Thammasat University students interested in economics, ASEAN studies, Indonesia, political science, planning, public policy, and related subjects may find it useful to participate in a free 20 August Zoom webinar on Indonesia’s 2025 Budget and Economic Outlook.
The event, on Tuesday, 20 August 2024 at 9am Bangkok time, is presented by ISEAS – Yusof Ishak Institute, Singapore.
The TU Library collection includes several books about different aspects of the economy of Indonesia.
Students are welcome to register for the event at this link:
https://us06web.zoom.us/webinar/register/9117206019995/WN_fUDQwuj5QZiBsEF7IUqBeA#/registration
As explained on the event website,
The Indonesian government’s fiscal stance for 2025 aims to maintain continuity in development policies while accommodating the programs of the new administration led by the President-elect Prabowo Subianto. A sound fiscal policy will be critical to achieving Indonesia’s Golden Vision of becoming a developed economy by 2045 and achieving Prabowo’s eight-percent annual economic growth target.
As the global economic situation remains uncertain, the next government will face tough challenges to ensure prudent fiscal management while implementing various flagship programs, such as the free school lunch program, the new capital Nusantara project and the projected military spending increase. Prudent fiscal management is therefore important to keep investors’ confidence in the country’s economic stability amid rising financial pressures, lower commodity prices, and slowing global investment flow. This seminar will highlight some of the key fiscal policy measures under the current and next administrations as well as the political economy of implementing difficult fiscal reforms. The speaker will also discuss the major challenges facing the Indonesian economy in 2025 and beyond.
About the Speaker
Muhamad Chatib Basri is Indonesia’s former Finance Minister and former Chairman of the Indonesian Investment Coordinating Board. He currently serves as the Chairman of Bank Mandiri and XL-Axiata.
Dr. Basri is a member of numerous International Advisory councils including the World Bank Advisory Council on Gender and Development, the Independent High-Level Expert Group on Climate Finance for COP27 and 28, and the Advisory Board, Centre for Applied Macroeconomic Analysis, the Australian National University. He is also a member of the Governing Board of the Lee Kuan Yew School of Public Policy at the National University of Singapore.
Last year Dr. Basri published an article, The Middle Class and the “Chilean Paradox.”
An English translation of the article posted online began:
“How terrible it would be to grow old with memories of youth filled with traffic jams, the fear of being late for the office, routine tasks that don’t inspire enthusiasm, and a life like a machine, which will only end with a meager retirement.” Seno Gumira Ajidarma wrote that in his work, “Growing Old in Jakarta”.
We may disagree with Seno or think he is an exaggeration, but that sentence reminds me of the lower urban middle class who practically don’t have many choices. Struggling in traffic jams, work routines, and the fear of being late for the office are everyday things that must be endured.
They may not have the luxury to choose another job or way of life. Amartya Sen calls it: their capability space is limited. Don’t have the freedom to achieve another lifestyle.
The lower middle class indeed has limited options. Social protection instruments are also inadequate. They are not eligible for social assistance because they are not included among the poor. They may not necessarily have access to Bidik Misi scholarships because they do not have a certificate of inability (SKTM).
They must pay for their own BPJS because they are not part of the fee assistance recipient. The focus of economic policy in many countries, including Indonesia, is practically on the poor group. The middle class is almost neglected. How does this lower middle class face economic shocks?
The middle class is neglected
The Indonesian economy is projected to grow around 5% in 2023, making it one of the best performers in the G20.
However, the challenges of 2024 will not be easy. […]
The impact of global economic pressures and slow government spending is beginning to be felt in household consumption, particularly among the lower middle class. Consistent with this, the Consumer Confidence Index for spending groups below IDR 3 million continues to decline while the over IDR 4 million spending group tends to increase.
One thing that must be taken seriously is the impact of El Nino on the rise in food prices. The largest portion of consumption for the poor and lower middle class is food, especially rice. The increase in the price of rice will hit vulnerable groups.
For this reason, social protection in the form of direct cash assistance and food aid is needed. The government must also ensure that the supply of food is available so that price increases can be overcome. As a result, the allocation of the national budget for social protection must be increased.
The pressure on the middle-lower class reminds me of the September 2023 case with former Chilean President Michelle Bachelet when I was teaching at the Harvard Ministerial Forum at Harvard University.
Bachelet Shares Insights on Economic Reform Experience in Chile. Chile’s economic performance is truly impressive.
Its per capita income is the highest in Latin America, its economic growth is the fastest in Latin America, and the poverty rate decreased from 53 percent (1987) to 6 percent (2017)—better than Indonesia. Chile has the best Human Development Index in Latin America. In short, brilliant economic performance.
Ironically, in October 2019 there was social unrest that almost led to a revolution. Economist Sebastian Edwards calls it ”The Chilean Paradox”. Why? One explanation is the neglect of the middle class.
People do acknowledge that progress has been made, but not as fast as expected. There is a gap between expectations and reality. People are not patient enough for it. I think this issue is highly relevant for Indonesia in the future.
More than 12 years ago, I wrote that economic growth would drive the emergence of a new consumer class with economic and political implications. This new consumer class, who are demanding and critical, with better incomes, would demand quality public service, justice, and better government governance.
I still remember, more than 40 years ago, when I jumped onto a crowded city bus number 35. Hanging on with one leg outside, going to or coming back from school. At that time, we were “happy enough” if there was a bus. Never complained about the air conditioning or the unavailable seats.
As aspirations have increased, there is now a desire for more comfortable buses. Hence, air-conditioned bus services have emerged. With these services, people can now enjoy riding on cooler and more comfortable buses. The middle class aspirations continue to progress. At present, buses are relatively available with air-conditioning, and the schedules are relatively good. However, a new issue has arisen – concerns over sexual harassment. To address this, the government has responded with the introduction of women-only buses.[…]
(All images courtesy of Wikimedia Commons)