INDO DONES NESIA IA MA MACROE OECONO ONOMIC MIC UPDATE TE th - - PowerPoint PPT Presentation

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INDO DONES NESIA IA MA MACROE OECONO ONOMIC MIC UPDATE TE th - - PowerPoint PPT Presentation

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MINISTRY OF FINANCE REPUBLIC OF INDONESIA INDO DONES NESIA IA MA MACROE OECONO ONOMIC MIC UPDATE TE th of Novembe Jakarta, a, 20 th ber r 2019 1 Downward pressure Global economy grows at its lowest pace since 3,8 % 3,4 % 3,4 % 3,6

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SLIDE 1

INDO DONES NESIA IA MA MACROE OECONO ONOMIC MIC UPDATE TE

Jakarta, a, 20th

th of Novembe

ber r 2019

1

MINISTRY OF FINANCE REPUBLIC OF INDONESIA

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SLIDE 2

Global economy grows at its lowest pace since the 2008 GFC

  • Revised projections

Global economic growth projection keeps having downward revision. In the past

  • ne year, global economic growth

projection 2019 has declined by 0,7 ppt from its initial projection.

  • Economic slowdown

The slowdown occures both in advanced and emerging economies, including Indonesia’s major trading partners.

  • Response to the slowdown

The slowdown is responded by monetary easing and fiscal expansion.

Global economic growth 3,6% 3,0% 3,2% 1,1% Global trade volume growth

Proyeksi

2019 Proyeksi 2020 2018

Source: WEO October, IMF

Downward pressure Downward pressure

3,4% 3,6% 5,5% 3,8% 2,2% 3,4%

2017 2016

Global Risks

Trade War Economic Recession Declining manufacturing & Investment Geopolitics Tension

2

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SLIDE 3

3.35 3.02 3.61 3.13 3.13

1 2 3 4 5 6 7 8

Jan Apr Jul Okt Jan Apr Jul Okt Jan Apr Jul Okt Jan Apr Jul Okt Jan Apr Jul 2015 2016 2017 2018 2019

Inflation (%, yoy)

Oct

Sumber: CEIC and MoF

Economic growth and inflation could be maintained.

Amid global economic slowdown,

  • 0.98

1.83

0.49

  • 1.05

0.48 0.08

2.24 1.38 2.69 2.69

  • 1

1 2 3 4 5 6 Q3 2018 Q3 2019

GDP Growth’s Contribution by Expenditure

GDP Item Growth Q3 2019 (%) Private Consumption 5.06 Government Consumption 0.98 Investment (GFCF) 4.21 Exports 0.02 Imports

  • 8.61

GDP

5.02

Net Export

Others

Investment

Net Export

Government Consumption

Household Consumption

Government Consumption

3

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SLIDE 4

Gini Ratio Poverty Level (%) Unemployment Level (%) Challenges

  • Economic changes structure of

employment

  • Skill mismatch
  • 4th Industrial Revolution (automation,

artificial intelligence) Challenges

  • Access to food, health, and education for

poor people

  • Climate change food price

Challenges

  • Disparity in access to capital
  • Geographical condition

Gini ratio target 2019

0.38 – 0.39

Poverty Target 2019

8.5% - 9.5%

Unemployment Target 2019

4.8% - 5.2% HDI : 71.98

4

Source: Central Bureau of Statistics, processed

9.11 5.28

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

0,360 0,382

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

17,75 9,41

2006 2008 2010 2012 2014 2016 2018

Healthy economic development improves Indonesian welfare

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SLIDE 5

Mid-Term Government Priorities

MID-TERM GOVERNMENT PRIORITIES

Economic Transformation Bureaucratic Efficiency Regulatory Streamlining and Simplification Infrastructure Development

 Widespread simplification of regulations, including the removal and streamlining of existing overlapping laws, to encourage economic growth and investment  President Jokowi will ask Parliament to issue two omnibus laws that target the creating of jobs and empowerment of SMEs  Reducing the bureaucratic process and easing echelonisation (bureaucratic hierarchy), creating greater flexibility  Ensure echelon levels are meritocratic and based on competence and expertise  Transforming the country’s economy legacy from a high dependence on agriculture / natural resources towards manufacturing and value-added services  Increasing the joint prosperity of the nation  Human capital development remains a main priority in response to the demographic dividend  Aimed at creating a generation of hardworking dynamic Indonesians who master knowledge and technology  Need for a large endowment fund to manage human capital  Optimizing work/labor allocation and skill matching within each industry  Developing infrastructure to continue supporting the activities of the people, develop the economy and enhance accessibility

MID-TERM GOVERNMENT PRIORITIES

Human Capital Development

5

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SLIDE 6

2015

4.9

2016

5.03

2017

5.07

2018

5.17

2019

5.08

2020

5.3

2015

(2.59)

2016

(2.49)

2017

(2.51)

2018

(1.82)

2019

(1.84)

2020

(1.76)

State budget is directed to be

Countercyclical

in order to respond the risk of weakening economy

Budget deficit

is still maintained at healthy and sustainable level ==========================

Outlook

Economic Growth(%) Budget Deficit as Percentage of GDP(%)

6

Outlook

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SLIDE 7

2020 BUDGET

Accelerating Competitiveness through Innovation and Strengthening Quality of Human Resources

7 I REVENUE

1,943.7 2,030.8 4.5

TAX REVENUE 1,518.8 1,643.1 8.2 NON-TAX REVENUE 409.3 386.3 (5.6) GRANT REVENUE 15.6 1.3 (91.7)

II EXPENDITURE

2,213.1 2,341.6 5.8

CENTRAL GOVERNMENT EXPENDITURE 1,455.3 1,527.2 4.9 TRANSFER TO REGION AND VILLAGE FUND 757.8 814.4 7.5

III PRIMARY BALANCE

(11.5) (34.7) 201.7

IV DEFICIT

(269.4) (310.8) 15.4

% Surplus / Deficit to GDP (1.82) (1.93) 6.04

V FINANCING

305.7 310.8 1.7

2020 BUDGET

(Trillion Rupiah)

2018 Realization 2019 Outlook Growth (%)

.4 2,233.2 10.0

.3 1,865.7 13.5 .0) 367.0 (5.0) .5) 0.5 (61.5)

.0 2,540.4 8.5

.4 1,683.5 10.2 .5 856.9 5.2

.4) (12.0) (65.4) .2) (307.2) (1.2)

1) (1.76) (8.81)

.2) 307.2 (1.2)

th 2020 Budget Growth (%)

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SLIDE 8
  • Tax revenue for supporting the

competitiveness with the realistic and

  • ptimal target
  • Budget spending will be prioritized for

productive spending

  • Budget financing will be decreased and will

be utilized for competitiveness improvements

11.6 10.8 10.7 11.4 11.1 11.6

2015 2016 2017 2018 2019 Outlook 2020 Budget

TAX RATIO

In 2020, budget deficit will be maintained at level 1.76% to GDP

Directed to be healthier and adaptive to face the economic risks 8

(298.5) (308.3) (341.0) (269.4) (310.8) (307.2) (142.5) (125.6) (124.4) (11.5) (34.7) (12.0)

(2.59) (2.49) (2.51) (1.82) (1.93) (1.76)

(3.00) (2.50) (2.00) (1.50) (1.00) (0.50) 0.00

(400.0) (350.0) (300.0) (250.0) (200.0) (150.0) (100.0) (50.0) 0.0

2015 2016 2017 2018 2019 Outlook 2020 Budget

Budget Deficit (Trillion IDR) Primary Balance

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SLIDE 9

1,240.4 1,285.0 1,343.5 1,518.8 1,643.1 1,861.8 1,865.7

8.2 3.6 4.6 13.0 8.2 12.6 5.8 2.9 13.4 10.5 13.5 14.8

  • 500

1,000 1,500 2,000 2015 2016 2017 2018 2019 Outlook 2020 RAPBN 2020 APBN

PPh Migas Pajak nonmigas Kepabeanan dan Cukai Pertumbuhan Penerimaan Perpajakan (%) Pertumbuhan Pajak nonmigas (%)

Improvement to Support Taxation

  • Increasing the tax compliance
  • Service quality improvement, counseling, and

supervision through the strengthen IT system and tax and administration

  • Equalizing the level playing field
  • Improving the business process especially for VAT

refund

  • Implementing the AEoI
  • Extensification of excise goods
  • Adjusting the excise duty rates on tobacco

Tax Revenue (Trillion Rp)

  • Management and Utilization of Optimal, Effective and Efficient

Natural Resources

  • Service Improvement and Tariff Adjustment
  • Improvement of BUMN Efficiency and BLU Performance
  • Improving Governance

9

Oil & Gas Custom & Excises Non Oil & Gas Tax Revenue Growth (%) Non Oil & Gas Tax Tax Revenue Growth (%)

Budget Plan Budget

(35.9) 2.5 18.8 31.5 (5.6)

2015 2016 2017 2018 Outlook 2019 RAPBN 2020 APBN 2020

PNBP Migas (Triliun Rp) PNBP Nonmigas (Triliun Rp) Pertumbuhan (%)

(7,0) (5,0)

255,6 262,0 311,2 409,3 386,3 359,3 370,0

Non Tax Revenue

(Trillion Rp) Oil & Gas (Trillion Rp) Non Oil & Gas(Trillion Rp) Growth (%)

2020 Budget Plan 2020 Budget

The role of the non-oil and gas PNBP sector continues to be strengthened accompanied by increased services to the community

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SLIDE 10

10

Fiscal incentives to promote investment

Government keeps committed to promote investment through among others tax and custom facilities

Several Incentives in the pipeline:

  • Inve

nvestment t Allo lowance for

  • r labor int

ntensiv ive pr proje

  • jects
  • Deduction of Net

Income based on amount invested capital

Income Tax Facility

  • Tax Holiday
  • Tax Allowance
  • Exemption from Import

Income Tax

  • Super Deduction for R&D

and vocational training

Custom Facility

  • Free import duty on capital

goods

  • KITE
  • Bonded Storage Area
  • Import duty borne by the

government

VAT Facility

VAT exemption for:

  • Capital goods
  • Health and education service
  • Social service
  • Export services

Special Facility

  • Facility in special economic

zone (KEK)

  • Facility in industrial zone
  • Free Trade Zone
  • Omn

mnib ibus Law Law Lowering the corporate income tax in a bid to attract more investment and boost the country’s economic growth.

Ministry of Finance Fiscal Policy Agency

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SLIDE 11

Education Budget Rp 508.1 T

  • Enhancement of productivity

and competitiveness of human resource

  • Education  Expansion of

education access, skill enhancement, entrepreneurship, ICT mastery, and support of research activities

Health Budget Rp132.2 T

Government expenditure in 2020

A better spending to supporting development to be efficient and effective

  • Health Acceleration of

stunting reduction, strengthening of promotive and preventive activities, continuation of national health insurance program

Social Protection Budget Rp372.5 T

  • Acceleration of poverty

alleviation

  • Improvement of data

accuracy and distribution mechanism

  • Synergy/synchronization

between programs

  • Well-targeted and

effective subsidy

Infrastructure development Rp 423.3 T

  • Improving investment and

export competitiveness

  • Supporting industrialization

transformation (connectivity, foods, energy, and water) and anticipation of city’s social problems (clean water, sanitation, waste management, & mass transportation)

  • Encouraging line ministries to use

creative financing scheme (PPP, Viability Gap Fund, Availability Payment)

14

Quality of Human Capital

Acceleration of Infrastructure Development Efficient, serving, and free of corruption bureaucracy

  • Encourage bureaucracy

effectiveness > productivity, integrity & public services

  • Maintaining the level of

welfare of apparatus and retirees (anticipating pension reform)

  • Bureaucracy based on ICT

progress

Improvement Budget Rp 261.3 T

Anticipating Uncertainties

  • Economic, security,

and political stability

  • Disaster risk

mitigation, environmental preservation, and development of renewable energy

  • Strengthening fiscal

buffer for sustainability and flexibility

11

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SLIDE 12

12

Thank You

Ministry ry of

  • f Finance

Th The Repu epublic of

  • f Ind

ndonesia