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The Launch of Indonesia Economic Quarterly – June 2018 Edition, the Flagship Publication of the World Bank Office Jakarta



On the Wednesday, 6th June 2018, I got to opportunity from INFID to participate in the launch of Indonesia Economic Quarterly, a report created by World Bank, supported by funding from Australian Government under the support for Enhanced Macroeconomic and Fiscal Policy Analysis (SEMEFPA) program at IDX Main Hall, Indonesia Stock Exchange Building, SCBD. Having theme “Learning more, growing faster”, World Bank Indonesia emphasized the importance of quality education toward Indonesia economy. The event was opened by Rodrigo A. Chaves, Country Director of World Bank Indonesia and representative of Indonesia Stock Exchange (IDX). The keynote speaker was Frederico Gil Sander, Lead Economist of World Bank Indonesia and invited speakers were Sri Mulyani Indrawati, Minister of Finance and representative from Secretary General of Ministry of Education and Culture. Panelists and moderator as follows:
1.       Purwanto, Director of Budget for Human Development and Culture, MOF
2.       Totok Suprayitno, Head of Research and Development Agency, MOEC
3.       Allaster Cox, Deputy Head of Mission, Australian Embassy
4.       Desi Anwar, Director, CNN Indonesia (Moderator)

The executive summary of the report are:
  1. The Indonesian economy continued to expand at a robust pace in the first quarter of 2018 because of strong investment. Higher global commodity prices mainly oil spurred stronger investment, especially in machine, equipment, and vehicles.
  2. The current account deficit narrowed in Q1, as the services trade deficit shrank sharply. It is partly due to strong foreign tourist arrivals.
  3. Total revenues grew at the fastest pace in the last ten years. However, in nominal terms, total Government spending is also rebounded. It is mainly due to an increase in fuel subsidies and social aid spending. The debt to GDP is increasing from a low level but it remains manageable.
  4. Tighter global financial conditions and increased volatility on strong US labor market news contributed to the capital outflows and a depreciating rupiah. This financial distress was in line with other emerging economies notably Tukey and Argentina. However, Indonesia economic resilience to global volatility has improved because of sound economic fundamentals and a strong macroeconomic framework.
  5.  Indonesia’s economic outlook continues to be positive, although risks are increasing.
  6. Noting Indonesia long-term growth potential and quality of life is highly dependent on the quality of its human capital, the report also discusses how 15 years of education reforms have helped to improve education outcomes and human capital in Indonesia, also what challenges remain. Indonesia has made great progress in closing quantity gaps in education, but student’s learning remains below the level of other countries in the region, compromising the country’s competitiveness in the global economy. Several suggestions as follow: a) Improve delivery at the local level where most of the growing education budget goes b) Take advantage of large number of upcoming teacher retirement to boost quality education c) Initiatives to improve quality require more and better information on learning outcomes. d) Key reform areas to boost the quality of human capital in Indonesia i.e. start right by investing in early childhood education and stunting eradication, take action to improve service quality at the district level, hire new qualified teacher, initiate to improve our national education quality 

Sri Mulyani Indrawati, Minister of Finance, closed the event by reemphasizing that economy of Indonesia is okay. It can be said that external factors put pressure on the rupiah where Indonesia, as an open economic country, should adapt with it. Indonesia should pay attention on four variables which are interest rate, exchange rate, commodity price and capital. For now on, The Indonesia government will focus on safeguard policy and restoring the confidence to adjust the “new normal” in global economy. It does not mean that Indonesia will not pursue different goals such as poverty and inequality, however those goals need more difficult work to do, not by an easy work by printing more money or expanding interest rate. Indonesia needs to address more fundamental factors of the economy such as health, education, and public services wherein the closing statement she also gave a compliment to World Bank in doing so, by addressing education quality in the country.

The full report can be accessed through 
http://documents.worldbank.org/curated/en/305361528210283009/pdf/126891-WP-PUBLIC-on-6-5-18.pdf

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