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Jakarta Post

Equality new goal for budget

President Joko “Jokowi” Widodo wants all citizens, regardless of their background, to relish the fruits of economic expansion equally, the details of the 2016 State Budget have shown, as the country’s robust growth over the past decade had been clouded by a widening gap of wealth and job opportunities between the rich and the poor

Satria Sambijantoro (The Jakarta Post)
Jakarta
Tue, August 18, 2015

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Equality new goal for budget

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resident Joko '€œJokowi'€ Widodo wants all citizens, regardless of their background, to relish the fruits of economic expansion equally, the details of the 2016 State Budget have shown, as the country'€™s robust growth over the past decade had been clouded by a widening gap of wealth and job opportunities between the rich and the poor.

Government officials have confirmed that local leaders would get more funds next year as a part of a decentralized fiscal policy set to spur growth on regional levels. Meanwhile, social and healthcare funds on regional levels would also see a boost, with new social assistance plans waiting to be introduced next year.

'€œTo have a good and sustainable economic expansion, income levels and infrastructure building should be distributed evenly across the regions,'€ National Development Planning Board (Bappenas) head Sofyan Djalil said recently.

'€œThat'€™s the goal that we want to achieve by decentralizing our fiscal policy and increasing the funding allocation for regions,'€ he added.

The allocation of village funds would be more than doubled from Rp 20.8 trillion this year to Rp 47 trillion (US$3.4 billion) in next year'€™s budget. Estimates from the Finance Ministry show that sub-district heads would each get an average of Rp 628.5 million to develop their respective regions next year.

Meanwhile, regional transfer and village funds would increase 17.6 percent year-on-year to hit Rp 782.2 trillion next year, the most dramatic increase compared to other spending allocations in the 2016 State Budget, as Jokowi seeks to boost economic growth at regional levels.

In addition, the government is currently designing new social assistance and healthcare programs to boost the income and purchasing power of the poor, according to Finance Minister Bambang Brodjonegoro.

Bambang said that the government'€™s existing conditional cash transfers (CCT) program would emulate the Brazilian government'€™s successful '€œBolsa Familia'€ plan, in which the South American country distributed funds to poor households as reward for their children'€™s participation in schools and healthcare programs.

Bambang estimated that the number of poor Indonesians gaining access to the CCT program would increase from 2.9 million this year to 6 million next year.

Poor households are also expected to benefit more from the dramatic increase in healthcare funds, after the Finance Ministry upped total healthcare spending from Rp 74.3 trillion this year to Rp 106.1 trillion next year '€” the first time ever that the government fulfilled a constitutional mandate stipulating that total healthcare spending must account for at least 5 percent of total state spending.

'€œThis is a state budget that was specifically designed for the poor,'€ said Bambang, adding that the government aimed for an all-inclusive growth this time in which the impact of economic expansion could be enjoyed by all parts of society.

Economists have noted that Indonesia'€™s robust economic expansion over the past few years was not enjoyed evenly by all of its citizens, with the rise in economic wealth heavily distributed in certain areas or specific demographic segments only, as shown by the widening income gap between the rich and the poor.

Official data shows that from 2005 to 2013, Indonesia'€™s Gini coefficient rose from 0.35 to 0.41, the fastest increase in Southeast Asia. A higher ratio means that wealth is concentrated among fewer citizens.

Steven Tabor, the Asian Development Bank'€™s (ADB) country director for Indonesia, said that the regional administrations were currently in need of stronger funding and regulatory support to improve the living quality of the people in their respective regions.

'€œThe challenge is to link regional funding to service delivery results, rather than to how much money is spent,'€ he said on Monday. '€œThe central government needs to set achievement standards and hold the regions accountable for these.'€

In most cases, the regional administrations knew better about their areas'€™ needs and potentials than their central government counterparts, said Tabor, who has been advising the Indonesian government on economic matters for more than 30 years.

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