Kedutaan Besar Republik Indonesia
Embassy of the Republic of Indonesia
Ambassade de la RÉpublique d'Indonésie

Jokowi Prepares Pancasila Economic Policy

TEMPO.CO,A�Jakarta - President Joko ‘Jokowi’ Widodo said he will launch the Pancasila economic Policy soon. The concept will focus on mutual cooperation (gotong royong) and equality for all, citing Indonesia’s high economic growth still comes with high economic discrepancy.

“Our economy grows quite well with a 5.1 percent rate, but discrepancy remains high,” he said when attending PDI-P’s 44th birthday celebration on Tuesday, January 10.

Jokowi acknowledged how the government’s goal of building villages and outer areas has not been running as planned. Since taking office in late 2014, Jokowi’s administration has only lowered the Gini ratio from 0.41% to 0.39%.

Finance Minister Sri Mulyani Indrawati said that poverty rate declines since 2007, but the speed has been slowing down. She said that powerty, inequality and labor productivity caused Indonesia’s economic growth to lack quality as seen in the growth-to-employment ratio of just 1.0 percent.

In the past, a 1-percent growth could provide jobs for 225,000 workers. Now, the number is down by more than half to just 110,000. “It’s impossible to self-sustain. There are also problems in creating equitable distribution of infrastructure, health, and financial markets,” Sri said.

In the fiscal sector, the Finance Ministry has mandated regional governments to allocate 25 percent of their budgets to build infrastructure. The government will increase regionals’ budget allocation for sanitary facilities by Rp1.2 trillion to support the health sectors, and transfer Rp1.7 trillion to support 41,000 teachers in 13,400 underdeveloped villages.

Indef economist Eko Listyanto said the government must also focus on the agricultural sector, especially during a transition period on investment from privates to labor-intensive.

According to Eko, the agriculture sector contributes 15% to the GDP and 35% to employment. “Food also has a huge influence on inflation,” he said.