Remarks of President of the Republic of Indonesia to Governors on Acceleration of Regional Budget Absorption Year 2020 Wednesday, 15 July 2020 at the Bogor Presidential Palace, West Java Province
Date 15 Juli 2020
First of all, I would like to thank you for your presence amidst the current pandemic situation. This morning I would like to address a number of issues especially those related to COVID-19 and those related to the economy. This is a very difficult situation, experienced not only by our country Indonesia, but also experienced by 215 countries in the world. For the record, the conditions are almost similar and some countries are experiencing even worse condition than Indonesia. I get information every day from Ministry of Foreign Affairs reporting current conditions in the world. For example, the highest case for COVID-19, this morning I heard that the United States is now have 3.4 million (positive cases), 3.4 million (positive cases) from 319 million (people) population. Brazil, has 1.8 million positive cases for COVID-19. This is the big one. Then today, we have 78 thousand positive cases.
Our country is listed in the top five largest population but if we look at the 10 countries with the highest cases, we are not included in it. United States 3.4 (million), Brazil 1.8 (million), India 906 thousand, Russia 739 thousand, Peru 326 thousand. Our position is still under control. However, we must not lose control. We must really do crisis management. Invite all state apparatus to really work extraordinary. We cannot work normally in a situation like this. We can’t. Everything must change, we can’t do it normally, we can’t, we must change everything. From ordinary to extraordinary. From complicated work to fast and simple work. Everything must change.
This situation is really difficult. Controlling two aspects, the economy and health must be maintained properly. We cannot work with normal SOP anymore, we can’t. We have to work with SOP that is simple with breakthroughs. So, urge the subordinates to work in a fast manner.
I appreciate the work of the provinces, the Governors, in handling COVID-19, of all the parameters that we have, Special Region of Yogyakarta is the best. Bangka Belitung, is also listed in the top five. Bangka Belitung, Aceh, West Sumatra. and Gorontalo. This is based on parameters from the Central Task Force. For the others I see all are good as well. I just talked with Governor of Mandacan – West Papua, the recovery rate is under control with 4 people died. At present, the world’s target is how to reduce mortality. Second, how to increase the recovery rate. These two are now being focused by countries in the world because it is very difficult to control the positive cases, so the emphasis is on those two things. However, we should still manage those all aspects, namely decrease the positive cases, decrease the positivity rate, increase the recovery rate, decrease the death rate as low as possible. But, that is not an easy thing.
And fortunately,regarding our economic condition, although the growth in the second quarter is likely to be minus 4.3 (percent) from information I received this morning. In the first quarter we were still positive 2.97 (percent). I can’t imagine if we used lockdown method, it might be minus 17 (percent). I need to convey this, three months ago, I called Ms. Kristalina, Managing Director of the IMF (International Monetary Fund), she told me that the world’s economy will experience contraction and the global growth will only grow about minus 2.5 percent. But later, the World Bank’s David (World Bank President, David Malpass) corrected it to minus 5 percent. Then, the OECD (Organization for Economic Co-operation and Development) reported that the figures have changed completely again, it is very dynamic, the uncertainty is daily, not even weekly. Finally, the figures changed again to minus 6 to minus 7.6 (percent). How severe this situation is.
And even in 2020, those estimation have changed completely. The last thing I received from the OECD, France’s economy, for example, is minus 17.2 percent. Britain minus 15.4 percent. Germany minus 11.2 percent. United States minus 9.7 percent. Every country experiences minus growth. Eventhough at the beginning, the IMF estimated that Indonesia’s economy will experience positive growth, together with China and India. Therefore, I ask the Governors to control the brakes and gas. Do not get out of control. We can’t prioritize only the economy but the number of COVID-19 cases rises. Both must be managed properly, everything must be under control.
Therefore, in the second semester, especially in the third quarter, we must have the courage to do something to lift up the condition. The momentum is in July, August, and September, the third quarter. The momentum is there. If we can’t bring it up in the third quarter, don’t expect better condition in the fourth quarter. Our only hope is in the third quarter, July, August, and September.
What should we do this month? We can no longer expect from investment, the growth is definitely minus. What we can expect now is the government spending. Therefore, do not stop the spending. If economy in the province wants to recover quickly, spending must all be accelerated. It is the only way. We can no longer expect from investment and private sector. Because this emergence must indeed be from government spending. Banking loans that used to grow at 12 percent or 13 percent, now can only grow at 8 percent, it is hopeless. Once again, government spending. Therefore, I hope, the government spending must be accelerated. Because it will increase our domestic consumption, our household consumption which was drop in the second quarter.
I need to remind you that the regional government’s budget stored in the bank is still Rp170 trillion. I check it daily. My minister checks it daily, how much is the realization. Yesterday I received a report stating that it is now increased. I know the budget position of all ministries and its capital expenditure. I also read daily newspapers from provinces, districts, and cities. I cited an example of the realization of the regional budget for the provinces of:
- Jakarta, 45 percent;
- West Nusa Tenggara, 44 percent;
- West Sumatra, 44 percent;
- Gorontalo, 43 percent;
- South Kalimantan, 43 percent;
- Bali, 39 percent;
- Central Kalimantan, 38 percent;
- Banten, 37 percent;
- Riau Island, 35 percent;
- South Sulawesi, 34 percent;
- Lampung, 32 percent;
- West Papua, 32 percent;
- North Kalimantan, 31 percent;
- Bangka Belitung, 31 percent;
- East Kalimantan, 31 percent;
- East Java, 30 percent;
- North Sulawesi, 29 percent;
- Jambi, 28 percent
- Bengkulu, 27 percent;
- Central Sulawesi, 27 percent;
- Yogyakarta, 27 percent;
- Central Java, 27 percent;
- Riau, 27 percent;
- North Sumatra, 25 percent;
- West Java, 24 percent;
- West Sulawesi, 24 percent;
- Aceh, 23 percent;
- West Kalimantan, 22 percent;
- Maluku, 21 percent;
- East Nusa Tenggara, 21 percent;
- North Maluku, 17 percent;
- Papua, 17 percent;
- Southeast Sulawesi, 16 percent;
- South Sumatra, 16 percent.
That is in total. That is employee expenditure, goods and service expenditure, and capital expenditure. But if we look, what drives it most is the capital expenditure. Because the employee is a routine expenditure. Meanwhile for capital expenditure, let’s see, South Sumatra is still 1.4 (percent), this is the capital expenditure as of July. Southeast Sulawesi capital expenditure is at 5.6 (percent). Papua 4.8 (percent). North Maluku 10.3 (percent). East Nusa Tenggara 19.6 (percent). West Kalimantan 5.5 percent. Aceh 8.9 (percent). Very low, be careful. We must order our apparatus to speed it up. Be careful, if I don’t remind you, the capital expenditure will still be very low. This is what I also reminded to the ministers yesterday. Later the LKPP will explain how to speed up the spending on goods and services as well as the capital expenditure.
If the auction of Rp15 trillion in November is still happen like last year. If our bureaucracy do not control it now and still spend all the budget only in November-December, please remind this. Right now we need to spend it in July, August, September.
Later Head of LKPP Roni will explain how the upcoming circular letter will work out to accelerate it. Now we are assisting and the BPKP will continue to check it up so there will be no mistakes. I think the Governors can also do the same thing to accelerate the spending. If we already have estimation, we can predict everything. Once again, in a crisis situation like this, the management we use is crisis management, not ordinary management. We can’t do business as usual. So, simplify the regulations, simplify the SOPs.
Back to COVID-19 issue, I believe the regional heads, especially the governors, can control the management of COVID-19 so that we are truly capable to manage this country.
Second, I will also immediately issue a presidential decree to the governors, in order to impose sanctions for health protocol violators. I think West Java Province has begun to impose sanctions. Indeed, sanctions must be given, otherwise the people do not have the awareness to wear masks, to keep their distance. And we will leave it up to the governors in accordance with their respective local wisdoms regarding the sanction. And that presidential decree can be used as a legal protection for the Governors to issue a regulation.
I conclude my remarks. Once again, thank you for the presence of the Governors, Deputy Governors this morning. The country, the people and the nation, are hoping that we will work hard in controlling COVID-19 and the economy in our country.
Wassalamu’alaikum warahmatullahi wabarakatuh.
Translated by Estu Widyamurti
Reviewed by Yuyu Mulyani