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Room for reform
The government, with its ability to spend big to jack up the economy, needs to step up its game.
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Sri Mulyani Indrawati, Finance Minister accompanied with moderator Ester Samboh, Deputy Managing Editor The Jakarta Post and Yunindita Prasidya, The Jakarta Post journalist, gives her speech as the main speaker in Webinar Jakpost Up Close theme Reimagining the future of Indonesia’s economy in Jakarta, on Wednesday August 19. 2020. (JP/Wienda Parwitasari)
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eform may be easier said than done. However, we agree with Finance Minister Sri Mulyani Indrawati’s statement in a live broadcast interview with The Jakarta Post on Aug. 19 that the pandemic presents an opportunity for reforms in Indonesia.
The coronavirus has exposed weaknesses in Indonesia’s healthcare system and social safety net database, which means there is plenty of room for reform. The pandemic should be speeding up reform that brings about more inclusive public services, especially in the desperately needed areas of health care and social protection.
Read also: Indonesia looking at near-zero growth as govt struggles to spend budget, Sri Mulyani says
Indonesia’s ratio of hospital beds per 1,000 people is lower than many other countries at 1.2. In comparison, India has 2.7 beds per 1,000 residents, China has 4.3 and the highest is Japan at 13. Indonesia’s low number of labs, healthcare workers and equipment are also of great concern.
The Social Affairs Ministry’s integrated social welfare data (DTKS) is still not capturing the depth of the most economically vulnerable groups of society. To make matter worse, data discrepancy has led to slow or mistargeted distribution of COVID-19 relief.
The state budget has been adjusted to focus on supporting the healthcare system and provide government aid to help soften the impact of COVD-19 on people’s purchasing power. The Rp 695.2 trillion (US$47 billion) COVID-19 containment budget is focused on healthcare spending, social safety nets and business rescue programs.
However, budget disbursement has been slow, with only 20 percent of the COVID-19 budget being spent as of Aug. 5. Only 39 percent of the overall state budget had been disbursed mid-year. Sri Mulyani said many ministers who were new to the bureaucracy were having difficulties adjusting to the dynamics of the pandemic while still maintaining state budget accountability.
That said, bureaucratic and public service reform is paramount to recovery. The government, with its ability to spend big to jack up the economy, needs to step up its game.
It is encouraging to hear from Sri Mulyani that despite the current “short-term” crisis, the government “is not losing sight” over its long-term vision and reform agenda, in which human capital development has taken center stage.
Read also: Indonesia aims for structural reforms as pandemic poses 'short-term challenge' to economy
The 2021 state budget, which has taken the themes “acceleration of economic recovery” and “strengthening reforms”, will see budget increases for education – pivotal for human capital development – and infrastructure, which is expected to increase mobility and productivity.
Only with tough bureaucratic reforms can these plans materialize. The government plays a big role in containing the effects of the pandemic. The people can participate by buying products from small local businesses, while the various institutions within the private sector can conduct reforms to help the country survive the pandemic.
Take the resilience of small and medium enterprises as an example. Although some have been forced to close shop, a lot more have quickly reformed their way of doing business, swiftly pivoting toward digital platforms to survive the pandemic.
