Indonesia president urges economic reboot, boost to healthcare

Jakarta

INDONESIA must use the Covid-19 pandemic to reboot South-east Asia's biggest economy, President Joko Widodo said on Friday, as he proposed a US$187 billion 2021 budget that includes spending more on healthcare, including vaccines, and infrastructure.

He made the remarks in his annual state of the union and budget speeches to parliament. Due to Covid-19 precautions, fewer than half of the lawmakers were present for his address, with the rest watching online.

Likening the current economic situation to "a computer crash", he said Indonesia, along with other countries, must "shutdown, restart and reboot".

"We must capitalise on the crisis as a momentum to make a big leap," he said.

He proposed a 2,747.5 trillion rupiah or US$186.65 billion (S$254 billion) 2021 budget, up 0.3 per cent from this year. He said the fiscal deficit should dip to 5.5 per cent of GDP, from 6.34 per cent in 2020, the highest in more than a decade as the government sought to shield the economy from the pandemic.

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Indonesia has recorded the highest death toll due to the novel coronavirus in South-east Asia, though the authorities have been pushing to reopen the economy.

Economic growth should rebound to 4.5 per cent to 5.5 per cent next year, he said, compared with government projections of stalled growth this year and a 5 per cent rise in 2019.

The budget showed "the government is pretty optimistic about its expectation for economic recovery even as we see globally that the recovery in developed economies has been pretty slow," said Josua Pardede, an economist with Bank Permata.

The president, who allocated US$1.7 billion for Covid-19 vaccines and research, said accelerating reform of the health sector was a top priority, along with strengthening food supply chains, including with a newly planned food estate on Borneo island.

He also highlighted plans to slash oil imports by using fuel made from palm oil, including by expanding the green diesel state oil firm Pertamina successfully made from 100 per cent palm oil. The so-called D100 would absorb a minimum of one million tonnes of farmer-produced palm for 20,000 barrels of production capacity per day, the president said, without giving a timeframe.

Cash and food assistance, tax breaks and programmes to support small firms would continue next year, though those would fall to US$24 billion, compared with US$47 billion this year.

To aid economic recovery, US$28 billion of infrastructure spending was proposed. REUTERS