PRESIDENT ORDERS CAREFUL PREPARATIONS FOR DRAFT STATE BUDGET 2012 by Fardah

      Jakarta, July 27, 2011 (ANTARA) - It has been a tradition that on every August 16 the President delivers a Draft State Budget and its Financial Note to the House of Representatives (DPR) and the Regional Legislative Council (DPD) at the Parliament building, a day prior to the celebration of Indonesia`s Independence Day.
      As the day is less than two weeks away, the government has intensified discussions on the preparations for the Draft Revenue and Expenditure Budget (RAPBN) 2012 in cabinet meetings chaired by President Susilo Bambang Yudhoyono.

      The head of state at a limited cabinet meeting on July 25, instructed his ministers to prepare the Draft State Budget 2012 in detail and carefully to produce a quality State Budget.
      Coordinating Minister for Political, Legal and Security Affairs Djoko Suyanto, Coordinating Minister for Economic Affairs Hatta Rajasa, Minister/ State Secretary Sudi Silalahi, and Cabinet Secretary Dipo Alam were among those attending the limited cabinet meeting.
      Yudhoyono ordered that every point in the draft must be checked one by one so the meeting could produce the best formulation of the Draft State Budget 2012, before it would later be discussed together by the government and the parliament in order to agree on a definitive State Budget 2012.
      The concept must be ready and comprehensive, although normally in the finalization process, there could be some adjustments.
      On the next day, July 26, the discussion on the Draft State Budget 2012 continued in a plenary cabinet meeting also led by the president, who explained that he would use the points of the Draft for his address a day prior to the 66th Anniversary of Indonesian Independence Day.

In his state address on August 16, 2010, President Yudhoyono had said state revenues and grants in 2011 were projected to increase 9.5 percent to Rp1,086.4 trillion from the target of Rp992.4 trillion set in the revised 2010 state budget.

State spending was estimated at Rp1,202 trillion, an increase of 6.7 percent compared to the target of Rp1,126.1 trillion in the revised 2010 state budget.

Both the government and the House have agreed on the theme of development programs in the 2011 Government Work Plan, namely "Accelerated Just Economic Growth, Helped by Good Governance and Synergy between the Central and Regional Governments".

Based on the priorities of the 2011 Government Work Plan, the central government`s expenditure in 2011 would be directed toward achieving seven main targets.

The main targets included supporting the attainment of quality economic growth, helped by the development of infrastructure facilities including those in the transportation and energy sectors, the head of state said.

The others were providing social protection through school`s operational assistance and public health guarantee, empowering the people through a self-reliant community empowerment program, continuing bureaucratic reforms, improving state employees` and pensioners` welfare, and repaying maturing debts on time.

Despite last year`s State Budget priorities, a noted economist, however, criticized that the Revenue and Expenditure Budget (APBN) posture in general is considered as having no leadership economic politically and no clear priorities in its implementation which leads to inefficiency in government expenditure.

"This (APBN) has no leadership and is torn apart. Due to the absence of leadership so there is no strategy," Didik J. Rachbini, an economist of the Institute for Development of Economics and Finance Indonesia (INDEF) said in a dialog on the State Budget in Jakarta on July 27, 2011.

He said the current state budget reaching about Rp1,320 trillion failed to improve the people`s welfare and was not effective.

The economist compared it with that during the Soeharto era, which the State Budget of no more than Rp100 trillion could develop infrastructures such as dams and fertilizer plants as well as buy Palapa Satellite.

The present State Budget, according to Didik, is like a vehicle having full-tank fuel but does not have a strategy to reach a certain destination, so the passengers would never arrive in a city they want to go.

"Yes, it`s like we have a car with full gasoline, and we want to go from Jakarta to Bandung, but we don`t have a strategy. So we waste the fuel as we take the car running around and the car`s fuel tank is even leaking. Of course, in such condition, we will never reach Bandung. That`s a rough description of our APBN, so our APBN is really weak," he said.

He reminded that actually, the State Budget should be limited, and therefore it must have main priorities as the locomotive.

"If we have the strategy, we could decide the priorities. It`s impossible that with little water, we want to plant chili, this and that, no way. We can look at England, they focused on railways, and in the middle there are seaports, properties. But, we are not focused, therefore the APBN is torn apart," he said.

Another speaker during the dialog, Chief of the Fiscal Policy Agency (BKF) Bambang Permadi Soemantri Brojonegoro said in one hand, the State Budget is very promising, but on the other hand, quality wise the State Budget needs improvement.

He pointed out that the total subsidies, including subsidy for energy and non-energy, in the Amended State Budget (APBNP) which was above Rp230 trillion, was considered having no significant impacts, and the people even felt that the life was still difficult.

"For sure, the subsidies being applied so far have missed the right target, because it subsidizes price premium gasoline so that many people who are not supposed to be eligible, have also enjoyed the subsidy, and they are quite numerous," Bambang said.

Concerning subsidies, former vice president Jusuf Kalla recently suggested that the government cut budget allocations for subsidies while at the same time raising development budget funds.

Nearly 30 percent of the state budget had gone to central and regional government personnel`s salaries, 20 percent to the education sector, 15 percent to subsidies and the rest to capital expenditure, he said at a national meeting of the Indonesian National Building Contractors Association (Gapensi) earlier this month.

The higher amount of budget funds allocated for subsidies reduced the development budget and a lack of infrastructures in regions made the local people`s economy stagnant, he said.

"It is the farmers who have fallen victim. Consequently, the prices of commodities are on the increase," he said.

He said the government could keep down the amount of budget allocations for fuel subsidies. "I think it will be quite proper if the government raises the price of fuel oils before the fasting month of Ramadhan," he said.

The government has projected subsidized gasoline consumption this year to reach 24.54 million kiloliters, up 8.18 percent from the quota of 23.19 million kiloliters set under the 2011 state budget.

Subsidized diesel oil consumption was also expected to increase 5.82 percent to 14.15 million kiloliters from the quota of 13.08 million kiloliters, Director General of Oil and Gas at the Energy and Mineral Resources Ministry Evita Legowo said at a meeting with the House of Representatives (DPR) Commission VII on July 6, 2011.

"The increase in subsidized gasoline and diesel oil consumption is the result of the stalled plan to rearrange the use of subsidized fuels," she said.

Last month, Coordinating Minister for Economic Affairs Hatta Rajasa predicted that subsidized fuel consumption this year will inevitably outstrip the quota of 38.6 million kiloliters set under the 2011 state budget.

"It (subsidized fuel consumption) will inevitably soar. We predict the quota of subsidized fuels will increase," he said. ***5***

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