Amidst uncertainty of global
economy, Indonesia chalked up economic growth faster than other nations.
Somehow many people questioned quality of economic growth of a country which
was supposed the second highest next to China.
Indonesia’s economic growth in
quarter 3 of 2012 was under 6.17% amidst world’s adverse economic condition.
The economic growth of 6.17% was sustained by domestic consumption (around 53%)
and up jump of invitation (around 33%1).
Economic growth over the period
of July-September was slower compared to two previous quarters, i.e. 6.4% and
6.3% respectively. The downturn of quarterly economic growth was on account of
declining export due to lessened global demand. Through January-September 2012,
export value slumped by 6.06% against same period the previous year to become
USD 143 billion.
Although slowing down, in fact
realization of economic growth in quartet 3 2012 had met analysts prediction.
Most analysts and economists rated realization of economic growth in quarter 3
was not bed at all. As footnote, economists predicted economic growth of
quarter three would be around 6.2% to 6.3%.
In view of economic growth in
quarter three which was only 6.17%, the Central Statistics Board (BPS) and even
the Government were beginning to be pessimistic about attaining the growth
target of 6.5%. Analyst and economists shared the same view they doubted that
economic target growth would be attained. According to their calculation,
economic growth of 2012 would be merely around 6.4%.
But then hope breezed out that
investment and realization of Government’s spending could lift up economic
growth in quarter 4 to 6.5% so target for that quarter would be met. The logic
was that economic growth of quarter four must be at least 6.7% so the target
of 6.5% for the year could be met.
Analysts and economists rated
that the target to be pursued by the Government was hard to attain amidst down
turning export performance. Long before the 6.5% target was announced,
international monetary institutions like IMF announced, international monetary
institutions like and the World Bank had set forth the same predictions.
In World Economic Outlook of
October 2012 edition, IMF projected Indonesia’s economic growth at only 6.0%
for this year 2012. The reason was that recovery of global economic slowdown
was dragging slow. European states still had to struggle to escape from the
tangles of debt while US economy was losing steam till next year. On the other
hand the impact of global economic crisis had spread out emerging markets
especially China and India.
It was noteworthy that Bank Indonesia
was still optimistic that the nation’s economy would constantly strengthen
this year. Survey unveiled that BI as Central Bank estimated Indonesia’s
economic growth this year would grow by 6.4%, which was higher then the
previous projection of 6.3% because of growing domestic consumption and growing
investment.
BI’s survey in October last
unveiled that the propelling force of economic growth was domestic consumption
and investment. Household consumption far the past six months grew by 4.8% on
the average. Meanwhile investment also increased by 9.6%. Strengthened by Government
expenditure which was around 91% and downpressing import to the level of 9% alone,
projection of economic growth of 6.4% this year was quite reasonable.
Is this the point of arrival? Not
yet. The Government still had to consider the impact of economic growth for the
people. As known many accusations were addressed to the Government that Indonesia’s
economic growth did not correlate with the quality. Among the indicators was poverty
figure.
Sometime ago, the Ministry of
Finance Agus Martowardojo admitted that poverty figure had not declined significantly.
He was expectant that progressed economy would drive pro-job and pro-poor
program previously President Susilo Bambang Yudhoyono said the same thing.
The Government admitted that
poverty figure of around 20 million to 30 million was notably high. This year
the Government set target for poverty figure to become 9.5% to 1056% from the
previous 11.9% of total Indonesian population. Not less interesting was that
economic growth means absorption of a vast number of workforce.
BPS noted that the total number
of employed workers per August 2012 lest was 110.8 million people, an increase
of only 2 million people compared to 2012 or 1.2 million compared to August
2011. All in all unemployment level per August 2012 reached 6.14% or slightly
dropping compared to February 2012 which was 6.32%.
And yet Government's target had
it that 1% of economic growth could accommodate 450,000 workers. Assuming that
economic growth came to 6.17% it meant that 2.7 million workers would be accommodated.
Only trouble was Indonesia’s economic growth created wider disparity of income.
The National Planning Development
Board (BAPPENAS) had noted gini ratio had come to 0.41 in September 2012 last,
this figure rose horn 0.35% in 2007. The higher the gini ratio the wider the
income gap. All unpleasant accusations must be responded by the Government with
better and more focused policy design.
There ware grievances that the
emerging middle class in Indonesia caused by economic growth resulted in
widening social gap. The structure of economic growth was also energized by the
service sector like communication and finance. On the Other hand index of
Human Development did not change drastically.
UNDP noted that Indonesia’s index
of Human Development (IPM) was in 124th position among 187
countries. Indonesia’s position was below South Africa but above Vanuatu. Compare
this against the Philippines which was in 122 position and Malaysia in 61
position. As footnote economic growth of the Philippines (4.5%) and Malaysia (5%)
were below that of Indonesia.
All in all the Government seemed
to have to work hard to realize a high quality development amidst global
economic uncertainty. This could begin with better allocation structure in the
APBN State Budget 2013 and so forth especially in relation to size of subsidy.
The size of subsidy for oil had its
serious impact on APBN State Budget it even burdened the Government in making
expansion in the regions in Indonesia. For that matter the efficiency strategy
by abolishing oil subsidy should be carried out so the fund could be allocated
for more productive spending.
There were some options of
strategies for strengthening APBN State Budget structure. i.e. adjustment of
oil price, limitation of oil consumption, conversion from oil to gas, green
automotive and hedging of oil price. The size of oil subsidy had its impact an
many things. For example less opportunity to regulate government expenditure to
be more productive and sensible, oil consumption being herd to control which made
oil reserves to dry out faster, while it would encourage misuse of cheap oil
but discourage development of alternative energy.
The condition had it s impact on
lessened opportunity to control distribution of subsidized oil to be on-target
and meet the sense of justice, while it also undermined nature conservation
program. To minimize the risk, there were recommendations to reduce oil subsidy
in 2013 which could be done by combining several policies. This became a
pressing necessity to consider that the amount of subsidy kept swelling time
after time.
The point was that subsidy burden
in APBN budget needed to be controlled to make fiscal healthier and prevent
excessive consumption. The reduction of oil subsidy could even enlighten APBN
burden. The portion of energy subsidy which was still big, reduced government’s
discreet to make expansion of infra structure and other important programs.
Being the biggest portion in the
budget structure, the oil subsidy automatically expended year after year.
There were even some factors which were rated as the cause of high oil subsdy.
Firstly, world’s oil price and
Rupiah exchange rate value. Increased oil price and depreciation of Rupiah
caused energy subsidy including oil subsidy to soar up.
Secondly Oil consumption kept
constantly increasing by volume. The nation’s growing economy and increased
number of vehicles could cause high consumption of subsidized oil.
Thirdly, selling price of
subsidized oil was lower. The wider the disparity between subsidized oil and
non-subsidized oil the greater the migration of consumers from non subsidized
oil to subsidized oil.
Fourthly, distribution of
subsidized oil which was off-target. In this case most of the subsidized oil
was still enjoyed by consumers of the middle class and up. Therefore efficiency
strategy of subsidized oil must be exercised whereby the saved fund could be
allocated for more productive spending. The Government must constantly strive
to re-allocate subsidy fund for better expenditure.
To make a breakthrough, the
Government’s courage was needed to make price adjustments of subsidized oil.
For example, to increase price by Rp 500 per litre for private cars; further
all public transportation for passengers and cargo must use gas as fuel, and
four-wheel private cars were forbidden to use subsidized oil. It was perhaps by
such a courage that economic growth of good quality could be maintained and be
enjoyed by all people.
Business News - November 30, 2012
