TEMPO.CO, Jakarta - THE National economy crippled by the Covid-19 has left very little room for the government to maneuver as the country slowly sank into recession. Like in many other countries, the government will focus the next year’s development agenda on economic recovery.
Suharso, 65, said the pandemic had not only claimed lives but also cost 2.67 million people their jobs. "We're currently focusing on managing the pandemic and providing social buffers for the poor," said Suharso Monoarfa, the national development planning minister as well as chief of the National Planning Agency (Bappenas), during a special interview with Tempo on December 2 and 3. As the public's income plunged, household consumption became the worst-hit sector. To maintain public's buying power, the government has poured out huge social assistance funds leaving the state budget in the red. Suharso predicted the state budget deficit to swell to 6.6 to 6.7 percent by the end of the year.
Although its focus has been turned to revive the economy, Suharso assures that the government is committed to realizing sustainable development and environmental-friendly programs. In the national medium-term development program for 2020-2024, for example, the government has targeted to reduce 29 percent of the country's greenhouse gas emissions by 2030 in line with the Paris Agreement. Bappenas has also included the green economy concept in the 17 Sustainable Development Goals to be achieved by 2030. "We've incorporated and mainstreamed environmentally friendly energy in all the major projects," he said.
To Tempo, Suharso, who is also the acting chair of the United Development Party (PPP), explained about the stalled national economy because of pandemic, economic projections for the coming year as well as the government's commitment to the green economy and its endeavors to reduce carbon emissions.
The Covid-19 pandemic has entered the ninth month. How has it affected the national economy according to Bappenas' records?
Unlike the previous economic crises that hit the middle to upper-class population the hardest, this time it is the middle to the lower class population that bears the worst brunt. The middle to upper class is cautious and refrains from purchases because they are not sure if the situation is really under control. They shop only as they need and save the rest. As a result, the third-party funds (in banks) have increased tremendously but at the same time cannot be channeled. This is the reason why the state's role in providing social buffers is important. Almost all the countries are spending an unprecedented amount of funds to maintain their people's purchasing power and household consumption leaving many in huge budget deficits.
Are the response measures taken by the government already correct?
I think they are. It is evident from the fact that the economy that shrank by a little over 5 percent in the second quarter improved in the third quarter albeit remaining negative. That is a positive trend but household consumption has not picked up yet. Government spending is what helps buffer the impact. It is now the backbone of our economy. The President has repeatedly reminded to spend the state budget. So, the government has adapted accordingly to the situation and responded quite flexibly giving appropriate social assistance and encouraging all jobs that boost buying power.
Are current employment opportunities not getting better yet?
There are fewer job opportunities. There is a total of 128.45 million working people in Indonesia. Based on the Central Statistics Agency's (BPS) data of August, only 82.02 million people are working full-time, 9.46 million down from last year. It means 9.46 million now either work part-time or are underemployed. Meanwhile, 310,000 people lost their jobs completely. So, the total number of part-time workers rose to 33.34 million and underemployed to 13.09 million. That is what caused the 2.67 million increase in the unemployed population compared to last year.
Which sectors are hit the worst?
Household consumption growth is worrying. From the BPS data, the worst areas where household spending plunged are transportation, restaurant and hotel. This is because of the fall in people's income. Meanwhile, there is still a surplus (spending) in education and health care.
What is the estimated budget deficit at the end of this year?
The actual deficit as of October 31 was only 4.67 percent against the 6.34 percent projected when the Government Regulation in of the law No. 1/2020, which has been legalized to be Law No. 2/2020, was issued. But it is predicted to jump to 6.6 or 6.7 percent at the end of the year.
In a condition like that, what is the economic outlook for the next year?
We are really hoping to flatten the Covid-19 curve; to better control the disease. As we will have the vaccines next year, we will have better immunity against the coronavirus. That's when the economy can make a rebound. If we have a balance, like in the goose philosophy, our economy can take off again.
Minister of National Development Planning/Head of the National Development Planning Agency Suharso Monoarfa at the launching of Coral Reef Rehabilitation and Management Program-Coral Triangle Initiative in Sorong, West Papua, November 13.
By focusing on the economic recovery, will the government still be able to realize sustainable development and eco-friendly programs?
It must. The Covid-19 has brought down greenhouse gases around the whole world through decreased human mobility. If we look at Google's mobility data, the drastic fall in greenhouse gases is clearly visible during major social restrictions in all countries, almost 1 percent in several towns. Some even saw 1.8 percent.
How will the government implement sustainable development?
Indonesia must be prepared to enter economic transformation where digitalization, blue sky energy, green economy and environmental friendliness all must go hand in hand, not singly.
Read the Full Interview in Tempo English Magazine