Consistency of Priority Agenda Items

After his inauguration, President Joko “Jokowi” Widodo announced five priority agenda items for the next five years.

KOMPAS/TOTOK WIJAYANTO

Enny Sri Hartati

First: human resource development. The target is to train people who can work hard and are dynamic, skilled and masters of knowledge and technology. Therefore, the President requires all ministers to work hard and be fast, productive and not corrupt. Ministers must be creative and innovative, not just trapped in monotonous work routines.

Second: continue infrastructure development, especially if it can drive business efficiency and connectivity.

Ministers must be creative and innovative, not just trapped in monotonous work routines.

Infrastructure should be able to connect production centers or industrial estates with distribution channels so as to reduce logistics costs. Infrastructure must be able to support productive activities, as well as add value to the domestic economy and create new jobs.

In the Global Competitiveness Index ranking of infrastructure utilization, Indonesia dropped from 87th position in 2018 to 89th in 2019.

Third: resolve regulatory constraints. The government is committed to issuing two laws, namely an employment creation law and a micro, small and medium business empowerment law. To eliminate regulatory uncertainties, the government plans to push for passage of an omnibus bill.

KOMPAS/PRIYOMBODO

An officer explains the online single submission (OSS) service to customers at the One-Stop Integrated Service (PTSP) outlet of the Investment Coordinating Board (BKPM) in Jakarta in July (26/7/2019). The government wants to ensure that the OSS system runs smoothly to provide fast online business licensing services to attract more investment to various regions.

These laws are to harmonize the licensing bureaucracy and the overlapping central, regional and sectoral regulations, as well as deal with employment issues.

Fourth, the simplification of bureaucracy on a large scale. Bureaucratic reform has proven to be not really optimal in increasing the effectiveness of government works. Investments are still hampered by complicated licensing procedures.

The President said he is committed to serious reforms of the bureaucracy and to cutting the large bureaucracy, even by cutting echelon levels.

Fifth: economic transformation. The low national productivity has been caused by the failure of structural transformation. The economy still depends on traditional sectors, which still focus on natural resources. The manufacturing sector has actually experienced a massive deindustrialization.

The low national productivity has been caused by the failure of structural transformation.

The five priority agenda commitments would be able to foster public optimism. People are waiting for the emergence of a dream team from the new Cabinet. Unfortunately, when the Cabinet was announced on Wednesday morning (23/10/2019), the stock market responded negatively. The Jakarta Composite Index (JCI) fell into the red during the morning trading session that day. After the announcement of the new Cabinet, the JCI dropped to 6,214, but it managed to gain ground in the afternoon trading session and rose to 6,225.49 by the close of trading.

On the following day, the JCI opened at 6,244.41, a 0.3 percent increase of 18.91 points because of strong domestic purchases.

KOMPAS/PRIYOMBODO

A double exposure photo shows the value of the Jakarta Composite Index in the first trading session on the Indonesia Stock Exchange in Jakarta on Monday (21/10/2019). The index closed up 7 points, or 0.11 percent, at 6,198, even though it previously weakened.

Bet of consistency

The market response cannot fundamentally be used as a reference for market confidence, especially in the long run. However, historically, at least, almost all of the initial steps of a new government, such as the announcement of a new Cabinet, have always been anticipated with new hope or positive sentiments. In comparison, the stock market euphoria following the first election of Jokowi to the presidency and the announcement of his first Cabinet was apparently not enough to convince investors in the real sector.

Especially now, the need to restore the confidence of the business world is becoming more urgent amid a slowdown of economic growth and a decline in Indonesia\'s competitiveness. Policy consistency and government commitment will become important factors in the success of the new government.

So, even though the economic team is dominated by political parties, they should work professionally.

There are at least five important notes on the President\'s commitment that need an immediate response so that they do not merely foster a positive sentiment, but are able to create investor confidence.

First, a professional cabinet

The appointment of ministers from political parties and non-political parties cannot be fully based on professionalism, but their competence should be in accordance with the principle of the right person in the right place. So, even though the economic team is dominated by political parties, they should work professionally.

KOMPAS/WAWAN H PRABOWO

Sri Mulyani, Nadiem Makarim and Retno LP Marsudi pose for a photograph shortly before being sworn in as ministers by President Joko Widodo at the State Palace in Jakarta on Wednesday (23/10/2019). In the Indonesia Onward Cabinet there are three other women besides Sri Mulayani and Retno Marsudi, namely Ida Fauziah, Siti Nurbaya and I Gusti Ayu Bintang Puspayoga.

Second, effective bureaucracy. The President has committed to creating an efficient bureaucracy and will even cut the government’s echelons. However, in reality, he added a number of deputy ministers. The urgency and proportion of the appointment of the deputy ministers has raised questions. There should be a standard about when the government appoints a deputy minister.

Third, the potential for demotivating civil servants. The President\'s plan to cut echelon levels must be carried out after an in-depth study. If not, it has the potential to demotivate government officials because almost all strategic positions are dominated by political parties.

Policy-making tiers can check and re-check to minimize errors or irregularities.

In addition, the slow performance of the bureaucracy is not necessarily caused by the level of authority. Policy-making tiers can check and re-check to minimize errors or irregularities.

Fourth, strengthen coordination. The affirmation that only the President and Vice President have a vision and mission is no longer a new thing. Even though the coordinating minister has a veto right to intervene in the technical ministry, it is still difficult to eliminate sectoral egos.

KOMPAS/WAWAN H PRABOWO

President Joko Widodo (left), accompanied by Vice President Ma\'ruf Amin, is preparing to announce the names of deputy ministers for the Indonesian Onward Cabinet at the Merdeka Palace in Jakarta on Friday (25/10/2019). There were 12 deputy ministers for 11 ministries who were sworn in on that day

Fifth, the commitment to form a clean government. Since the Cabinet must be accommodative and representative it can be very colorful. However, the Cabinet members should be professional and have integrity. There should be no tolerance for duplicity and double-dealing.

Besides, the Corruption Eradication Commission (KPK) should have been involved from the beginning to examine the integrity of prospective ministers.

These concerns should be used as an early warning to ensure the Indonesian Onward Cabinet works to meet the President\'s target. Moreover, future economic challenges will be even more difficult. In addition to the decline in the competitiveness ranking, Indonesia’s ranking in the 2020 Ease of Doing Business Index issued by the World Bank is also stagnant at the 73rd position.

Read more : The Urgency After the Inauguration

Extraordinary efforts and consistency from the government are therefore needed so that negative market sentiments will only be short-term.

Kompas

Enny Sri Hartati

However, 34 ministers and 12 deputy ministers in the new Cabinet must be given the trust and opportunity to prove that they can work. In addition, the President must have accurate, transparent and accountable assessment indicators. Happy working and carrying out the mandate!

ENNY SRI HARTATI, Senior Researcher, Institute for Development of Economics and Finance (Indef)