Research Institute of Economy, Trade and Industry (RIETI)
RIETI BBL Seminar
Handout
“Jokowi's economic policy:
What will it take to reach sustainable development?”
March 11, 2016
Speaker: Dr. Fauziah ZEN
http://www.rieti.go.jp/jp/index.html
2015 Macroeconomic Performance Show Positive Indicator
Positive development despite external pressure
GDP Growth YoY %; Source: BPS
2014
HH. Cons
5,2
Trade USD Juta; YoY; Source: BPS
2015
5,0
Mining Industries
0.7
(5.1)
Exports
175.980
・3,6%
150.253
・14,6%
Imports
178.179
・4,5%
142.740
・19,9%
Industrial Processing
4.6
4.2
Govt. Cons
1,2
5,4
Construction
7.0
6.6
Investment
4,6
5,1
Big traders and Wholesale and
Retail; Automotive Repair
5.2
2.5
Exports
1,0
‐2,0
Imports
2,2
‐5,8
Transportation & Warehouse
2014 : 5,0
7.4
6.7
2015 : 4,8
Non Oil & Gas
・17,8%
Rp. 545,4 T
・2,6%
131.701
・9,8%
Imports
134.719
・4,7%
118.127
・12,3%
Oil & Gas
‐13.441
Exports
30.019
・8,0%
18.552
・38,2%
Imports
43.460
・4,0%
24.613
・43,4%
8,36%
3,35%
4,93%
3,95%
DDI
・21,8%
Rp. 156,1 T
・15,0%
Rp. 179,5 T
VOL. FOOD
10,88%
4,84%
FDI
・13,5%
Rp. 307,0 T
・ 19,2%
Rp. 359,9 T
ADM. PRICE
17,57%
0,39%
CORE INF.
‐6.061
Balance of Payment USD Bin, Source: BI
2015
CPI
13.574
145.961
2014
2015
11.242
Exports
Inflation YoY, YTD; Source: BPS
Direct Investment YoY Growth; Source: BKPM
TOTAL
7.513 (surplus)
4.0
‐0,6
・16,2%
Rp. 463,1 T
‐2.199 (deficit)
Total Trade
4.2
12,2
2014
2015
Agriculture. Forestry. Fisheries
Non Profit
HH Cons
Indonesia
GDP Growth
2014
2014 2015
2014
Balance of Payment
Current Account
(% to GDP)
Capital & Financial Account
Foreign Reserve
Per Desember
2015
6,5
‐4,6
‐7,0
‐4,0
3,02%
1,95%
14,7
1,2
111,8
105,9
1
Indonesia’s Growth Fundamentals Remain Healthy
Stable growth on the back of household consumption, bolstered by ongoing shift
from commodity‐based economy to value‐adding sectors and investments
GDP Growth by Sector (%,
YoY)
2013
2014
2015
Yearly Yearly
Q1
Q2
Q3
Q4
Yearly
4.0
6.9
3.3
1.6
4.0
Agriculture, Forestry, and
Fishery
4.2
Mining Industries
1.7
0.6
(1.3)
(5.2)
(5.7)
(7.9)
(5.1)
Industrial processing
4.5
4.6
4.0
4.1
4.5
4.4
4.2
Construction
6.1
7.0
6.0
5.4
6.8
8.2
6.6
4.7
4.8
4.1
1.7
1.4
2.8
2.5
Big traders and Wholesale
and Retail;
Automotive Repair
Transportation and
Warehousing
4.2
8.4
8.0
5.8
5.9
7.3
7.7
6.7
Information and
Communication
10.4
10.0
10.1
9.7
10.7
9.7
10.1
Other Services1
6.4
8.9
5.7
6.0
5.9
TBC
5.9
GDP
5.6
5.0
4.7
4.7
4.7
5.0
4.8
-
Primary sector showed weakened
performance due to bearish condition of
the commodities market, particularly in
mining.
-
Industrial processing sector grew slower
due to contraction in external trade
growth. This will become the main focus
for the Government’s industrialization
efforts
-
Slower growth in trading sector was
notable due to negative growth of import
and export
-
Strong growth of construction sector was
resulted from government capital
expenditure which increased in 2H15
Source: BPS
Estimated
1. Other services consist 10 sectors (according to SNA 2008)
2
Indonesia’s Growth Fundamentals Remain Healthy
The majority of growth contribution is still coming from Java, an industrialized and consumption‐based region
Source: BPS
1. Others include statistical discrepancy and net
export and import
2. HH consumption include non profit consumption
GDP Growth Contribution by Region (Q4 2015)
Sumatera
Kalimantan
22.4%
8.0%
Maluku &
Papua
2.2%
Sulawesi
6.1%
4.6%
1.5%
8.3%
Java
58.3%
10.4%
5.9%
National GDP
Growth
7.6%
% GDP growth in the region
5.0%
Bali & Nusa
Tenggara
3.1%
Majority of Indonesia’s growth
was driven from Java island
Growth in Java is higher than
resource‐rich regions such as
Sumatra and Kalimantan, given
its high industrialization and
larger consumption base
Indonesia continues to drive
growth in
resource‐based industrialization
to shift from commodity‐based
economy
% contribution to GDP growth in the
region
Source: BPS
The Government of Indonesia is committed to shift from resource‐based economy to manufacturing and value‐adding sectors through
policy reforms, tax intensification and other new breakthroughs
3
Strong Macroeconomic Fundamentals Amidst Policy Adjustments
Macro indicators remain robust despite external pressure and policy adjustment initiatives
Rising Direct Investments
(IDR tn)
150
2014;
FDI: IDR 307 T
DDI: IDR 156.1 T
Well Balanced Debt and Fiscal Deficit Management
2015;
FDI: IDR 359.9 T
(19.2 % YoY)
DDI: IDR 179.5 T
(15% YoY)
145.4
28%
2.56%
27%
46.2
100
2.20% 2.30%
26%
24%
99.2
23%
0.70%
21%
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q4 Q1 Q2 Q3 Q4
24.5%
0%
1.10%
27.3%
22%
0
2.15%
1.80%
25%
50
0%
23.1%
23.0%
2011
2012
24.9%
24.7%
2013
2014
26.7%
0%
0%
20%
2010
2011
2012
2013
2014
2015
Source: BKPM
2015
Preliminary
2016
Budget
Source: Ministry of Finance
Government Debt to GDP
Fiscal surplus / (Deficit) (% of GDP)
FDI
DDI
Total
Total Investment realization in January ‐ December 2015: IDR 545,4 T,
increases around 17,8% from that in January ‐ December 2014 (IDR463,1 T)
4
Improvement in Budget Implementation Supports Sustainable Economic Growth
Re‐allocation of energy subsidy to productive sectors and rural development, while modernizing procurement system
Government Spending grew 11% CAGR from 2010 ‐ 2015with Regional Transfer and Village Fund Allocation Outgrowing Central Government
Budget
(IDR tn)
2,500
2,000
1,500
1,000
345
500
697
481
411
884
1,011
2011
2012
665
770
1,204
1,320
1,326
2014
Revised
Budget
2015
Budget
2016
513
574
1,137
2013
0
2010
Central Government Spending
Reallocation of Energy Subsidies to Productive Areas:
Education, Healthcare and Infrastructure
10 Ministries with Highest Budget
Allocation
Min. of Public Works and Housing
Min. of Defence
National Police
Min. of Health
Min. of Religious Affairs
Min. of Basic Education
Min. of Transportation
Min. of Higher Education and Research
Min. of Finance
Min. of Agriculture
450
HEALTH
・75.4%
300
ENERGY SUBSIDY
・ 60.7%
150
INFRASTRUCTURE
・ 103.5%
0
2011
2012
2013
Education
2014
Revised
Budget
Healthcare
Budget
2016
Comparison between
average allocation in
2015 ‐ 2016 and
2011 ‐ 2014
104.1
99.5
73.0
63.5
57.1
49.2
48.5
40.6
39.3
31.5
Acceleration of capital and goods spending in 2015 is resulted from adoption of
online procurement system which promotes efficiency and transparency
2015 Revised Budget
Capital Spending Profile
(IDR tn)
EDUCATION
・ 28.3%
Budget (IDR tn)
2015 Revised Budget
Goods Spending Profile
(IDR Trillion)
(IDR Trillion)
140
180
120
100
80
2015
2015
120
90
60
40
150
2014
60
20
30
0
0
2014
5
Disciplined and Sophisticated Debt Portfolio Management
Portfolio management characterized by stable Debt/GDP and Well‐Diversified Debt Across Tenors and Currencies
Remarkable Debt Reduction Initiative Over the Past 10
Years2
Stable Debt to GDP Ratio Over the Years1
(US$ bn)
Government
Debt / GDP (%)
27.3% 30
250
24.5%
23.1%
23.0%
24.9%
25
54
69
150
(%)
(80.0)
24.7%
200
64
Change in Debt to GDP Ratio (2005 ‐ 2015)
20
58
India
50
Germany
Poland
100
141
136
169
10
Italy
Japan
Colombia
5
Malaysia
South Africa
0
0
2010
2011
2012
2013
2014
2015*
United States
United Kingdom
Chile
Securities (LHS)
Australia
Loans (LHS)
120.0
170.0
220.0
270.0
Philippines (39.4)
Brazil
15
131
70.0
Indonesia (43.3)
Thailand
69
118
20.0
Turkey (39.0)
54
155
(30.0)
Govt Debt / GDP (%) (RHS)
(19.3)
(1.0)
2.0
5.3
8.7
30.6
31.9
33.0
34.3
52.1
61.6
113.7
159.3
230.3
6
Commitment to Accelerate Infrastructure Development
Good progress on 2015 infrastructure projects, 2016 project auctions are on the way
Progress of Infrastructure Projects Still Positive Despite Some
Administration Issues in the Beginning of 2015
NATIONAL TOLL ROAD
INTERCITY RAILWAY
Trans Java
Pejagan ‐ Pemalang (58 km)
Semarang ‐ Solo (73 km)
Trans Sulawesi
Manado ‐ Bitung (39 km)
Trans Sumatera
Medan ‐ Binjai (16 km)
Palembang ‐ Indralaya (22 km)
Pekanbaru ‐ Dumai (135 km)
Medan ‐ Tebing Tinggi (62 km)
South Sumatera (Prabumulih ‐
Kertapati), North Sumatera (Tebing
Tinggi ‐ Kuala Tanjung), Southern
Java Double Track
COMMUTER RAILWAY
Jakarta MRT (North ‐ South
Corridor), Jakarta LRT, SHIA Airport
Railway
Projects Already Being Auctioned
MINISTRY OF PUBLIC
WORKS & HOUSING
IDR 66.4 tn allocated to:
• Public Road
• Water Resource
• Housing Infrastructure (sanitation
and clean water)
• Public housing
MINISTRY OF
TRANSPORTATION
IDR 32.5 tn allocated to:
• New construction and
maintenance of railway
infrastructure
• Port construction, procurement of
exploration and navigation ships
• Procurement of traffic equipment
• Ferry ships
1 MILLION HOUSE PROJECT
West Jakarta, Banten, Kalimantan,
Batam, NTB, NTT, East Java, Central
Java, South Sulawesi, West Sulawesi,
Southeast Sulawesi
DRINKING WATER
INFRASTRUCTURE
Central Java (West Semarang);
AIRPORT DEVELOPMENT
Revitalization
Central Kalimantan, Bangka
Belitung,
New Project
West Java (Kertajati)
Expansion
Terminal 3 Soekarno‐Hatta
International Airport
DAM
PORT AND HARBOUR
East Java (Bendo), Central Java
(Gondang, Pidekso), North Sulawesi
(Lolak), NTT (Raknamo), NTB (Mila),
Banten (Karian)
East Kalimantan (Maloy), Jakarta
(Kalibaru), South Sulawesi
(Makassar New Port), Central
Sulawesi (Parigi)
MINISTRY OF
AGRICULTURE
MINISTRY OF ENERGY
& MINERAL
RESOURCES
IDR 4.6 tn allocated to:
IDR 4.0 tn allocated to:
• Procurement of farm machineries
• Cattle procurement
• Other supporting infrastructure
• Power plants
• Oil & gas infrastructure
• Energy conversion and renewable
for agriculture sectors
energy infrastructure
• LPG and fuel storage tanks
Source: Varipus Sources
7
Alternative Source of Infrastructure Financing
SOEs and PPP become alternative source of funding to supplement Government Budget
2015 ‐ 2019 Infrastructure Plan
Scenario 1
(Full Scenario)
1,274
278
155
563
91
182
1,080
535
1,091
666
384
242
6,541
Infrastructure Financing Needs 2015 ‐ 2019
New Roads ‐ 2,650 km
Highway ‐ 1,000 km
Road Maintainance ‐ 46,770 km
Bus Corridors ‐ 2
Roads
Rail System
Urban Transportation
Sea Transportation
Ferry and Other Waster Transporation
New Sea Ports ‐ 24
Air Transportation
Sea Port Development ‐ 59
Electricity
Pioneer Cargo Ships
Other Energy dan Gas
New Airports ‐ 15
Waer Resources
Airport Infrastructure Development Water and Sanitation
Airplanes ‐ 20
Public Housing
Rail lines ‐ 2,159 km
Information and Communication Technology
Intra City Rail Lines ‐ 1,099 km
Total
Scenario 2
(Partial Scenario)
851
222
115
424
80
165
762
420
845
450
247
200
4,781
Baseline
(Baseline)
637
140
75
282
60
100
714
268
645
330
180
130
3,561
SOEs and PPP Become Alternative Source of Funding as Government Budget Could Only Support ~20% of Our Infrastructure Needs
・
Central & Regional Budget (Special Allocation Fund & Village Fund)
・
Mainly to support basic infrastructure projects:
・
►
Food Security: Irrigation, dams etc.
►
Maritime: Seaports, shipyards etc.
►
Connectivity: Village roads, public transportation etc.
Government support for PPP :
・
Government to inject capital to SOEs ‐ with leveraging process a multiplier
effect, more infrastructure projects can be developed
・
Key focus areas:
►
For commercial and/or complex projects
・
Medium term infrastructure developments focus: electricity and power
plants, toll road
・
Projects Ready for Auction under PPP Scheme:
►
Land Fund: Modification and simplification of land acquisition process
►
Toll roads projects such as Balikpapan‐Samarinda, Manado‐Bitung
►
Project Development Facility (PDF) through PT Sarana Multi Infrastructure
►
Railway projects such as Halim‐Soetta Airport Express Railway
►
Indonesia Infrastructure Guarantee Fund (IIGF)
►
Water supply such as West Semarang water supply project
►
Viability Gap Fund (VGF)
►
Infrastructure Fund & Availability Payment (AP)
8
Realization of Revised Budget 2015
Fiscal deficit stay within the constitutional ceiling
2015
Description
(In Trilion Rupiah)
A.
B.
C.
D.
E.
Revenue
I.
Domestic Revenue
1. Tax Revenue
2. Non Tax Revenue
Grant
II.
Government Spending
Central Government
I.
…Personnel, Operational and Capital
…Subsidy, interest payment & other
Intergovernmental Transfer
II.
Transfer to Regional and Local Govt.
Rural Transfer
Primary Balance
Surplus/Deficit
% deficit to GDP*
Financing
Domestic Financing
I.
Foreign Financing (Net)
II.
Surplus/(deficit) financing
Realization
Per 31 Dec
1,504.5
1,494.1
1,240.4
253.7
10.4
1,796.6
1,173.6
724.7
448.9
623.0
602.2
20.8
(136.1)
(292.1)
(2.53%)
318.1
307.8
10.4
26.1
% to Budget
85.4%
85.0%
83.3%
94.3%
314.9%
90.5%
88.9%
91.1%
85.7%
93.7%
93.5%
100.0%
203.8%
131.3%
143.0%
126.9%
(51.9%)
Δ 2015 ‐ 2014
(IDR tn)
(46.0)
(51.4)
93.5
(144.9)
5.4
19.4
(30.0)
147.5
(177.5)
49.3
28.5
20.8
(42.8)
(65.4)
(0.3%)
69.2
46.6
22.8
3.9
9
Better Financial Balance between Region
Portions and allocation of funds per capita in Eastern part of Indonesia is increasing
Portion (%)
Region
Sumatera
Jawa
Kalimantan
Sulawesi
Balnustra
Maluku
Papua
2010
28.6
31.3
12.8
10.7
5.8
2016
26.9
31.8
12.1
11.6
6.3
10.8
11.3
Transfer to the Region and Rural Fund
243.2
250.0
205.6
200.0
150.0
107.6
98.2
92.5
89.2
86.7
300.0
48.4
37.1
44.0
36.7
100.0
50.0
20.0
‐
Maluku dan Papua
Bali dan Nusa Tenggara
Sulawesi
2010
2011
2012
Kalimantan
2013
2014
2015
2016
Jawa
Sumatera
Transfer to the Region and Rural Fund per Capita
11.3
12.0
Sumatera
10.0
Jawa
8.0
Kalimantan
6.0
6.0
6.0
4.6
4.0
3.2
1.8
2.0
0.8
‐
2010
2011
2012
2013
2014
2015
Sulawesi
Bali dan Nusa
Tenggara
Maluku dan Papua
2016
10