Crucial Point Of Indonesia’s Economic Challenges

Amid the intention and efforts of the government of Indonesia has spurred Indonesia’s economic growth, essentially we have many crucial point of Indonesia’s economic challenge which could be solved for sustainability of strengthening national economic. The crucial point of these are firstly, PLN debt has been increasing. State electricity firm PLN has stated that it still needs additional financing worth Rp 468 trillion (US $ 34.5 billion) to develop various infrastructure for the government flagship 35,000 megawatt (MW) program. This statement comes about amid rising concern over the company’s debt.  By the end of the first half of this year, PLN’s liabilities reached Rp 420.5 trillion, a 9.8 percent increase year-on-year. It net profits plunged 71.7 percent to Rp 2.24 trillion.

Previously, PLN has come into the spotlight lately following the leak of a letter dated Sept.19 from Finance Minister Sri Mulyani Indrawati to Energy and Mineral Resources Minister Ignatius Jonan, State-Owned Enterprises (SOE) Minister, Rini Soemarno and PLN President Director Sofyan Basir.

Secondly, exploration target in the upstream oil and gas has predictably been out of reach. The government is once again unlikely to meet its exploration target in the upstream oil and gas sector by the end of the year, for the third year in a row, because of the impact of the previous global oil price slump. Latest data from the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) show that upstream exploration activities are not expected to reach the year-end targets once again.

Between January and August, only 10 or 22 percent, of the planned 45 two-dimensional and three-dimensional seismic surveys for exploration had been conducted, according to the data. During the same period, only 29 percent of 138 exploration wells under companies work plans and budgets this year were actually drilled.

Thirdly, state budget potential losses at dozens of government institution. State budget inefficiency and prudence are among concerns of the government, particularly at a time when tax revenues have dropped and export earnings have fallen. The Supreme Audit Agency (BPK) found 14,997 irregularities streaming from weak internal control, incompliance to laws and inefficiencies in the first half of the year, which may cost the country Rp 27.4 trillion (US $ 2.03 billion).

Fourthly, Indonesia’s fiscal and monetary measures likely to be less effective. Fiscal and monetary measures taken by the government and the central bank recently are projected to convert into real economic growth at a slow pace owing to changes in consumer spending and the financial industry.

As part of efforts to accelerate economic growth, the government has allocated a larger stimulus in the state budget, while Bank Indonesia on the monetary side has begun slashing benchmark interest rates.

Strategically, in the case of Indonesia, the economic difficulties were exacerbated by political difficulties. There was a change of government after many many years, that also affected the whole transition including political transition, confidence and economic performance.

However, Jokowi’s administrations must be ended and solved those national economic challenges, because if it did not quite solve, it will be trigerred an economic turbulence and those can impact on the implementation of national economic plan.

The debt of several state-owned enterprises will be happened if they must be done their obligation to fullfil President’s instructed that state-owned enterprises must be supported intrastructure development financing, because the capability of state budget didn’t enough to financing the massive and too much infrastructure development which must be done in Indonesia during Jokowi’s administration. If state-owned enterprises must have financed infrastructure development and they were failed, it could be endangered the cash flow of state-owned enterprises and severe also accute foreign debt trap which it was created during Jokowi’s tenure.

Meanwhile, the facts over state budget losses at dozens of government institution must be paid a deep and huge attention by President Jokowi, because state budget losses at dozens of government have been happening by un-controlled budget using and sometimes state budget had been used for un-necessary conditions such as to financing government task force at dozens government institution which the benefit of those task force have been still on the big questions, so many of task force at dozens government institution have just been made severe state budget losses.

*) Amanda Sylvana, Economic observer. Lives in Tabanan, Bali.