Jokowi lays out reform agenda

JAKARTA. President Joko “Jokowi” Widodo unveiled on Thursday his ambitious medium-term economic agenda, which includes plans to boost domestic production, spur growth and improve the fiscal balance to levels that Indonesia has not seen in decades.

The new government would implement a different approach in developing the economy, said Jokowi, adding that he sought to reform what he called the “wrong” public policy approach undertaken by his predecessors.

Indonesia, which currently relies on imports to meet strong domestic demand, would strive to secure sovereignty in food and energy, while also paying special attention to maritime-based infrastructure, the President said during the National Development Planning Conference (Musrenbangnas) in Jakarta.

The concept of food sovereignty, also known as import-substitution policy, has been criticized by many foreign economists and international organizations, including the Organisation for Economic Co-operation and Development (OECD).

They have argued that it would be economically inefficient for a country to push its industries to manufacture goods that they are not accustomed to producing, while it is actually cheaper to import from overseas in the globalized world economy.

“I will directly oversee this country becoming self-sufficient in rice, having no more rice imports within three years,” said Jokowi to applause from the governors, regents and mayors in attendance.

“We are rich in rice, sugar, soybeans, corn and other commodities. We have the potential and the ability to secure food sovereignty — the prospect to be independent is there, but we have not yet implemented the correct public policy,” he remarked.

During the conference, Jokowi’s economic ministers also delivered presentations that set out ambitious goals such as spurring economic growth to 8 percent and reducing the budget deficit to 1 percent of gross domestic product (GDP) by 2019.

In the third quarter this year, Indonesia’s economy grew by only 5 percent, the slowest in five years. Meanwhile, the fiscal shortfall for this year stood at 2.4 percent of GDP, equivalent to Rp 241.5 trillion (US$19.2 billion).

Stronger economic growth and a healthier fiscal balance, the economic ministers claimed, could be achieved through the reallocation of costly fuel subsidies to growth-generating infrastructure projects, the development of which would also attract foreign investors.

Within Jokowi’s five-year presidency, the government plans to build 49 new dams, develop 24 seaports and establish new power plants with a combined capacity of 35,000 megawatts, according to a medium-term economic blueprint formulated by the National Development Planning Board (Bappenas).

The development of highways (toll roads) is to be quadrupled from the 260 kilometers constructed in the last five years to 1,000 km by 2019, while railways will be extended from 5,434 km to 8,692 km.

To realize these infrastructure projects, the government would cut bureaucratic red tape, Jokowi said; for example, investors will only have to go to the Investment Coordinating Board (BKPM) to process their business permits, instead of visiting many layers of ministries — a change that could take effect in January 2015, he said.

He added that the government would also improve the project planning capacity for ministries and institutions so that they could disburse funds more efficiently.

Finance Minister Bambang Bro-djonegoro explained that the manufacturing and tourist industries would have a “balancing” role that aimed to attract dollar-denominated earnings from the export of goods and influx of tourists, so that the country’s balance of payments would remain in healthy shape despite its rapid economic expansion.

“If there is no crisis in the global economy, God willing we can grow 7 percent as early as 2016,” the minister said.

Over the past few years, Indonesia has struggled to maintain economic growth at above 6 percent as the collapse in commodity prices hurt its exports.

The country also showed signs of overheating as the rapid economic expansion relied heavily on imports, which led to a bloated current-account deficit. Aware of the instability in the domestic economy, Bank Indonesia has lifted its interest rate to the highest level since 2009, in a bid to put the brakes on overly speedy growth. (Satria Sambijantoro)