Ada Pertanyaan? Hubungi Kami 
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Ada Pertanyaan? Hubungi Kami Christina Desy, Fitri Novia Heriani, Kartini Laras Makmur
After winning the presidential election last July, Joko Widodo, more popularlyknown by his nickname Jokowi, took the oath of the presidential office on Monday. On the day of his inaugurationas the seventh President of the Republic of Indonesia, President Jokowi and his supporters threw a festive celebration for Indonesia with a spirit of spreading fresh optimism for a greater Indonesia.
As the celebration ended, President Jokowi immediately got down to work serving the country and implementing his programs for 2014-2019. One of the most pressing issues the new President and his administration team will have to deal with how to face current and future economic challenges.
Raden Pardede, Deputy Chairman of the National Economic Committee, sees that there are possibilities for various challenges from both external and internal factors. According to him, the primary external factor is the economic position of the United States’ as its economy recovers.
Mr. Pardede explained that United States is targeting more capital inflows to the country, meaning the United States Federal Reserves plans to increase the interest rate, commonly known as the Fed rate.
“If the Fed rate increases, the rupiah’s exchange rate will be weakened,” said Mr. Pardede.
In addition, higher Fed rates will hamper the Indonesian economy as more funds will flow out from Indonesia. This situation is concerning as Indonesia is actually in dire need of capital to overcome its fiscal and current account deficit, collectively referred to as the “twin deficit”.
Meanwhile, in terms of internal factors, Indonesia remains challenged by the intense debate on raising the price of subsidized fuel. If the new administration enforces this plan, Indonesia’s inflation level is predicted to increase.
In response, Mr. Pardede expects the new administration to prepare effective policies, targets, and solutions to handle any potential problems resulting from the subsidized fuel increase. He further hopes the government will encourage all elements of the economy element to support and enforce the determined policies, targets, and solutions.
Mr. Pardede has also suggested the new administration cut and reallocate the energy subsidy under the 2014 State Budget. This policy will generate more budget funds to be allocated for gainful expenses, such as infrastructures and social-safety net expenditures.
Mr. Pardede’s concern is also shared by Susilo Siswoutomo, Deputy Minister of Energy and Mineral Resources (ESDM). The subsidized fuel issue, Mr. Siswoutomo added, will be the first agenda to be settled by the future Minister of ESDM, who must also keep a lid on fuel consumption to decrease energy imports as well.
In addition, Mr. Siswoutomo is highlighting the urgency of restructuring the energy sector. He is specifically focusing on the mineral and coal sector due to its crucial contribution to state revenue.
To begin with, Mr. Siswoutomo pointed out licensing procedures for mining business activities, although he did not elaborate on the subject further. He wants to see the government renegotiate mining contracts, while also maintaining the policy of mining products being smelted and purified in Indonesia.
Furthermore, To preserve the alarming levels of fossil energy stocks, Mr. Siswoutomo recommends the government support energy supply with large scale development of renewable energy, especially to generate electricity.
“Until 2025, Indonesia must provide six to ten thousand megawatts per year to boost its economic growth, which is not easy,” said Mr. Siswoutomo on Monday.
Other than renewable energy development, the government must also apply effective energy policies. For instance, the government must allocate 65 percent of its coal production to be used for Indonesian power plants over that which is being exported to foreign countries. Looking at the complexities of the energy sector, Mr. Siswoutomo emphasized the importance of choosing the right ESDM Minister.
Chairul Tanjung, Coordinating Minister of Economic Affairs and ad interim Minister of ESDM, agreed with Mr. Siswoutomo’s comments. In view, the next two years will be challenging for the new administration. Existing problems vary from the current account deficit, excessive subsidies, the fuel price increment dilemma, and an increased poverty rate.
Mr. Tanjung understands how important the energy sector is because of its huge contribution to state revenue. Therefore, he emphasizes that the next Minister of ESDM must be tough in leading this tangled yet valuable sector. Whoever the Minister is, it must be a person with high competence and integrity without conflict of interests or a criminal record.
Currently, there are several candidates for the Minister of ESDM position. These include names from Pertamina, such as Karen Agustiawan, Ahmad Faisal, Hanung Budya, and Hari Karyuliarto.
However, Mamit Setiawan, Executive Director of Energy Watch, stated that there is a tendency to prevent those candidates from being appointed as it is alleged they may have relations with energy mafia, something undesirable for the Minister of ESDM.
(hot/kc)
Christina Desy, Fitri Novia Heriani, Kartini Laras Makmur
After winning the presidential election last July, Joko Widodo, more popularlyknown by his nickname Jokowi, took the oath of the presidential office on Monday. On the day of his inaugurationas the seventh President of the Republic of Indonesia, President Jokowi and his supporters threw a festive celebration for Indonesia with a spirit of spreading fresh optimism for a greater Indonesia.
As the celebration ended, President Jokowi immediately got down to work serving the country and implementing his programs for 2014-2019. One of the most pressing issues the new President and his administration team will have to deal with how to face current and future economic challenges.
Raden Pardede, Deputy Chairman of the National Economic Committee, sees that there are possibilities for various challenges from both external and internal factors. According to him, the primary external factor is the economic position of the United States’ as its economy recovers.
Mr. Pardede explained that United States is targeting more capital inflows to the country, meaning the United States Federal Reserves plans to increase the interest rate, commonly known as the Fed rate.
“If the Fed rate increases, the rupiah’s exchange rate will be weakened,” said Mr. Pardede.
In addition, higher Fed rates will hamper the Indonesian economy as more funds will flow out from Indonesia. This situation is concerning as Indonesia is actually in dire need of capital to overcome its fiscal and current account deficit, collectively referred to as the “twin deficit”.
Meanwhile, in terms of internal factors, Indonesia remains challenged by the intense debate on raising the price of subsidized fuel. If the new administration enforces this plan, Indonesia’s inflation level is predicted to increase.
In response, Mr. Pardede expects the new administration to prepare effective policies, targets, and solutions to handle any potential problems resulting from the subsidized fuel increase. He further hopes the government will encourage all elements of the economy element to support and enforce the determined policies, targets, and solutions.
Mr. Pardede has also suggested the new administration cut and reallocate the energy subsidy under the 2014 State Budget. This policy will generate more budget funds to be allocated for gainful expenses, such as infrastructures and social-safety net expenditures.
Mr. Pardede’s concern is also shared by Susilo Siswoutomo, Deputy Minister of Energy and Mineral Resources (ESDM). The subsidized fuel issue, Mr. Siswoutomo added, will be the first agenda to be settled by the future Minister of ESDM, who must also keep a lid on fuel consumption to decrease energy imports as well.
In addition, Mr. Siswoutomo is highlighting the urgency of restructuring the energy sector. He is specifically focusing on the mineral and coal sector due to its crucial contribution to state revenue.
To begin with, Mr. Siswoutomo pointed out licensing procedures for mining business activities, although he did not elaborate on the subject further. He wants to see the government renegotiate mining contracts, while also maintaining the policy of mining products being smelted and purified in Indonesia.
Furthermore, To preserve the alarming levels of fossil energy stocks, Mr. Siswoutomo recommends the government support energy supply with large scale development of renewable energy, especially to generate electricity.
“Until 2025, Indonesia must provide six to ten thousand megawatts per year to boost its economic growth, which is not easy,” said Mr. Siswoutomo on Monday.
Other than renewable energy development, the government must also apply effective energy policies. For instance, the government must allocate 65 percent of its coal production to be used for Indonesian power plants over that which is being exported to foreign countries. Looking at the complexities of the energy sector, Mr. Siswoutomo emphasized the importance of choosing the right ESDM Minister.
Chairul Tanjung, Coordinating Minister of Economic Affairs and ad interim Minister of ESDM, agreed with Mr. Siswoutomo’s comments. In view, the next two years will be challenging for the new administration. Existing problems vary from the current account deficit, excessive subsidies, the fuel price increment dilemma, and an increased poverty rate.
Mr. Tanjung understands how important the energy sector is because of its huge contribution to state revenue. Therefore, he emphasizes that the next Minister of ESDM must be tough in leading this tangled yet valuable sector. Whoever the Minister is, it must be a person with high competence and integrity without conflict of interests or a criminal record.
Currently, there are several candidates for the Minister of ESDM position. These include names from Pertamina, such as Karen Agustiawan, Ahmad Faisal, Hanung Budya, and Hari Karyuliarto.
However, Mamit Setiawan, Executive Director of Energy Watch, stated that there is a tendency to prevent those candidates from being appointed as it is alleged they may have relations with energy mafia, something undesirable for the Minister of ESDM.
(hot/kc)