Indonesia 2020’s State Budget Aims More Export, Investment Stimulus
Indonesia President Joko Widodo voted at the 2019 Presidential Election in Jakarta. Photo: Privacy.

JAKARTA (TheInsiderStories) — Amid the continuing uncertainty of global economic conditions, Indonesia President Joko Widodo demands the next year’s State Budget to have high resiliency. In a meeting with his vice president and ministers, Widodo wanted the budget to have more stimulus for boosting export and investment.

“The 2020 state budget must be able to provide a stimulus to investment and exports, as well as a stimulus for good, equitable and fair economic growth,” Widodo said, as there are economy gaps between several Indonesian regions.

He stressed that export and investment increase are the key for Indonesia’s economic competitiveness. So these are needed to anticipate the dynamics of the changing world economy.

“I need to remind you that the challenges we have to face in 2020 are increasing and not easy. We must anticipate the dynamics of the world economy that is constantly changing dynamically and keep moving and the key is to increase economic resilience and competitiveness,” said Widodo in Jakarta today (04/22).

Moreover, the next year’ budget will focus on human resources development and social security, continuing the 2019’ focus, as Widodo switched focus from infrastructure to human resources development last year.

Widodo, who was stated won in Indonesia’s presidential election temporary result, asked his team to arrange the state budget in detail. All programs in the budget must be able to be implemented and measured, he said.

The next year’ State Budget plan seemed to not change much compared to this year. The 2019’ budget aims in achieving justice, reducing poverty, creating employment, and overcoming disparities. Furthermore, the fiscal policy is also expected able to respond the dynamics of global volatility, answer challenges, and support the achievement of optimal development targets.

This year, there’s Rp296 trillion (US$21.14 billion) deficit in the state budget posture. The revenue gathered is expected at Rp2,165.1 trillion. Meanwhile, the estimated expenditure is higher at Rp2,461.1 trillion. Education budget, as a part of the human resources focus, has been increasing since 2017.

Meanwhile, for the social security focus, health budget seen an uptrend since 2015, although the portion of the state budget is still lower than 10 percent. It only covers Rp123.1 trillion, including for the controversial health protection which caused deficit.

Widodo’ focus on infrastructure has been switched lately. It is seen from the slowdown infrastructure budget. In 2019, the infrastructure allocation budget only increased by 1.04 percent to Rp415 trillion. While in 2015 and 2017, the budget allocation jumped by 65.5 percent and 44.3 percent respectively.

Meanwhile, amid world economic growth in 2019 which is projected to remain at a low level of 3.3 percent, the April 2019 World Economic Outlook (WEO) projects Indonesia’s economy will still grow 5.2 percent in 2019.

This can be seen from the implementation of the 2019 State Budget to March 31 running safely in accordance with fiscal policy, according to the April 2019 edition of the state budget report today.

Reportedly, the realization of State Expenditure grew by 7.7 percent (yoy), higher than the previous year which grew 4.9 percent (yoy). The realization of the State Expenditures includes Central Government Expenditures of Rp260.74 trillion (15.96 percent of the State Budget ceiling) and Transfers to Regions and Village Funds of Rp.191.33 trillion (23.14 percent of the State Budget ceiling).

The good achievement of State Expenditures is supported by State Revenues which grew by 5.0 percent (yoy). This State Revenue Growth is supported by the realization of tax revenues which have reached 15.78 percent of the target or are able to grow by 1.82 percent (yoy) and the realization of customs and excise revenues which grew quite significantly by 73.04 percent (yoy).

This good tax revenue achievement is inseparable from the policy of accelerating tax refunds in order to provide stimulus to the economy.

In addition, this performance was also supported by the achievement of Personal Income Tax which grew 21.4 percent (yoy) higher than the same period in 2018 of 17.6 percent (yoy). Meanwhile, the good growth in customs and excise revenues is driven by the excise tax payment policy and the absence of changes in tariffs in 2019.

In addition to being supported by tax revenues, State Revenues also come from the realization of Non-Tax State Revenues which, among others, are supported by the realization of Non-Oil and Gas Natural Resources revenues reaching Rp8.23 ​​trillion, an increase compared to the same period in 2018 of Rp8.11 trillion.

In addition, the realization of Other Non-Tax State Revenues in the same period reached Rp25.77 trillion, slightly higher than in 2018 which reached Rp24.87 trillion.

Meanwhile, the realization of the State Budget deficit and primary balance is quite manageable at 0.63 percent of the GDP and negative primary balance of Rp31.4 trillion.

US$1: Rp14,000

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