Mere Momentary Blessings

Kompas

Indef Enny Srihartati

The tradition of mudik (exodus) during Idul Fitri in Indonesia should be used as a powerful accelerator for local economies. More than 22 million local holidaymakers, plus many more from abroad, are projected to join the exodus. This massive movement of people has both cultural and economic nuances.

Furthermore, the government has disbursed Rp 20 trillion (US$1.4 billion) in holiday bonuses (THR) to civil servants, police officers, military personnel and pensioners. This does not include THR for private employees. Idul Fitri falls at the beginning of the month this year. Other than the THR, employees also received their monthly wages. Bank Indonesia projects that Rp 217 trillion will be spent in all transactions during Idul Fitri.

A Kompas R&D survey has confirmed this figure. Only 8 percent of respondents had prepared a holiday budget of less than Rp 500,000. The largest amount of respondents, or 34.9 percent, had prepared a holiday budget of Rp 500,000-Rp 3 million. Meanwhile, 26.3 percent had prepared more than Rp 5 million, 23.8 percent had prepared a budget of Rp 2 million-Rp 5 million, and 6.2 percent did not respond. This means that a majority of holidaymakers have prepared a holiday budget of more than Rp 1 million. At 22 million holidaymakers, more than Rp 220 trillion will be spent of money during the Idul Fitri holiday.

KOMPAS/ALIF ICHWAN

Customers browse through sale items on Monday (3/6/2019) at Blok M Square shopping center in South Jakarta. Many outlets offered wholesale prices and other promotional two days ahead of Idul Fitri.

This is no small amount, and is more than enough to accelerate the national economy. The problem is whether this blessing is a momentary one, like sudden rain during drought, or if we can save it in a reservoir to drive regional economies during a later drought.

It is hoped that the village fund will drive the local economy and provide added value for local potentials.

KOMPAS/PRIYOMBODO

Customers queue at a checkout booth on Monday (3/6/2019) during the Jakarta Great Sale Festival at a Kebayoran Lama shopping center in South Jakarta. Many vendors participate in the seasonal shopping festival to increase sales.

Two determinants are at work here. First is the availability and readiness of the “reservoir” in each region. Regions will be able to fill their reservoirs if they have enough potential and resources, including food products and unique souvenirs and handcrafts. With a variety of prospective and productive activities, local investors who have struck gold in big cities will be attracted to going home. If the regional government can boost local tourism, the region will enjoy so much more than financial returns. However, if a region is passive, holiday spending will channel back to big cities. It is hoped that the village fund will drive the local economy and provide added value for local potentials.

The second determinant is the potential of holidaymakers’ remaining funds to flow through the regional coffers and into productive sectors. Despite the large amount of money in circulation during the Idul Fitri holiday, where does most of this money actually flow? If we look into holiday spending, we discover that transportation is a major expense.

KOMPAS/YUNIADHI AGUNG

A dense crowd mills among shopping stalls on Saturday (1/6/2019) along the Tanah Abang Skybridge in Central Jakarta. The popular shopping area saw an increase in the number of visitors ahead of Idul Fitri.

The higher price of staple goods during Idul Fitri will affect how much of the holiday budget is left to fill the reservoir for productive activities. Food inflation is generally under control, but consumers are facing an increase in the price of onions, chili peppers, beef and other food commodities. If women complain in jest about increasing prices, it would not be a problem. In reality, however, this has significant effect on the total retail growth.

Therefore, the preparations ahead of Idul Fitri must not only cover transportation so that the blessings of mudik are not momentary. What is more important is for the THR to not be spent entirely on momentary consumption.

KOMPAS/PRIYOMBODO

Visitors browse through clothing at the 2019 Ramadhan Bazaar on 27 May 2019 at the Trade Ministry in Central Jakarta. The bazaar, which offered clothing, food parcels and other goods at low prices, was held until 29 May.

The holiday bonus will have a sustainable multiplier effect if it can drive demand for productive sector goods, especially microbusinesses in the regions. This will happen if, at the very least, the prices of staple goods are stable and public transportation fares are efficient. This will enable holidaymakers to use their THR to fill reservoirs across the regions. In this way, Idul Fitri will increase not only consumption, but also production.

ENNY SRI HARTATI, Executive Director, Institute for Development of Economics and Finance (Indef)