said the economy had changed. The changes were triggered by human lifestyle changes along with developments in technology. In the economy, this changed consumption and production patterns.
In consumption, for example, there is a change in the hierarchy of needs as reflected in the growth of hotel and restaurants as well as education and health that were higher than household consumption. This changed the production aspect.
Along with these changes, manpower needs also changed. In the past few years, the number of workers in the service sector has grown. Meanwhile, the growth of workers in the manufacturing sector was relatively stagnant. In primary commodities, it declined.
Pambudi Sunarsihanto said the business sector saw that the era was changing and so competition and business had changed too. For companies, this condition forces them to change their businesses and recruit the best workers they can.
“They need to be competent, self-confident and able to communicate and adjust themselves to changes and different cultures,” Pambudi said.
Meanwhile, Kuntoro Mangkusubroto said policies that were not based on good governance would create complicated problems, especially in the medium and long term.
Kuntoro said the government needed to develop an effective governance system.
Food
In the food sector, the government’s working programs in the 2004-2014 and 2015-2019 periods were similar, although there was a far higher budget for infrastructure repair, fertilizer subsidies and seeds. Agriculture and food budgets grew from Rp 38 trillion in 2014 to Rp 73.2 trillion in 2015, Rp 58.6 trillion in 2016 and Rp 54 trillion in 2017.
The government through the Agriculture Ministry has claimed steep growth in production, mainly of rice and corn. Rice production reached 75.4 million tons of hulled rice in 2015 and 79.14 million tons in 2016.
According to Dwi Andreas Santosa, the rice surplus based on production figures stood at 22.7 million tons in 2015-2016. But, the surplus was not reflected in the market price.
During 2017, medium-grade rice was priced at more than Rp 10,500 per kilogram. This is higher than the reference purchase price.
A surplus was not reflected in corn either. The situation turned chaotic when the government decided to reduce corn imports in 2016 and stop corn exports in 2017.
Andreas said problems emerged because the government used production data that was not accurate.
