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A decade of Jokowi's budgetary and economic policy
The pandemic crisis has underscored the importance of continued structural reforms to accelerate economic transformation.
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Joy ride: President Joko “Jokowi” Widodo (third right), State-Owned Enterprises Minister Erick Thohir (center foreground) and a number of celebrities take the Light Rail Transit during a trial run on Aug. 10. The new public transportation mode will serve the route from Jati Mulya Station in Bekasi, West Java, to Dukuh Atas Station in Central Jakarta. (Antara/Press Bureau of Presidential Secretariat/Muchlis Jr)
O
n the eve of Indonesia’s 78th Independence Day, President Joko “Jokowi” Widodo submitted the draft budget for 2024 to the House of Representatives. The event marked nearly a decade of his tenure as president. Therefore, it is crucial to reflect on the country's budgetary and economic journey under his stewardship.
Several significant events are worth noting here, from grappling with energy subsidies, steering through an unprecedented pandemic crisis, to embarking on transformative economic strategies, notably downstreaming policies, all of which have sparked a heated debate on budget effectiveness.
One of Jokowi's most notable economic policies was energy-subsidy reform. This was no small feat, considering its social and political implications. The oil prices in 2011-2014 were stubbornly high at around US$100/barrel.
The administration of Jokowi’s predecessor Susilo Bambang Yudhoyono spent around Rp 1.3 quadrillion (US$85 billion based on current exchange rates) on energy subsidies during the period of 2010-2014, higher than the expenditure on infrastructure and social protection combined, which amounted to Rp 1.2 quadrillion.
Jokowi took a bold step to reform the fuel subsidies and redirect resources toward more targeted social programs and growth-enhancing expenditure. The price of subsidized Premium gasoline (RON 88) and diesel fuel were increased by more than 30 percent each in November 2014.
The freed-up resources resulting from the reform were channeled into infrastructure development and human capital enhancement, fostering long-term economic growth. Energy subsidy expenditure was slashed by more than half from Rp 341.8 trillion in 2014 to Rp 119.1 trillion, while infrastructure spending almost doubled from Rp 157.4 trillion to Rp 256.1 trillion.
Progress in infrastructure development has been impressive. As of 2022, the network of toll roads has reached 2,687 kilometers, more than triple the 2014 mark (802 km). In addition to 237 airports that have been upgraded, 50 new airports were built. Electricity capacity jumped from 52 gigawatts in 2014 to 81.2 GW as of 2022. Public investment in basic facilities, such as hospitals and health service centers, has also increased significantly.
