Adrian Wail Akhlas, Jakarta – Indonesia is aiming to capitalize on the coronavirus crisis to conduct structural reforms including in human capital and infrastructure, among other things, as the coronavirus pandemic posed a "short-term challenge" to the country's economy.
Finance Minister Sri Mulyani Indrawati pledged on Wednesday the government would use all policy instruments to face the coronavirus pandemic, adding that the current economic situation was different than the 1998 Asian financial crisis and the 2008 global financial crisis.
"We will use all of our policy instruments to face this short-term challenge without losing sight of what is really important such as human capital, infrastructure, efficiency of bureaucracy and the ease of doing businesses," Sri Mulyani said during the webinar "Reimagining the future of Indonesia's economy", which is part of The Jakarta Post's webinar series "Jakpost Up Close".
The current economic crisis, she went on to say, had hit all kinds of businesses, adding that the government aimed to make sure businesses survived by reviving the demand side and restoring the supply side.
The government has earmarked Rp 695.2 trillion ($46.6 billion) to finance the country's COVID-19 fight and boost economic recovery, which is expected to widen the budget deficit to 6.34 percent.
The coronavirus outbreak caused the country's economy to shrink 5.32 percent in the second quarter this year as all components of economic activity fell significantly. The government expects the economy to contract 1.1 percent this year, or to grow 0.2 percent at best.
The government recently announced that economic recovery and structural reform would be at the core of the 2021 state budget policy.
"Structural reform must also be carried out in education, health, social protection and budgeting and the taxation system," President Joko "Jokowi" Widodo said in his annual state budget speech before the People's Consultative Assembly in Jakarta last week.
Jokowi also stated in his inauguration speech last year that he aimed for the country to escape the middle income trap by 2025, becoming an advanced country with an annual income of Rp 320 million per capita, or a monthly income of Rp 27 million per capita.
Sri Mulyani stated that the government would continue its plan to conduct structural reforms, including through the omnibus bill on job creation and infrastructure development.
The omnibus bill is expected to help the government attract more investment by revising 79 laws and more than 1,200 articles deemed harmful to Indonesia's ease of doing business, amid concerns over environmental and labor rights, among other things.
"We are hoping that the omnibus bill can be passed [by next year]," she said. "Infrastructure development, budget support and ease of doing business can all create confidence for the business community and consumers" once the coronavirus crisis subsides, she added.
Red tape prevented Indonesia from climbing up the World Bank's ease of doing business ranking last year, hence why the country has been ranked 73rd since 2018. The President wants the country reach the 40th position this year.