New Govt Must Pay Attention to Economic Policy

 
Fathan Qorib, Jazmi Adlan Bohari
 
This year’s general and presidential elections are the two most important events that will shape Indonesia over the next five years. The results of these elections will affect many aspects of life in Indonesia including issues related to society, politics, legal developments, and the economy. Any new administration will particularly need to pay attention to maintaining economic growth.
 
Muhammad Idrus, a member of the Indonesian Young Entrepreneurs Association (HIPMI), said that in order to achieve good economic growth, the new government must show consistency in reforming laws and regulations. One example he cited was the Law No. 24 of 1999 on Foreign Exchange Traffic and the Exchange Rate System.
 
Mr. Idrus also proposes that the new government amend the Agrarian Law, which he views that in its current form fails to meet the needs and reality of society and does not provide a healthy base for entrepreneurial activities and the needs of the people.   
 
“Amendment towards the Agrarian Law is important, as of now there is a businessman that owns 400 thousand hectares of land. Therefore, the amendment is needed to evenly distribute the ownership of the land among the citizens,” Mr. Idrus said during a seminar in Jakarta on Monday.
 
A further recommendation for the new government also came from Siti Zuhro, Political Analyst at the Indonesian Institute of Science (LIPI). Mrs. Zuhro added that the new President should prioritize legal certainty in order to accelerate investment in Indonesia which remains hampered by inefficient and muddy bureaucracy.
 
“Legal certainty is not enough. We need economic development to support the stability of politics and security,” Mrs. Zuhro asserted.
 
Meanwhile, Purbaya Yudhi Sadewa, Director of the Danareksa Research Institute, said that all in all the election in Indonesia is supporting better economic foundations and providing positive economic sentiment. He added, however,  the better economic foundations are more a result of good monetary policy, not the election per say. 
 
“The rupiah tends to be stronger and the stock market tends to rise,” he concluded.
 
Mr. Sadewa recommends that the new government should optimize the thrust of fiscal policy by utilizing positive sentiment. The new government should also increase budget absorption, to optimize development expenditure as well as control inflation.
 
“The newly elected leader should prioritize these issues. Otherwise, we cannot compete in terms of interest rates,” Mr. Sadewa stated.
 
Chatib Basri, the Minister of Finance, said that Indonesia is still not ready to implement tight fiscal policy. According to him, current tightening measures taken by the Government are a response to the global and domestic economic shocks that occurred in 2013.
 
The Minister is of the view that Indonesian economic policy in the medium and long term should be more concentrated on national supply than tightening fiscal policy. In order to promote domestic supply, the Minister said that  it is necessary to have equal and rapid infrastructure development.
 
“For the supply side, the solution is to develop and improve both our infrastructure and quality of human resources,” he concluded.
 
(hot/kc)