By Eko B. Supriyanto Chairman Infobank Media Group
Jakarta – REshuffle is not performance-related. Honestly, the reshuffle is more about politics ahead of the 2024 Presidential Election (Pilpres). Who tackles who, who approves of whom. It is believed that the sixth ups and downs during Jokowi’s presidency will not have much effect on economic affairs. On the contrary, it can lead to policy inconsistency. Change ministers, change policies, it’s normal.
Since Tuesday afternoon, news of the dismantling of the Indonesia Maju Cabinet has been getting stronger. Moreover, President Jokowi has summoned several figures to come to the palace. There is a lot of speculation. There are various scenarios for the composition of the cabinet to be replaced. This reshuffle is on Wednesday Pahing, so since Jokowi became president there has been six cabinet disassembly. And, in this reshuffle, only two ministers were replaced, not as big as the news on Tuesday.
The president has rights. Who is invited to join the government is the prerogative of the president. But, is it a prerogative? It could be true, but it could also not be because the names sitting in the government are representatives of the parties. That’s not wrong. However, many questions, what is the reshuffle for?
According to the Infobank Institute, first, the reshuffle is more of a bargaining tool for the President to parties. At least support for Jokowi’s government, which is only 28 months away. The news that National Mandate Party (PAN) enter into the coalition is proof that the Jokowi government still needs the support of parties that have been sitting outside the government.
Second, the President likely sees that, this is related to the upcoming presidential candidate in 2024. Perhaps, the President sees that in carrying out a presidential candidate, it is adjusted to the President’s wishes. Coalition parties, such as Golkar, Nasdem, PKB, and PPP, did not maneuver for the remaining 28 months of Jokowi’s administration.
Third, President Jokowi should see that ministers from parties are not working effectively. Busy with the affairs of presidential candidates, and unfortunately his choice does not match the ruling party – Jokowi’s party. So, get it sorted out before it’s too late.
The reshuffle this time has nothing to do with the minister’s performance, although a number of opinions mention performance. Honestly, it’s more about politics. The political dimension is more obvious. The name of politics has nothing to do with performance, but a matter of winning and losing. This is a political matter ahead of the 2024 presidential election.
Then, what effect does it have on mothers’ wallets? Frankly, not much affect. Mothers are still expensive to buy food commodities. Unstable ups and downs. Even if the price does not increase, the size will shrink like the size of a shrinking instant noodle.
Possiby, that the wallets of mothers, as well as fathers, are increasingly being undermined by “ghost” inflation which in a year has reached 3.55%. Purchasing power began to weaken. Prices of food commodities began to rise. Inflation has “pickpocketed” mother’s wallets in the wet market today. Also, in minimarkets – where the size of instant noodles is getting smaller and smaller. So far, not only has there been stagnation in purchasing power, but there has also been inflation, which has reduced the purchasing power of mothers.
On the contrary. Any minister who served, whether from the party or not, in fact, the price of imported fuel oil (BBM) and food commodities is difficult to control. For example, the price of cooking oil is still felt to be high, even though its availability is sufficient. That’s because the Indonesian economy is dominated by godfathers, who were raised by the government since New Order.
The food commodity market is dominated by godfathers. Wheat, wheat flour, sugar, rice, soybeans, cooking oil, are examples where the state “lost” to them. The market has been controlled. Then, reshuffle for what? Still can’t lower food prices, and the government may not be able to win from these godfathers – whose accomplices are also in the party and government.
Even if all ministers were replaced, coal and palm oil commodity prices continued to soar. Permanent. And, it’s not because of the sophistication of the government, but because commodity prices are indeed high, which was triggered by the Ukraine versus Russia war. The Indonesian economy can be called economy of InsyaAllah (economy God willing) – it depends on commodity prices abroad. Sustenance depends on market prices abroad. Not because of the greatness of the ministers.
It must be admitted, whoever the minister is, thanks to the increase in commodity prices, coal and minerals, has provided sustenance through royalties of Rp420 trillion. The sustenance of the “durian falling” will be used to cover the burden of energy subsidies. According to the Budget Agency of the House of Representatives, the burden of energy subsidies is Rp502.4 trillion. This “big” subsidy is to keep the price of 3 kilograms of LPG, kerosene, diesel, pertalite, and electricity tariffs below 3,000 watts from rising.
In fact, if it is consistent, such as the revocation of energy subsidies in 2017 – at that time the subsidy was revoked because it was considered not in favor of the people. Energy subsidies are not on target, something like that, so they must be removed. However, the song for the fat subsidy is now playing again after the foreign fuel prices skyrocketed.
There are many opinions, that the windfall fortune from commodity royalties would be better if it was to reduce new debt. But, in fact not. The government continues to dig up debt. Just keep digging it. Interest is paid on debt. Even more goosebumps because the coupon yield of Indonesian bonds is higher than that of regional countries. This debt burden may become a burden in future periods.
The Godfather Ruled the Economy
According to data in our APBN, Indonesia’s debt position as of March 2022 reached Rp7,052 trillion with a ratio of 40.39% to GDP. Compared to March 2021, there was an increase of 9.45% from the position of Rp6,445 trillion. The ratio continues to increase, although it continues to increase.
Imagine, in 2022, as recorded in the budget book, there will be around Rp405.9 trillion just to pay debt interest. Although the debt-to-GDP ratio is still safe, it is the government’s cash flow, where the interest payments are paid, that is a point of concern. If the government is consistent with energy subsidy policies such as reducing subsidies in 2015 and 2017, then the windfall fortune from coal, minerals, and crude palm oil (CPO) can reduce debt.
Apart from these structural problems, there are several problems where high growth is always accompanied by high imports. The low competitiveness of Indonesian products. More important than that, and this is very crucial, is the issue of corruption. Corruption drives the economic costs higher.
The reshuffle this time does not seem to be to face the challenges of an increasingly hot global economy. As is known, worldwide inflation is increasingly burning the global economy. World food prices are rising. The stock market also starts to burn. The era of high-interest rates is back.
Moreover, the era of digital stocks is also starting to be corrected. Many start-ups began to fall. Indonesia, which is also a country with high e-commerce growth with its digital euphoria, was also affected.
The banking sector will experience normalization in March 2023. Global pressures and interest rates will be a heavy burden for the banking sector. Meanwhile, the business world that is expected to emerge is only certain sectors, such as coal, palm oil, minerals, and mining. The manufacturing sector is still consolidating. The era of normalization will be tough for banks.
So, the reshuffle this time does not seem for economic interest. In short, it has nothing to do with the pockets of society in general. This reshuffle is only for the benefit of a few party elites. Only for the sake of the “copras-capres” (Presidential Election) in 2024.
Like it or not – economic actors still have to breathe the air caused by the hectic reshuffle issue. Frankly, this reshuffle does not affect the economy much. In fact, whomever the minister was replaced. Policy consistency is the main problem besides corruption. This zig-zag policy is an important issue in attracting investors
Once again, to be honest, this reshuffle is only for the distribution of seats ahead of the 2024 presidential election. It’s far from a matter of performance and economic interests. More precisely, the reshuffle this time is just political entertainment ahead of the 2024 presidential election. And mothers will continue to be proficient in spending their money amid conditions that prices continue to climb and inflation is also starting to flare up. (*)
