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Apindo to present Jokowi an economic roadmap
The Indonesian Employers Association (Apindo) will soon present president-elect Joko âJokowiâ Widodo with an economic road map comprising a set of recommendations and policies for his incoming administration
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he Indonesian Employers Association (Apindo) will soon present president-elect Joko 'Jokowi' Widodo with an economic road map comprising a set of recommendations and policies for his incoming administration.
The road map, which will be officially launched on Thursday, focuses on, among other things, the need to create at least 3 million jobs every year.
The topics were selected based on a series of discussions with entrepreneurs, academics, think tanks, government officials, international NGOs, chambers of commerce and embassies between March and July this year.
Apindo chairman Sofjan Wanandi said the need to create 3 million jobs was calculated on the estimation that there would be at least 8.3 million new people entering the workforce within the next five years.
Last year, the country had 7.2 million people unemployed.
'The new government should create at least 3 million new jobs each year, because the total demand for jobs will reach 15.5 million in the next five years,' he said at a press conference on Tuesday.
Aside from job creation, Apindo also emphasized several sectors, including energy, food and agriculture, manufacture, services and finance, as well as cross-sector concerns, such as on legal certainty, decentralization and bureaucracy reform.
In addition, Sofjan said the next government should take the chance during its first 100 days to scrap the fuel subsidy to lessen its burden on the state budget. The next government needs also to improve the agriculture sector, particularly in order to produce an additional 4.5 million tons of rice.
According to the 2015 state budget, the fuel subsidy will increase by Rp 44.6 trillion (US$3.72 billion) to Rp 291.1 trillion next year. Jokowi will have no choice but to raise the fuel price if he wants to reduce the state budget.
Sofjan said Apindo members have agreed the new government needs to increase the cost of subsidized gasoline (premium) by Rp 3,000 ($0.25) from its current price of Rp 6,500 and diesel fuel (Solar) by Rp 4,000 to Rp 9,500.
Apindo, Sofjan said, has calculated the fuel price increase would trigger around 3 to 4 percent inflation, especially in the logistics and transportation sectors. However, he was convinced that the economy would be normal again within six months after the increase.
Sofjan added that the fuel subsidy should be reallocated to pay for infrastructure to support business activities and job creation. Jokowi and vice president-elect Jusuf Kalla need to do this within the first year of their tenure.
'We recommend that Jokowi raise the state budget's allocation for infrastructure from 2.5 percent to 5.5 percent because we calculate that the subsidy reallocation to infrastructure can reach to around Rp 140 to 150 trillion if Jokowi agrees with that,' he said.
In the medium to long term, Sofjan said the new administration should support the manufacturing sector, especially for industries that were labor intensive and also for the upstream ones, such as oil refineries and smelters.
- Apindo offers road map for incoming administration
- It focuses on need to create 3 million jobs each year for next five years
- Apindo also wants the new administration to raise fuel prices
He said that his organization was researching new regions, especially in Central Java, to assess reasonable regional minimum wages (UMR) in order to create clusters for labor-intensive industries.
Regarding the upstream industries, Sofjan said investors from several countries, including Japan and China, are interested in joining the investment synergy, even though the total estimate can reach US$5 billion.
'The government-to-government approach should be done in order to start the breakthrough, before the private sector comes along. The current government's revision of tax holidays, especially for the eastern part of Indonesia, was positive as an incentive,' he said.
However, Sofjan said the manufacturing sector needs at least two years to grow above 6 percent after receiving investments because scrapping the fuel subsidy would create temporary negative impacts on people's purchasing power. (gda)
