Ari Kuncoro Discusses Government’s Efforts to Encourage Indonesia’s Economic Growth
Rima Noersita Sarvi ~ Humas FEB UI
President Joko Widodo asked ministers to speed up spending on ministries and institutions. With the acceleration of spending, it is hoped that it can drive Indonesia’s economic growth.
“The growth rate of 2019 gives us a kind of yellow light. Because the slowdown happened at one time, it grew to only 3.66% from 4.5%. This is a significant reduction. Secondly, the trade sector has practically weakened its growth. This shows that the consumer is holding back his income. Because from survey data, they have income. And expectations of future income are still good. But looking at the data again it turns out they are still shopping for food, drinks and traveling. that we see from the transports sector which reached 7.6% and 6.44% growth in the hotel and restaurant sector. However, this growth is not enough to compensate for the slowdown in the manufacturing and trade sectors. ” Ari said.
According to Ari, the Government must anticipate, because only government spending can provide stimulus. But, certainly not by slowing the deficit. Of course, with the acceleration of expenditures, for example: routine expenditure, maintenance expenditure, procurement expenditures for goods (not capital goods), and official travel. So he felt, this could be used as a tool for stimulation. Because at this time the trade sector and the hotel restaurant sector are the motors. Especially with the development of cities other than Jakarta.
All government potential must be used to boost the economy. What is very important now is that the Government must create minimum essential growth (MEG). Why? Because this can affect investors. “Indeed, it cannot compensate 100%, especially now that there is Corona, etc. But we must maintain that economic growth does not get far below 5%. Because it is a signal to investors that Indonesia is still a good place to invest. ” concluded Ari.
The outbreak of the corona virus in Wuhan is a serious challenge for Indonesia because the Indonesian and Chinese Business activities are quite large. So that if there is an economic slowdown in China, Indonesia will feel the impact. In Q1 in 2020, the Indonesian Employers’ Association (APINDO) estimated economic growth in the range of 4.8% to 5.1%. However, the Corona virus continues to spread and greatly impacts the economy. Then the possibility of economic growth in Indonesia in Q1 2020 is below 5%.
Currently, the most effective is to run routine shopping. Routine expenditure is expenditure spent on maintenance of offices, for official travel of employees, and for the transfer of village funds. “I think this will be enough to compensate because the Corona virus was only heard at the end of December, then gave negative expectations in January. Thus, there are still around 1.5 months to compensate for declining expenses. Hopefully this will not fall too much in quarter 1. Because it can affect growth for 2020. ” Ari said.
According to Ari, the important thing now is that the government must maintain a minimum growth for momentum. So, the government needs to anticipate how this sudden drop in data demands on compensation. Compensation such as acceleration of government spending, investments that are labor intensive, then transfers of village funds and also things that are routine expenditures. While from Bank Indonesia, it can reduce the benchmark interest rate.