Govt Spends More on Local Products; Caps Import Spending in 2023

29 November 2022 23:16 WIB

TEMPO.CO, JakartaCoordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan in a national coordination meeting among state ministries on Tuesday said spending commitment on local products by state ministries, institutions, regional governments, and SOEs as of November amounted to Rp994.46 trillion, with a realization that reached Rp584.59 trillion. 

Luhut mentioned the amount of actual spending shows the government’s partiality to domestic businesses. “This shows the government’s inclination with domestic producers,” said Luhut on November 29.

He said that even though domestic goods are increasingly being absorbed, acceleration is still needed to realize spending on domestic products. Currently, spending on local products (PDN) is realized by the central and regional governments.

"However, it is necessary to accelerate the realization of spending on domestic products by the central and regional governments which have only reached Rp343.29 trillion from a goal of Rp400 trillion this year," said Luhut.

As reported previously, the amount of spending on domestic products is mentioned in Joko Widodo’s Presidential Instruction No.2/2022 which basically instructs state leaders to utilize and empower local products through the procurement of goods across government institutions. 

The purpose is to increase economic turnover, create a supply-demand of local products, and an efficient, transparent, and sustainable government procurement system.

Luhut also pushed for the commitment of government-related institutions to reduce import spending by 2023. "Next year, all import spending will be limited to a maximum of 5 percent, with 95 percent for PDN spending, or around Rp1,002 trillion," he said.

The minister believes that reducing the portion of imports will be able to increase spending on domestic products and have a significant economic impact. 

"Based on calculations by Statistics Indonesia (BPS), the transition from import spending to PDN spending of Rp 400 trillion alone can have an economic impact of around 1.6 percent to 1.7 percent with the absorption of 2 million workers. Especially if the entire Rp1,002 trillion is for local products spending," Luhut Pandjaitan said.

NABILA NURSHAFIRA

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