political economy of apbn in overcoming … · national level, tends to decrease from 0,81 (2011)...

MINISTRY OF FINANCEREPUBLIC OF INDONESIA

POLITICAL ECONOMY OF APBN IN OVERCOMING ECONOMIC DISPARITY

PROF. SUAHASIL NAZARA

Chairman of Fiscal Policy Agency

7 September 2017

1

2

O

U

T

L

I

N

E3

POLITICAL ECONOMY OF APBN

POVERTY AND INEQUALITY

•Economic Growth and Welfare Indicators (Poverty, Inequality, Unemployment Rate, HDI)

•Strategic Issues

FISCAL FOR OVERCOMING INEQUALITY

•APBN for Achieving welfare

•Tax for Redistribution

•Effectivity of Social Protection Programs

•Refocusing Priority Budgets

•Prudent Debt Management

FURTHER THOUGHTS

1

2

3

42

STRICTLY CONFIDENTIAL

POLITICAL ECONOMY OF APBN1

3

Politics (institution and policy) influence Economic Performance

In the other hand…

Economic Policy influences Political performance

Necessary factor for economic performance are political stability and rule of law.

Nevertheless…

Political success often based on sound economic policy (Inclusive,

sustainable, and Responsible)

Unlike (independent) monetary policy, Fiscal Policy is in the domain of

Executive Power. Current Government can decide the vision, objective

and technicalities of fiscal policy (Revenue, Spending, Financing).

POLITICS AND ECONOMIC POLICY

4

Technocratic Politics Governance

• Data analysis.• Economic

modeling.

• Long-term growth

strategy.

• Revenue, Spending

and Financing

Design.

• Political promises

• Cabinet

meetings

• Discussion with

Parliament• Regional budget

development

• Budget

acceleration

• Governance

• Accountability

and transparency

BUDGET IS A RESULT OF COLLABORATIONS

Parliamentary Process

5

BUDGET ROLE AS THE ANCHOR OF ECONOMIC DEVELOPMENT

STABLE AND SUPPORTIVE

ECONOMIC AND

BUSINESS CLIMATE

MAINTAIN PEOPLE

PURCHASING POWER

• Provide incentive to strategic sectors.

• Adjust non-taxable income to be inline with current condition.

• Infrastructure development

• Provide subsidy for poor and maintain people purchasing power

• Long term investment through education and health.

• Investment in SOEs to support priority programs.

• Bonds management to help deepen domestic financial market.

• Credible and productive debt management.

REVENUE

SPENDING

FINANCING

6


POVERTY AND INEQUALITY

• Economic Growth and Welfare Indicators (Poverty, Inequality, Unemployment Rate, HDI)

• Strategic Issues2

7

5,12

4,94 4,93

5,05

4,82

4,744,77

5,17

4,92

5,18

5,01

4,94

5,01 5,01

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016 2017

YoY (%) Tahunan (%)

5,0

4,9

5,0

Sumber: BPS, diolah

SOUND AND STABLE ECONOMIC GROWTH

Driven by domestic

demand

Positive international trade,

export grew by 5,8% &

import grew by 2,8%

GROWTH SNAPSHOT ON

SEMESTER 1 2017

Households consumption

grew by 5,0%

Capital investment

grew by 5,1%

Government consumption

grew by 0,0 %

8

Inequality is increasing during 2008-2012

then relatively stagnant afterward about

0,40-0,41.

In 2017, Gini ratio is declining to 0,393

Economic growth contributes

to poverty and inequality

reduction but not yet optimal.

Indonesian economy has

been steadily growing during

the last 10 years.

Average growth: 5,64%.

Poverty is decreasing yet the rate of

decrease has slowed down

2010-2012: Poverty↓0,116%

2013-2017: Poverty ↓0,049% Economic

growth ↑1%

Consumption of middle

income group grows

higher (nominal)Rata-rata nasional

1,34%

-1

0

1

2

3

4

0 10 20 30 40 50 60 70 80 90

Per

sen

(%

)

Poor Near Poor Middle Rich

Source: TNP2K

The growth of

consumption of

the poor (low

income group) is

very low

Real Consumption Growth, 2011-2016

IMPACT OF ECONOMIC GROWTH ON POVERTY AND INEQUALITY

9

National

average

1,34%

0,413

0,406

0,414

0,402

0,394 0,393

0,38

0,385

0,39

0,395

0,4

0,405

0,41

0,415

0,42

2012 2013 2014 2015 2016 2017

Gini Ratio13,3

12,4

11,7 11,511,0 11,1

10,7 10,6

9

9,5

10

10,5

11

11,5

12

12,5

13

13,5

14

25

26

27

28

29

30

31

32

2010 2011 2012 2013 2014 2015 2016 2017

Tin

gkat

Kem

iski

nan

Jum

lah

Pen

du

du

kM

iski

n(m

illio

n

peo

ple

)

Poverty

10,5

5,3

4

5

6

7

8

9

10

11

Feb

-06

Agu

-06

Feb

-07

Agu

-07

Feb

-08

Agu

-08

Feb

-09

Agu

-09

Feb

-10

Agu

-10

Feb

-11

Agu

-11

Feb

-12

Agu

-12

Feb

-13

Agu

-13

Feb

-14

Agu

-14

Feb

-15

Agu

-15

Feb

-16

Agu

-16

Feb

-17

Unemployment Growth

Source: BPS

LONG-TERM GROWTH STORY INTACTDeclining inequality, poverty, and unemployment ratio

DEMOGRAPHICS ECONOMY

IND

ON

ES

IA

IN 2

04

5

Population: 309mm

Working-Age Population: 52%

Urban Population: 75%

Middle Class Population: 80%

8th largest economy in the world

Income per capita: US$29,300

Structure of the economy shifting towards

higher value-added industries

Share of economy from service sectors: 73%

INDONESIA’S POTENTIAL TO BECOME A DEVELOPED COUNTRY

10

11

INEQUALITYEconomic growth has not been equitably enjoyed among income groups and regions

19,10 17,67 17,02

36,11 35,89 36,09

44,79 46,45 46,89

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

40% terendah 40% menengah 20% tertinggi

• Economic growth has been enjoyed more by the richest 20%. The consumption of this group has been increasing since 2007.

• There is high disparity in asset ownership. The proportion of account with saving above Rp 1 billion is only 0,25% yet it dominates 64% of total savings in banking system.

• Inequality in economic output (PDRB/kapita), in national level, tends to decrease from 0,81 (2011) to 0,78 (2015) but in Jawa, Balinustra, dan Sulawesi tends to increase.

98

14

0,25

64

Number of Account's Proportion Saving's Proportion

Saving Distribution by Segments as of October 2016 (%)

< Rp 100 million Rp 100 -200 million Rp 200 -500 million

Rp 500 -1 billion > Rp1 billion

Source: LPS

Source: BKF’s calculationNote : IW < 0,35 low inequality; 0,35 ≤ IW ≤ 0,5 middle inequality; IW > 0,5 high inequality

Consumption Distribution by Income Group (%)

0,610,53

0,24 0,26

0,490,52

0,84

0,76

0,11 0,13

0,48 0,44

0,810,78

2011 2012 2013 2014 2015

Wiliamson Index 2011-2015

Sumatera Jawa Balinustra Kalimantan Sulawesi Malpapua Nasional

HDI 70,18

Life expectancy at birth:

70,9 year

Mean years of schooling

7,95 yearExpected years of schooling

12,72 year

GNI per capita (adjusted)

Rp 10.420.000

12

IN AREA OF HUMAN CAPITALThere is disparity between western and eastern part of Indonesia

70

,0

70

,0

70

,7

71

,2

69

,6

68

,2

69

,3

67

,7

69

,6 74

,0 79

,6

70

,1

70

,0

78

,4

69

,7

71

,0 73

,7

65

,8

63

,1 65

,9 69

,1

69

,1 74

,6

69

,2

71

,1

67

,5 69

,8

69

,3

66

,3

63

,6 67

,6

66

,6

62

,2

58

,1

70

,2

55

60

65

70

75

80

85

Ace

h

Su

mu

t

Su

mb

ar

Ria

u

Jam

bi

Su

mse

l

Be

ng

ku

lu

La

mp

un

g

Ba

be

l

Ke

pri

DK

I

Jab

ar

Jate

ng

DIY

Jati

m

Ba

nte

n

Ba

li

NT

B

NT

T

Ka

lba

r

Ka

lte

ng

Ka

lse

l

Ka

ltim

Ka

lta

ra

Su

lut

Su

lte

ng

Su

lse

l

Su

ltra

Go

ron

talo

Su

lba

r

Ma

luk

u

Ma

lut

Pa

ba

r

Pa

pu

a

Ind

on

esi

a

1996 2008 2016

66,5367,09

67,7

68,31

68,9

69,55

70,18

2010 2011 2012 2013 2014 2015 2016

POVERTY REDUCTION IS

SLOWING DOWN

• Indicates chronic poverty

accompanied by rising of

inequality

NEED TO IMPROVE THE EFFECTIVITY OF POVERTY AND INEQUALITY REDUCTION PROGRAMS• Strengthening the data accuracy to have a better targeted program

• Better distribution mechanism: faster, more efficient, inline with financial inclusion policy

• Sinergy between relevant programs to improve effectivity

• Optimize Transfer to Region (General and Special Allocation Fund, Village Fund) forreducing inequality

• Social empowerment program to improve sustainable livelihood

LIMITED AND UNEQUAL

DISTRIBUTION OF ACCESS

• Basic Services: education,

health, infrastructure

• Access to capital

• Skill and job opportunity

SINERGY BETWEEN CENTRAL

AND LOCAL GOVERNMENT

• The accuracy of targeting

• Program implementation

• Inter programs

harmonization

STRATEGIC ISSUES OF POVERTY AND INEQUALITY

13


FISCAL FOR OVERCOMING DISPARITY a. APBN for Achieving welfare

b. Tax for Redistribution

c. Effectivity of Social Protection Programs

d. Refocusing Priority Budgets

e. Prudent Debt Management

3

14


APBN for Achieving Welfarea

15

16

BUDGET AS AN INSTRUMENT TO ACHIEVE WELFARE

WELFARE

EDUCATION

INFRASTRUCTURE

HEALTH

SECURITY

HDIPOVERTY EQUALITY

TRANSFER TO REGION• D A U - e q u a l i s e r• S p e c i a l A l l o c a t i o n F u n d f o r

P o v e r t y R e d u c t i o n• E f f e c t i v e F u n d• A c c o u n t a b l e a n d E f f i c i e n t

S p e c i a l A u t o n o m y F u n d

REVENUE• T a x R e f o r m• C u s t o m & E x c i s e R e f o r m• O p t i m u m N o n T a x• I n c r e a s i n g T a x R a t i o• F i s c a l I n c e n t i v e t o i m p r o v e

i n v e s t m e n t c l i m a t e

CENTRAL GOVERNMENT

EXPENDITURES• E f f i c i e n c y & S i m p l i f i c a t i o n• F i g h t C o r r u p t i o n • P r i o r i t y B a s e d• P l a n n i n g a n d S i n e r g y

• W e l l t a r g e t e d S u b s i d y

F INANCING• P r u d e n t a n d w i s e• T o w a r d p r o d u c t i v i t y• I n n o v a t i v e a n d c r e a t i v e

f i n a n c i n g ( L P D P / S W F , L M A N , P P P )

• R i s k c o n t r o l

Fiscal Sustainability&

Sound Fiscal

W E L F A R E

17

CHALLENGES OF FISCAL MANAGEMENT

Promoting economic growth and reducing poverty, inequality and unemployment

• Revenue optimization

• Quality of spending

• Sustainable Financing

• Allocative function

• Stabilization function

• Distributive function

• Economic aspect

• Social aspect

• Environment aspect

• Inclusion

Sound &sustainable

Budget1Strengthening key

fiscal policy functions2Sustainable

Development3 4

• Economic growth

• Decreasing unemployment

• Poverty reduction• Decreasing inequality

o A sound budget serves as a basic foundation to achieve welfareo By having a sound budget, the key fiscal policy functions would work optimally to boost

sustainable development

o Sustainable development will promote welfare

18

FISCAL POLICY DIRECTIONS

Stimulating economy and achieving welfare

WELFARE

REVENUE

EXPENDITURES

1.878,42.204,4

TAX REVENUE

NON TAX REVENUE

1.609,4

267,9

Central Government Expenditures

Transfer to Region &Village Fund

1.443,3

761,1

Deficit

(325,9)

Primary Balance

(78,4)

Financing

325,9

2,19% GDP(2017 : 2,67% GDP)

Debt Financing

Investment

399,2

(65,7)Decreasing from 2017: (144,3)shows that APBN is more sustainable

19

2018 BUDGETDeficit in 2018 lower than 2017

• Line Ministries• Non Line Ministries

814,1

629,2

FISCAL RISK MITIGATION Accumulated Budget Surplus

Fiscal Risk Contingency Fund for

BSF

QUALITY IMPROVEMENT OF PUBLIC SERVICES Better welfare for state apparatus

and retirees

Strengthening Bureaucracy Reform

SOCIAL PROTECTION PROGRAMS

PKH: 10 million family (Rp17,3T);

JKN: 92,4 million family (Rp25,5T)

PIP:19,7 ,million student (Rp10,8T)

Bidik Misi:401,5 thousand student (Rp4,1T)

Food Assistance &Subsidy :15,6 million (Rp13,4T)

Village Fund:74.958 Village(Rp60T)

EXPANSIVE, CLEAR DIRECTED, AND WELL MEASURED Deficit 2,19% GDP

CONSISTENTLY DEVELOPING

INFRASTURCTURE : Rp409T

Road: 856 km

Railway: 639 km

New airports: 15 location

Irrigation: 781 km

Electrification ratio: 95,15%

Housing: 7.062 unit

HIGH QUALITY EDUCATION Rp440,9T

PIP: 19,7 million student

BOS: 262,2 thousand schools

School

development/rehabilitation: 61,4

thousand

RAPBN 2018

BETTER HEALTH SYSTEM: Rp110,2T

PBI JKN: 92,4 million people

Health facilities: 49 hospitals

Child immunization (0-11 month):

92,5% 20

STRATEGIC POLICIES OF 2018 BUDGET

21

STRATEGY TOWARD EQUALITY

ACCELERATING POVERTY

ALLEVIATION AND

INEQUALITY REDUCTION

Improving access to basic

services

Increasing access to job

opportunity

Improving access to capital

Price stabilization

• Increasing health and education facilities

• Improving the distribution among between regions

• Improving the effectivity of social assistance program

• Sustainability of JKN (National Health Insurance Program)

Health and Education

Infrastructure and Housing

• Improving the distribution of infrastructures among regions (DAU, DAK and Village Fund)

• Affordable housing (interest subsidy, Down Payment subsidy)

• Improving vocational education• Skill and entrepreneurship training• Link & match vocational with

industry• Expanding the use of technology

• Improving access to financial credit services (KUR, LPDB, KUMKM)

• Balancing supply and demand

• Improving infrastructure & logistic system

• Well targeted subsidy

5

1 2

3

Strengthening tax function for

income redistribution

• Tax base expansion • Implementing progressive tax• Capital Gain Tax• Unutilized asset tax

4

22

ECONOMIC EQUALIZATION POLICYAims to strengthen the national economy based on democracy and market-based system

Announced in April 2017 embodies national economic transformation to successfully overcome the middle income trap and achieve the status of a developed country in the long-term

Lan

d

Social Forestry The Ministry of Environment and Forestry (KLHK) will distribute access to social forest management covering an area of 211,522

ha for 48,911 families with total permits of 134 Initial focus will be on 11 s with a total area of 15.576 ha for 9,411 households

Agrarian Reform and

Transmigration

Land Legalization

Transmigration land of 220,000 ha and 3,800 ha under the National Agrarian Operation Project (PRONA) is ready to be legalized from a total of 4.5 million ha, while 23,000 ha of displaced land and 707,000 ha of forest disposal are also ready to be redistributed from a total of 4.5 million ha

The Land Object of Agrarian Reform (TORA) will be expanded to several provinces, including Banten, West Java, Central Java, Riau, West Kalimantan, West Sumatra, North Sumatra, and Maluku

Affordable Housing for the

Urban Poor

Committed to housing development within urban areas that are well connected to the center of activity, economic resources and public transportation for the urban poor

Core housing policies, among others, include provision of land for affordable housing (land availability), implementation of Housing Scheme for MBR (social housing), and the Housing Financing Scheme

THREE KEY PILLARS AND “QUICK WIN” PROGRAMS

Op

po

r-t

un

ity Targeted

Development of Key Sectors

Focused on addressing issues related to the tax system, development of manufacturing and IT industries and retail sector

Improve the competitiveness of the retail sector and strengthen synergies between traditional and modern retail

Hu

ma

n

Ca

pita

l

VocationalTraining and

Labour Markets

Vocational and labor policies structured for capacity building of human resources, especially to align with industry needs and to support government priority programs

Policy steps will be taken by the government to draft and improve on the road map for vocational education and training,through reclassification and prioritization of business fields and positions

Job matching program that will focus on strengthening vocational programs for industries

Vocational schemes in place for the automotive, tourism and transportation sectors


Tax for Redistributionb

23

Tax policy directly influence the pattern of income

distribution (collect more from rich and otherwise)

24

TAX ROLE IN ECONOMY

Revenue and

AllocationRedistribution Regulation

Tax could change the income distribution between parties in economy (capital owner, workers, land owner)

Tax influences savings and investments to boost productive economy that leads to job creation

Accelerate economic activities through incentive

Influence consumption pattern for price stability

TAX ROLE IN

ECONOMY

TAX AS SOURCE OF FUND IN STATE BUDGETDespite the tax ratio tends to decrease, share of tax in Budget is increasing

TAX FOR INCOME REDISTRIBUTION

619,9

723,3

873,9

980,5

1077,3

11

46

,9

1240,4

1285,0

1472,7

11,1% 11,2% 11,8% 11,9% 11,9% 11,4% 10,7% 10,8% 11,5%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

0

200

400

600

800

100 0

120 0

140 0

160 0

2009 2010 2011 2012 2013 2014 2015 2016 2017

Nominal (Rp Tn) % of GDP

Tax as source of fund for State Budget

Tax revenue could influence resources allocation in economy.

Tax revenue used to fund poverty and inequality

reduction programs

• Progressive Income Tax• Optimize VAT (neutral and sustainable)• Optimize asset and capital tax

Redemption Money

Source: Ministry of FinanceNote: Figures in IDR trillion1. End of tax amnesty period III

0,040,15 0,20

0,62

1,10

0,58

0,17 0,120,04

Germany(2004)

Belgium(2004)

Italy(2009)

Chile(2015)

Indonesia(2016)

India(1997)

SouthAfrica…

Spain(2012)

Australia(2014)

% o

f G

DP

25

TAX REFORM IS CRUCIAL

TAX OPTIMALIZATION STRATEGY

Improving Tax Compliance

Expanding Tax BaseExploring potency of

sectoral taxesExtensification of New

Excisable Goods

Simple and convenient tax

system

• Strengthening

database

• Designing selective

and efficient tax

incentives and

exemptions

Expanding excisable

objects to limit

consumption of certain

goods to reduce

externalities

Increasing collection and

closing the gap between

potency and realization of

tax revenue

NEXT STEPS• Regulation reform• Administration reform

TAX AMNESTYthe first step of tax reform

With more than 965,900 taxpayers participating in

the program 2,1 3,98,3

39,4

5,2 3,60,3

India(1997)

Spain(2012)

Chile(2015)

Indonesia(2016)

Italy(2009)

SouthAfrica…

Australia(2014)

% o

f G

DP

Assets Declared


Effectivity of Social Protection Programsc

26

27

SPENDING REFORM: REFOCUSING ON PRIORITIY SECTORSShare of budget for infrastructure, education, and health has been increased. Nevertheless, the effectivity

and efficiency still need to be improved

Beginning of Subsidy Reform

187,8 184,3 177,9

290,3

317,1

401,1 409,0

310,8

345,3

375,4

408,5 416,6 426,7

440,9

41,5 48,2 61,0

74,8

104,1 106,7 110,2

202,4

299,8

350,3

137,8

94,4

77,3

103,4

2012 2013 2014 2015 2016 2017 2018

80,7%

70,5%

129,9%

17,5%

Health

Energy Subsidy

Infrastructure

Education

∆ 2018 : 2014

Program Keluarga

HarapanProgram

Indonesia PintarContribution for

the poor in JKN

Food

Assistance

Village

Fund

Program Keluarga Harapan

10 million family

Food Assistance and Subsidy

15,6 million family Expanding Non cash food assistance

Program Indonesia Pintar

19,7 million student

Contribution for the poor in JKN

92,4 million people

Village Fund Usaha Ekonomi Produktif

106,7 thousand family 74.958 village

161,6 10,8 25,5 13,5 60,0

28

ACCELERATING POVERTY ALLEVIATION AND INEQUALITY REDUCTIONThrough optimizing social assistance, subsidy, and Village Fund

Subsidy**exclude tax subsidy

Bidik

Misi

4,117,3

POLICY DIRECTIONS

• Improving targeting accuracy by using unified data

• Sinergy between programs

• Refinement of scheme and cashless distribution

TOTAL

292,8T(trillion rupiah)

29

ENCOURAGING BETTER TARGETED SUBSIDYBetter targeting, better mechanism, and synergy between programs

Energy Subsidy

Fuel and LPG Subsidy

Electricity Subsidy

Non energySubsidy

Food Subsidy

Fertilizer Subsidy

TOTAL

172,4

103,4

51,1

52,2

7,3

28,5

69,0

• Enhancement distribution mechanism to improve accuracy

• Closed subsidy for LPG 3 kg

• Targeted subsidy only for household using 450 VA and 900 VA

• For 5,6 million targeted family• Sinergy with Non Cash Food

Assistance (BPNT)

• Refinement of beneficiaries data using NIK and “kartu tani”

• Volume 9,5 million ton

(trillion rupiah)

POLICY DIRECTIONS

• Improving targeting accuracy of electricity subsidy (900VA)

• Sinergy between subsidy and social assistance such as Rastra and Non Cash Food Assistance

(BPNT)

• Improving data accuracy of subsidy and social assistance beneficiaries using unified data

• Shifting seed subsidy into direct assistance for seed (BLBU) through social assistance

29

30

BENEFIT INCIDENCE ANALYSISLowest decile household received subsidy and social assistance about 35% of total consumption

Source: PKEM-BKF staff calculation using Susenas 2014-2015

1,41,8

2,12,3

2,62,9

3,5

4,1

5,2

10,1

0

2

4

6

8

10

12

0%

5%

10%

15%

20%

25%

30%

35%

40%

1 2 3 4 5 6 7 8 9 10

Su

bsi

dy/B

en

efit

Re

ce

ive

d b

y H

H, M

illio

n ID

R

% o

f H

H E

xp

en

ditu

re

Expenditure Decile

Benefits by Market Income Decile: Absolute and Relative Terms

LPG Electricity Diesel Rastra PKH PIP Total Subsidy and Social Assistance (RHS)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1 2 3 4 5 6 7 8 9 10

Cu

m.

Sh

are

of

Su

bsi

dy/S

oc

ial A

ssis

tan

ce

Disposable Income Decile

LPG Subsidy

Electricity Subsidy

Diesel Subsidy

Rastra

PKH

Indonesia Pintar

45 degree line

Disposable Income

-0,020 0,000 0,020 0,040 0,060 0,080 0,100 0,120 0,140 0,160

Indonesia Pintar

LPG Subsidy

Rastra

Diesel Subsidy

PKH

Electricity Subsidy

Indeks Efektivitas

Effectiveness in reducing Gini (poin / tr Rp)

Effectiveness in reducing poverty (% / tr Rp)

Source: PKEM-BKF staff calculation using Susenas 2014-2015

Concentration Curve Effectiveness in Reducing Poverty and Gini

31

IMPACT ON POVERTY AND INEQUALITYPKH (CCT) and Program Indonesia Pintar are most effective in reducing poverty and gini ratio


Refocusing Priority Budgetsd

32

33

MAINTAIN 20% BUDGET ALLOCATION FOR EDUCATIONEqualizing access & quality of education, strengthening vocational and SWF for education

Target

Smart Indonesia Program

(Program Indonesia

Pintar)

19,7 million student

School Operational Assistance

(Bantuan Operasional

Sekolah/BOS)

56 million student

Assistance for College

Student (Bidik Misi)

401,5 thousand college students

Development/

rehabilitation of school/

classroom61,2 thousand

Teacher allowances

• Non PNS 213,7 thousand teachers

257,2 thousand teachers • PNS

POLICY DIRECTIONS

1. Expanding access to education (particularly for the poor) and improving quality of education

2. Improving the quality of school facilities

3. Synergizing between central and sub national government da

4. Strengthening vocational schools and synchronizing the curriculum of SMK ( link nd match)

5. Synergizing programs to improve the access (BOS, PKH, PIP, Bidik Misi dan DPPN) for sustainable education

2014:

375,4

2015:

408,5

2016:

416,6

2017:

426,7

8,6

2,0%

8,7%

8,8%

3,3%

2,4% Transfer to

Region

Rp146,6T

Central

Government

Rp146,6T

SWF

Rp15T

2018:

440,9(trillion rupiah)

34

GOVERNMENT HAS BEEN ALLOCATING 5% FOR HEALTH BUDGET SINCE 2016Expanding supply side, improving access and quality of health care and maintaining the sustainability of JKN

Jaminan KesehatanNasional (JKN)/ National Health Insurance

92,4 million people

Family planning (KB) 1,8 million people

Immunization for baby 0-11 month

92,5%

High quality health care facilities

49 hospitals/ health facilities

Certification of drugs and

food

74,0 thousand

Target

Malaria and HIV treatment 95% Malaria cases treated

52% HIV cases treated

2015:

74,8

2016:

104,1

39,2%

2017:

106,7

8,6

2018:

110,2

26,3 %

22,6%

3,3%

2,5%

Central

Government

Rp80,7T

Transfer to

Region

Rp29,5T

2014:

61,0

(trillion rupiah)

POLICY DIRECTIONS

1. Increasing and improving the uneven distribution of health facilities and and health professionals

2. Strengthening promotive and preventive programs focused on NCDs and programs for maternity through Gerakan Masyarakat Sehat (Germas)

3. Improving the effectivity and sustainability of JKN

4. Strengthening local government role for supply side and improving the quality of health care

KemenPUPR Kemenhub DAKGovernment(PMN)

Road development and preservation

Pembangunan jalur KA

New airport

LRT Affordable housing for low income group

856 km• New road

25 km• Toll

639 km’sp

15 location

23 km’sp

7.062 unit• Vertical housing

180,0 thousand

unit• Stimulus Assistance

106,9 48,2 6,128,0

8.761 m• Bridge

Information and Technology

• BTS in blank spot area, focus in remote area

• Integrated broadband village

100 location

380 location

(trillion rupiah)

35

INFRASTRUCTURE BUDGETS TO ACCELERATE DEVELOPMENT

Focus on improving capacity, competitiveness, connectivity, and housing for low income group

Interim figures

Rp409,0T

RAPBN 2018

145,5 155,9 154,7256,1 269,1

401,1 409,0

2012 2013 2014 2015 2016 2017APBNP

2018RAPBN

(trillion rupiah)

35


Prudent Debt Managemente

36

Source: World Economic Outlook – IMF April 2017, CEIC, MoF Indonesia

WITH RELATIVELY STABLE GROWTH, INDONESIA HAS BEEN ABLE TO MAINTAIN ITS

LOWER FISCAL DEFICIT

Average deficit and economic growth in a decade

37

Pertumbuhan PDB

Defisit fiskal

1,2

9,0

5,64,8

2,22,7

2,1

-0,6

7,4

2,2 2,1

1,10,5

1,3

-0,7-1,1

-1,6-2,1

-2,7 -2,8 -3,1 -3,1-3,5 -3,3

-4,3

-6,2 -6,4-6,7

-8,0

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

Germ

any

Chin

a

Indo

nesi

a

Turk

ey

Arg

entina

Aust

ralia

South

Afr

ica

Italy

India

Mexic

o

Bra

zil

United K

ingdo

m

Japa

n

United S

tate

s

GDP Growth

Deficits

%

MAINTAINING DEFICIT AND DEBT RATIO AT MANAGEABLE LEVELS

Deficits vs Debt ratio

38

24,84

24,68

27,45

28,33

28,97

28,83

2.22

2.14

2.59

2.49

2.92

2.19

-5 0 5 10 15 20 25 30 35

Debt to GDP (%) Deficits (%)

2018

2017

2014

2015

2016

2013

Commitment to maintain debt to GDP at manageable levels (27 - 29% of GDP)

Ensuring debt to support productive activities

Innovative and creative financing to support infrastructure

Commitment on international institutions

Supporting the development of micro, small, medium enterprises (MSMEs);

housing programs; and educational allocations through SWF

DEBT OUTSTANDING POSITIONSDebt ownership’s dominated by domestic investors

39Source: Ministry of Finance

Foreign debt

19,3%

Domestic debt0,1%

Global bond22,2%

Domestic Bond58,4%

Rp 3.780 Trillions

Foreign Debt 729,6

Domestic Debt 5,4

Global Bond 838,9

Domestic Bond 2.206,1

DEBT POSITIONS (as of July 2017)

In Trillion Rupiah

DEBT COMPOSITIONS

237 451 437 581 611 568 582 645 653 609 652 853 754 779 816 880

1.112 1.131 1.410 1.496

-

100 502

652 661 655 649 653 659 693 737 784 836 903 993

1.098

1.264 1.478

1.755 2.019

(500)

-

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Trili

un

KOMPOSISI UTANG

Valas Rupiah

Foreign currency

Rupiah

PORTFOLIO AND DEBT RISKS INDICATORS (2018-2021)

Foreign debt (%)

Average Time to Maturity (ATM) (years)

Debt to GDP (%)

Interest payment to GDP (%)

40Sumber: Kementerian Keuangan

29.09 29.03

28.84

28.25

2018 2019 2020 2021

38.04

36.97 36.69

36.53

2018 2019 2020 2021

8.00

7.67

7.34

7.13

2018 2019 2020 2021

1.64 1.63

1.61

1.57

2018 2019 2020 2021

Source: World Economic Outlook – IMF, April 2017

LOW PUBLIC DEBT

Compared to developing and developed countries

41

239%

107%

89%78%

70% 68%58%

51% 50% 46% 42%34% 29% 28%

17%

0%

50%

100%

150%

200%

250%

300%

Jap

an US

UK

Bra

zil

Ind

ia

Ge

rman

y

Mex

ico

Arg

en

tin

a

S A

fric

a

Ch

ina

Thai

lan

d

Ph

ilip

pin

es

Turk

ey

Ind

on

esi

a

Ru

ssia

Debt Ratio, 2016

…AND LOWER DEBT PER CAPITAcompared to other countries around the world

42Source: howmuch.net

Indonesia

$1K

“Compared to other emerging and developed countries, Indonesia has

even lower debt per capita…”


FURTHER THOUGHTS4

43

44

COLLABORATION BETWEEN GOVERNMENT AND BUSINESS COMMUNITYTOWARD EQUALITY IN ECONOMY

Maintaining investment climate• Government provides incentives to boost economic activities

• Growing economy is expected to lead to job creation

Increasing access to basic services• Collaboration in infrastructure development

• PPP (Public Private Partnership) schemes

Expanding partnership from infrastructures to other sectors• PPP for building hospitals and schools in the remote area

Synergy in developing new tourism area• Government builds the basic infrastructures (road, airport, electricity)

• Private builds the hotels, shopping mall, tourist attractions

Business could invest in human capital development• Support the link and match programs with vocational

• Hire high quality Bidik Misi graduated

• Collaborate with LPDP to provide internship opportunity

Thank You

K E M E N T E R I A N K E U A N G A N

45

political economy of apbn in overcoming … · national level, tends to decrease from 0,81 (2011)...

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