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New govt promises to narrow social gap despite high growth target
Bridging the gap: (From left to right) Author of Bridging the Gap: Reducing Inequality and Sorting Out the Essence of Development and No Easy Way Wijayanto Samirin, Paramadina University rector Anies Baswedan, vice president-elect Jusuf Kalla and Indonesian Democratic Party of Struggle (PDI-P) politician Arif Budimanta share laughter during the book launch event in SCBD, Jakarta, on Tuesday
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Bridging the gap: (From left to right) Author of Bridging the Gap: Reducing Inequality and Sorting Out the Essence of Development and No Easy Way Wijayanto Samirin, Paramadina University rector Anies Baswedan, vice president-elect Jusuf Kalla and Indonesian Democratic Party of Struggle (PDI-P) politician Arif Budimanta share laughter during the book launch event in SCBD, Jakarta, on Tuesday. During the event, Kalla said that the countryâs gross domestic product (GDP) per capita could increase by 100 percent if economic growth reached 7 percent. (JP/Wendra Ajistyatama) (From left to right) Author of Bridging the Gap: Reducing Inequality and Sorting Out the Essence of Development and No Easy Way Wijayanto Samirin, Paramadina University rector Anies Baswedan, vice president-elect Jusuf Kalla and Indonesian Democratic Party of Struggle (PDI-P) politician Arif Budimanta share laughter during the book launch event in SCBD, Jakarta, on Tuesday. During the event, Kalla said that the countryâs gross domestic product (GDP) per capita could increase by 100 percent if economic growth reached 7 percent. (JP/Wendra Ajistyatama)
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span class="caption">Bridging the gap: (From left to right) Author of Bridging the Gap: Reducing Inequality and Sorting Out the Essence of Development and No Easy Way Wijayanto Samirin, Paramadina University rector Anies Baswedan, vice president-elect Jusuf Kalla and Indonesian Democratic Party of Struggle (PDI-P) politician Arif Budimanta share laughter during the book launch event in SCBD, Jakarta, on Tuesday. During the event, Kalla said that the country's gross domestic product (GDP) per capita could increase by 100 percent if economic growth reached 7 percent. (JP/Wendra Ajistyatama)
The incoming government is optimistic that the country's growing inequality can be narrowed despite its target to achieve economic growth of at least 7 percent a year, said vice president-elect Jusuf Kalla.
Kalla said in Jakarta on Tuesday that the social gap between the rich and the poor had continued widening in the past several years due to the government's inability to make use of the country's agricultural potential and improve the quality of education.
As a large part of the state budget in the past several years comprised the costly fuel subsidy, the government lacked the financial resources to finance more productive activities that could help improve incomes, he said.
The remark was expressed at the launch of two books about economic inequality written by Wijayanto Samirin, an economist at Paramadina University, Jakarta, on Tuesday.
During his keynote speech at the book launch, Kalla said inequality in a country was an output of the government's policies that had failed to give fair economic conditions to their citizens.
'The government should take affirmative action in budgeting and executing policies to help create an environment where people can work and investment can grow,' he said.
Also on Tuesday, Samirin said he hoped his books could contribute insight for the new administration to narrow the economic gap, which had grown wider in the last 10 years based on the Gini coefficient ratio.
According to Central Statistics Agency (BPS) data, Indonesia saw a Gini ratio of around 0.41 to 0.42 in 2013, which was the highest in the country's history. The number was higher compared to 0.32 in 2004, when President Susilo Bambang Yudhoyono began his tenure.
The Gini ratio is a measure of statistical dispersion intended to represent the income distribution of a nation's population.
Such inequality contrasts with Indonesia's economic growth of 6 percent in recent years, which could turn the country into the world's 7th largest economy by 2030, according to McKinsey research.
A member of president-elect Joko 'Jokowi' Widodo's economic team, Arif Budimanta, added that the Jokowi administration aimed to decrease inequality by reallocating subsidies to productive sectors and spreading development more widely.
According to Arif, the Jokowi administration will give inclusive development to villages, where the highest poverty levels were, compared to cities, saying that at present only around 26 percent of total funds in the state budget was allocated to regional levels.
'We still have a centrist design in our state budget, even though we have practiced decentralization for 10 years. The Jokowi administration will try to focus on regional allocations in the state budget to boost local resources and public investment in villages,' he said.
However, economist Faisal Basri was skeptical that 7 percent economic growth could be achieved in the first term of Jokowi's administration due to a lack of fiscal space and minimum support in the House of Representatives.
According to Faisal, the first thing that Jokowi and Kalla should do is get the country's economy back on track through policies that are often termed 'low-hanging fruit', meaning seizing the most obvious opportunities. (gda)
