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Ministries of transportation, public works have spent less than half of annual budgets

Jakarta Post - September 1, 2020

Mardika Parama, Jakarta – The Transportation Ministry and the Public Works and Housing Ministry, in charge of infrastructure projects, have spent less than 50 percent of their respective budgets as of Monday, top officials reported, amid calls to expedite government spending during the pandemic.

Transportation Ministry had spent 45.2 percent of its budget, that is Rp 16.3 trillion (US$1.1 billion) of a total of Rp 36.1 trillion, by the end of August, Transportation Minister Budi Karya Sumadi said in a House of Representatives hearing on Monday.

Meanwhile, the public works ministry had spent 48.1 percent of its allocated spending as of Monday, or Rp 41 trillion of a total budget of Rp 85.7 trillion, according to Public Works and Housing Minister Basuki Hadimuljono.

Minister Budi blamed the COVID-19 pandemic for hampering the ministry's budget realization, as health protocols and large-scale social restrictions (PSBB) had halted progress on infrastructure projects.

"The pandemic has slowed down our budget realization as it disrupts infrastructure development," Budi told lawmakers, adding that the measures had also led the ministry to cancel its employee training program and had disrupted its nontax revenue (PNBP) collection efforts.

Experts have called for speedier state budget disbursement to aid the country's economic recovery, as the COVID-19 pandemic puts continuous pressure on people's purchasing power.

The Indonesian economy suffered its sharpest downturn since the 1998 Asian financial crisis in the second quarter of 2020, when its gross domestic product (GDP) contracted 5.32 percent year-on-year (yoy), according to Statistics Indonesia (BPS).

However, government spending, which is expected to anchor the economy and increase purchasing power amid cooling private sector activity, plunged 6.9 percent yoy in the second quarter.

In an unusual projection of anger, President Joko "Jokowi" Widodo lashed out at his ministers on Aug. 3 over the Cabinet's poor utilization of funds allocated for the country's COVID-19 response, which at the time stood at 20 percent of the total Rp 695.2 trillion.

The Transportation Ministry has set itself a target to spend 96 percent of its budget by the end of fiscal year 2020.

Furthermore, minister Budi said he planned to reallocate Rp 700 billion of the ministry's unused funds.

"There are funds we haven't used that could be reallocated. We have sent the budget reallocation proposal to the Finance Ministry and are currently waiting for approval," he said.

He also pledged to improve the ministry's coordination with other agencies to streamline land acquisition and bureaucratic procedures to expedite the spending.

Meanwhile, the public works ministry aims to spend 97.5 percent of its total budget by the end of fiscal year 2020.

"We have also spent Rp7.16 trillion of the Rp12 trillion budget allocated in the National Economic Recovery [PEN] program for labor-intensive projects," Minister Basuki said during the hearing.

Basuki was referring to the ministry's allocated funding for its cash-for-work (PKT) program and labor-intensive work program, at Rp 11.5 trillion and Rp 654 billion, respectively, to provide jobs for an estimated total of 680,000 workers amid increasing unemployment during the health crisis.

The ministry planned to "transform" a number of regular infrastructure projects into labor-intensive schemes, Basuki explained earlier this year.

The ministry had employed around 402,000 people under labor-intensive projects and PKT programs to date, he said on Monday.

In an effort to expedite spending, Basuki said the ministry would accelerate infrastructure spending in the third quarter and commence programs that were supposed to start in the fourth quarter.

"We are accelerating our labor-intensive projects and moving some of our completion targets from the fourth quarter to the third quarter," he said.

Source: https://www.thejakartapost.com/news/2020/09/01/ministries-of-transportation-public-works-have-spent-less-than-half-of-annual-budgets.html