There are positive and negative notes for President Joko Widodo (Jokowi) and Vice President Jusuf Kalla (JK) in the fourth year of their government. They received red and blue grades related to the realization of nine key development programs, known as Nawacita, which is outlined in the 2015-2019 National Medium Term Development Plan (RPJMN).
According to the Economist of the Institute for Development of Economics and Finance (INDEF) Bhima Yudhistira, there are still many missed RPJMN targets. This is the fruit of an economy supported by volatile commodities. “Most of the economic targets have not been achieved, except inflation, which is relatively more controlled,” he told katadata.co.id, Thursday (10/25).
Jokowi had targeted an ambitious economic growth of 7 percent for 2019, which was then raised to 8 percent, but the realization was still low. Since the first time he was sworn in as the President of Indonesia, the economy has never grown by 6 percent. Last year, it was only 5.07 percent, and even reached 4.79 percent in 2015. Bhima predicts economic growth will only be in the range of 5 percent this year.
Bhima said growth was stagnant due to a decrease in the portion of the manufacturing industry towards the Gross Domestic Product (GDP). It even fell below 20 percent in the second quarter of this year. According to him, Jokowi was too quick to shift his focus to the service sector, even though the development of the manufacturing industry actually declined.
“This is alarming because the manufacturing industry absorbs labour and has a large chain effect to other sectors,” he said. According to Bhima, the current unemployment rate at 5.13 percent could still be reduced to 5 percent as long as the government consistently boosts the development of industry, agriculture, and digital economy.
The poverty reduction rate also missed the RPJMN target of 7.5-8.5 percent, even though it was revised to 8.5-9.5 percent. Based on data from the Statistics Indonesia (BPS) in March, the poverty rate was only supressed to 9.8 percent. This single digit poverty rate (below 10 percent) is the first in history.
Another missed medium-term target is the rupiah exchange rate, which was targeted at Rp 12,050 per USD this year. In reality, the rupiah weakened to Rp 15,193 per USD in the Jakarta Interbank Spot Dollar Rate until 24 October.
Bhima refers to the role of external factors behind the prediction of rupiah depreciation. However, he also highlighted current account deficit, which reached 3 percent in the second quarter of 2018, as the fundamental factor of weakening rupiah. He estimates the rupiah will continue to weaken next year.
The government debt to GDP ratio also has a large difference from its target. In the RPJMN, this month’s ratio was set at 21.1 percent. However, as of September, it was actually increased to 30.4 percent (Rp 4.416 trillion).
According to the Indonesian Employers Association (Apindo) Chairman Hariyadi Sukamdani, the weakness of the Jokowi-JK’s government is the coordination among institutions (sectoral ego), especially between the central and regional governments. This problem complicates the implementation of pro-business policies that were set in the 16 economic packages.
In addition, Hariyadi saw policy makers in certain sectors who did not have adequate competence. However, he was reluctant to mention the official in question. “What needs to be considered is that anyone in charge must really master it [the sector],” he told katadata.co.id.
Infrastructure Not Always Fruitful
In the construction of infrastructure, as Jokowi’s leading program, the Ministry of Transportation had given up because it was unable to pursue the target. This can be seen from the railroad construction project, which has been cut from 3,258 kilometres (km) to only 1,349 km for 2019. The ministry was only able to build double tracks and reactivate a 735.1-km track from 2012 to 2018. “This is because of funding issue,” Ministry of Transportation’s Railway Director General Zulfikri said.
The realization of the new airport construction runs quite well, only five more remain from the RPJMN target of 252 airports. Meanwhile, there is a greater difference in the realization and target of port development. In 2015-2018, the Transportation Ministry only developed 104 ports, while the 2019 RPJMN target requires the construction of 172 new ports.
The Ministry of Public Works and Housing (PUPR) is quite successful in carrying out the infrastructure development. Some targets, such as infrastructure development, will be exceeded. In the RPJMN, the cumulative toll road completion target is 1,000 km by 2019. Currently, 941 km of new toll roads have been built, approaching next year’s target number.
Not only 1,000 km, Jokowi even added a new toll target of 911 km. Thus, new toll roads must be built until next year reaching 1,852 km. The Public Works and Housing Minister Basuki Hadimuljono is optimistic the target can be achieved because some toll roads are already under construction.
The target will be supported by several toll roads outside Java, such as Balikpapan – Samarinda (99 km), Manado - Bitung (almost 40 km), and Pekanbaru - Dumai (140 km). “So, it does not jump [far] because it only requires completion,” Basuki said recently.
Red Grades for Human Rights
There are also criticisms over the enforcement of law. This is related to the investigation of human rights violations that occurred many years ago. There has been no enforcement of law until now even though the fourth Nawacita puts forward the law enforcement that is free of corruption, dignified, and trustworthy.
The National Commission on Human Rights (Komnas HAM) gave red grades for President Joko Widodo (Jokowi) related to the government’s seriousness in investigating human rights violations. Komnas HAM Chairman Ahmad Taufan Damanik said there were nine serious human rights cases that have not been resolved for years by the Jokowi’s government: the 1965-1966 incident, the mysterious shootings in 1982-1985, the Talangsari incident in 1989, the disappearance of activists in 1997-1998, the Trisakti incident, the Semanggi I incident, the Semanggi II incident, the May 1998 riots, and the Wasior, Wamena incident in 2000-2003.
Komnas HAM even added three more cases: the Jambu Kepok case, the Simpang KKA case, and the Rumah Gedong case. Therefore, they asked the Jokowi’s government to immediately resolve the violations. “He received red grades for serious human rights cases because there was no progress,” Taufan said.
Despite expressing a lot of criticism, Bhima admitted that the Jokowi-JK’s government was not lacking in achievements. In the RPJMN, the 2018 inflation was expected to be maintained at the level of 3.5 percent. At least, the inflation rate was maintained at 1.94 percent until last September. It was also positive last year, which successfully supressed at 3.61 percent, below the RPJMN target of 4 percent. “The formation of the task force on food prices and infrastructure development correlates with the maintenance of prices for basic necessities,” he said.
Entrepreneurs also gave blue grades on Jokowi-JK’s four-year performance. According to Hariyadi, the international community gave many awards to Indonesia, including rating agencies that put Indonesia as a country worth investing. The World Bank also upgraded Indonesia’s Ease of Doing Business ranking to 72 from 91 in the previous year.
Hariyadi also said that Jokowi had built a number of infrastructures with the target of economic justice, including infrastructure development in Papua. Based on data from the Public Works and Housing Ministry, at least 3,103 km from a total of 3,259 km of the Trans Papua road successfully built in the Jokowi era.
“Concern for Small and Medium Enterprises [SME] is also good because there are People’s Business Credit (KUR), village funds, and certification,” he said. This year, the number of channelled KUR is expected to reach Rp 120 trillion, rising significantly from Rp 96.7 trillion in 2017 and Rp 94.4 trillion in 2016.
Economic Coordinating Minister Darmin Nasution said there is a difference between Jokowi and the previous government. Jokowi focuses on balancing the supply and demand, so that structural transformation in the economy could be realized. “If he only focuses on the demand side, then only monetary [policy] will be tampered with,” he said recently.
According to Darmin, the unachieved growth target was closely related to the upheaval of the world economic situation. However, he also highlighted things that need to be considered as achievements, such as declining poverty to its lowest level in history, inequality issue with the best gini ratio position for 7-8 years at 0.389, and unemployment rate that was only 5.13 percent. “We can be proud of the inflation in the past four years because it is approaching the low-inflation country,” he said, referring to the inflation rate which moved in the range of 3.5 percent.
However, the work is not over yet. Darmin said the government still continues to design economic transformation with a number of policies, such as vocational education and agrarian reforms. Other measures, from the online single submission (OSS) to the support of one map policy, are still running. It also formulates a tax holiday for several investment sectors.