Jokowi delivers one of three speeches at the House of Representatives on Friday. (Antara Photo/Sigid Kurniawan)

Jokowi Wants a New Generation of Top Talents to Take Indonesia to Developed Country Status


AUGUST 16, 2019

Jakarta. President Joko "Jokowi" Widodo targets a narrower deficit in his 2020 state budget, staying true to his original vision of developing local talents to strengthen the domestic economy amid continued threats of global recession and trade wars.  

The 2020 deficit is projected to reach Rp 307 trillion ($21.6 billion), or 1.76 percent of the country's gross domestic product, down from this year's 1.96 percent of the GDP. 

Revenue is projected at Rp 2,222 trillion and spending at Rp 2,529 trillion. Most of the money will be spent on developing local talents, infrastructure development, social protection programs, decentralization and programs to counter global economic uncertainties, Jokowi said. 

"Economic challenges are getting harder and more complex. The global economy is in a flux, some emerging markets are in crisis and some countries are facing fallout from negative growth," Jokowi said. 

"We have to watch out for potential trade wars. Currency depreciation, such as those experienced by the Chinese yuan and the Argentine pesos, should be a reminder for us to be ever vigilant," he said. 

Morgan Stanley said in its report early this month that escalating trade tensions have pushed corporate confidence and global growth to multi-year lows. 

The global investment bank said if the United States increased tariffs to 25 percent for 4-6 months, and China retaliated, the world would enter recession by March next year. 

But according to the bank, the Indonesian economy would be less impacted by the trade war and would still be able to grow by 5 percent this year and next year. 

This is thanks to the country's large domestic market and Jokowi's structural reforms – revisions to the labor law, new electric vehicle regulation and corporate tax cuts – which have continued to attract investors, Morgan Stanley said.   

Jokowi shows he is even more optimistic by assuming a 5.3 percent growth next year, higher than this year's target of 5.2 percent. Assuming higher growth allows for a higher tax revenue projection, but also runs the risk of widening the deficit if the growth target is missed.   

"A state budget that was too expansive in the current global economic condition would be imprudent. This proposed state budget is quite rational for the government to maintain confidence," Raden Pardede, an economist at Creco Consulting, told BeritaSatu on Friday.  

The government's other budget assumptions include inflation at 3.1 percent, the rupiah at 14,400 per US dollar and the interest rate on three-month government bill at 5.4 percent. 

The price of Indonesian crude oil is projected to be around $65 per barrel, with oil and gas production at, respectively, 734,000 barrels and 1.19 million barrels of oil equivalent per day. 

Top Human Capital

Earlier in the day, Jokowi laid out his vision to transform Indonesia into a developed country by relying on a new generation of top talents to achieve it.

"We need science and technology to allow us to overtake other nations. We need top talents who are hardworking and deeply believe in the [state ideology] Pancasila," Jokowi said. 

Jokowi also proposed to increase the education budget to Rp 505.8 trillion in 2020, up 30 percent from 2015. 

Jokowi said the government will revamp its teacher training and certification system, while continuing to provide scholarships to 20.1 million highschool students and introduce a new college scholarship for 818,000 students from poor families. 

"To help young people and job seekers to learn new skills, the government will run the pre-employment card program, which will allow them to learn the skill they want, from coding, data analytics, graphic design, accounting, foreign languages, barista skill, agribusiness to operating heavy machinery," Jokowi said.

The government plans to spend Rp 132 trillion on healthcare next year, double the amount in 2015. The focus of its healthcare program will be stunting prevention and reducing the maternal mortality rate.

Jokowi also promised a "total overhaul" of the state health insurance scheme (BPJS Kesehatan), which has suffered from growing deficits in the past few years.