New Cabinet's Economic Challenges  

TEMPO.CO, Jakarta – President Joko Widodo's cabinet for 2014-2019, which Joko dubbed as the Working Cabinet, will face uneasy challenges in the next five years. Despite inheriting political and economic conditions that are fairly stable, Jokowi's economic team must be able to boost growth and pay more attention to the inequality in various sectors.

Hendri Saparini, executive director of the Indonesian Center of Reform on Economics (CORE), said that even though Susilo Bambang Yudyhoyono's double term managed to post high growth, there is an increasing gap in the people's level of income. The income distribution metrics fell from 0.364 into 0.413 at the end of SBY's term.

Efforts to crunch the gap, Hendri said, depend on the economic performance of Jokowi-Kalla's economic ministers. These ministers, he said, should be people with economic independence as paradigms, not people who use macro-economic stability and financial approaches.

Hendri hopes that the new government's economic approaches will be based on the real sector, and not the financial-based monetary approach, since 60 percent of Indonesia's economy is is supported by private and government consumption.

Enny Sri Hartati, executive director at the Institute for Development of Economy and Finance (Indef), said that investment value rose sharply during SBY's term. However, most of the investments were placed in tertiary sectors that require raw material imports and do not absorb labor, since they are dominated by the services industry and not downstream or upstream industries. As a result, these investments became less optimal in supporting the government's priority programs.

Indonesia also faces external challenges that are not easy. There is the risk of a global economic slowdown, and the fact that Indonesia is considered unready to welcome the free market that comes with the ASEAN Economic Community in 2015.

"According to the calculation of the Industry Ministry, only about 30 percent of our manufacturing industries are ready to enter the AEC," Harjanto, director general of Manufacturing Industry at the Ministry of Industry, said last week. 

AISHA SHAIDRA | AMIR TEJO | GANGSAR PARIKESIT | AMOS SIMANUNGKALIT