Indonesia's efforts to attain food self-sufficiency have been hampered by macroeconomic policies that were very often not in line with microeconomic conditions, causing stagnation in the food and agricultural industry, experts say.
Macroeconomic policies initiated by the National Development Planning Agency (Bappenas), Bank Indonesia and related ministries were hampered by a lack of coordination with the House of Representatives, Bogor Institute of Agriculture (IPB) economic and agriculture expert Hermanto Siregar said during his speech for professorship, in Bogor on Saturday.
Beside Hermanto, IPB inaugurated two other lecturers for professorship that day: Rector Herry Suhardiyanto and deputy rector for academic affairs Yonny Koesmaryono.
Hermanto said that while the government had initially considered microeconomic factors when making its national budget, lengthy discussions with the House often changed the initial amounts in the budget and its composition.
"Government discussions with the House, such as those discussing the national budget, often take a very long time, and quite frequently cause major changes in the government's initial macroeconomic projections," he said.
Hermanto demanded that the government and House limit changes to the initial planning in their national budget formulation deliberations.
"Indonesia should look up to Korea. Budget discussions in the Korean Parliament do not allow item changes and composition increases for items," he said.
The deputy to the coordinating minister for the economy, for agriculture and maritime affairs, Bayu Krisnamurti, agreed that lengthy discussions with the House had hampered the macroeconomic decision-making process.
"The decision-making process for macroeconomic policies doesn't always take into account what industries need," he said.
On the monetary side, as the central bank's monetary policies aimed to stabilize currencies and inflation, they tended to increase interest rates, affecting banks' lending rates, Hermanto said.
"This has caused constraints in channeling micro credit to agriculture businesses," he said.
Because of the central bank's independence, Bayu said, the government could not influence BI's monetary policies to increase such credit.
The current interest rate for microcredit is 16 percent. Indonesian Chamber of Commerce and Industry (Kadin) chairman M.S. Hidayat recently said the microcredit interest rate was supposed to be dropped down to 12 percent.
BI's monetary policies had impeded real sector acceleration, and slowed down food self-sufficiency efforts, Hermanto said.
"Its policies cannot be used to increase the amount of investment in the food and agricultural sector," he said.
A lack of coordination within economic ministries has also undermined the focus on the food and agricultural industries, he said.
"The economic ministries need a specific desk to ensure that they make macroeconomic policies in line with the microeconomic conditions," he said.
To boost investment in the food and agriculture sector, Hermanto said, the government could make expansive fiscal policies, such as the application of labor-intensive programs in villages, since there are a lot of poor people, limited job opportunities and low-quality housing.
"A lack of infrastructure and minimal linkages to big cities are also factors to consider," he said.
Hermanto added that labor-intensive programs could also be implemented in cities. (nia)
