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Economy biggest challenge in Jokowi's second term: Kalla

Twice a vice president with two different presidents, Vice President Jusuf Kalla is set for a spell outside the government once he leaves office on Sunday

Nezar Patria, Karina M. Tehusijarana and Marchio Irfan Gorbiano (The Jakarta Post)
Jakarta
Sat, October 19, 2019

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Economy biggest challenge in Jokowi's second term: Kalla

Twice a vice president with two different presidents, Vice President Jusuf Kalla is set for a spell outside the government once he leaves office on Sunday.

Kalla has been the go-to person for President Joko “Jokowi” Widodo in making important decisions, considering his wealth of experience as former Golkar Party chairman and in numerous ministerial posts in previous administrations, the President said.

“Whether in the morning or middle of the night, we always [communicate] over the telephone or face to face. That was very good to me in exchanging ideas to decide important matters for this country,” Jokowi said on Friday at the State Palace, where cabinet members gather to enjoy live keroncong and campursari music two days before the new administration takes charge.

Kalla was equally effusive in his praise for his executive partner, saying that every working moment with Jokowi was “interesting” and therefore he could not pick a single favorite moment during his five-year period.

Following the completion of his second five-year term as vice president, Kalla said he would like to spend his days taking care of his grandchildren as well as devoting his time to social, educational and religious affairs.

While the former businessman said he was proud of the government's achievements over the past five years in building infrastructure, expanding the social safety net and reducing poverty, he expressed his concern about the economic outlook in an interview with The Jakarta Post on Thursday. 

"Looking at the world as a whole, and the Asia and Southeast Asia region, I am pessimistic as long as the trade war between China and the United States continues. That is one of the problems caused by [US President Donald] Trump," said Kalla, whose family business ranges from energy to construction and transportation to property.

International institutions the World Bank, International Monetary Fund and Asian Development Bank recently slashed their global growth outlook for this year and next, while the World Trade Organization cut its global trade growth outlook by more than half.

"The conflict in the Middle East will also have an effect on energy prices and can impoverish the world. So of course we will be pessimistic looking at the situation if it continues,” Kalla, 77 years old, said.

He added, however, that if the government worked to address the issues that were holding back the country's economy, he was optimistic that it could improve upon the 5 percent gross domestic product (GDP) growth that Indonesia has been stuck at for the past five years.

"However, this year and next year will be difficult," Kalla said. "[We have to] improve our economy's productivity, improve the people's skills so that we can add more value. And we have to simplify our bureaucracy, both the [business] permit process and the decision-making process have to be easier."

Indonesia’s economy grew at the slowest pace in two years in the second quarter of this year at 5.05 percent, as emerging economies suffered from the US-China trade war, while recession outlook in European countries added to risks.

"It is hard for us to control the problems of the world but we have to control our own country's problems," he went on to say.

Kalla's comments echoed those of Jokowi in the President’s first postelection speech in July, in which he outlined his plans to improve the quality of education and human resource development in the country and to reform the country's notoriously bloated and knotty bureaucracy in a bid to attract more foreign investment.

The outgoing vice president also weighed in on another possible obstacle to investment: the 2003 Manpower Law. The business community has long called for a labor market reform that revises the law, which they consider to place overly onerous requirements on employers and corporations. 

"For example, if a laborer is fired or replaced, the severance pay that he receives is very high, around 30 times his wage," Kalla said. "That is very burdensome and concerning especially for labor-intensive industries that have many workers. If the company wants to dismiss a worker because of a problem, even if he is at fault he still has to be paid."

A 2018 analysis and evaluation by the Law and Human Rights Ministry’s National Law Development Agency (BPHN) outlined a number of proposed revisions for the law, including a reduction in severance pay, an extension of working hours, more flexible outsourcing and a reinforcement of employers’ rights to lay off staff for serious faults. 

Labor unions have expressed strong objections to the revision, and Manpower Minister Hanif Dhakiri has said a draft of the bill is still in development.

"I agree that one of the concerns for investors to come into Indonesia is that the Manpower Law is too stringent," Kalla said. "We have communicated to labor unions that while the law may be good for laborers now, if it prevents investment then that could lead to more unemployement. So we should look beyond the present day."

When asked whether he had any personal goal that he felt he had not yet achieved during his two vice presidential stints, the former Golkar Party chairman demurred. 

"Pak Jokowi is very collegial, everything is a joint decision so what we don't achieve, we don't achieve together, and what we do achieve, we achieve together as well," he said, adding that the stagnant economic growth was one matter that stuck in his craw.

"We wanted 7 percent but we only achieved 5 percent," he said. "Of course we managed to reduce poverty but we could have reduced it even further and created even more jobs if we had achieved 6 or 7 percent."

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