Jakarta – The Government and the Budget Agency (Banggar) of the House of Representatives have discussed the draft APBN and have agreed on macro assumptions as the basic material in the preparation of the 2019 State Budget. Based on the records of the Civil Society Coalition for the State Budget (Fitra, PWYP Indonesia, INFID, and Prakarsa) critical issues related to the 2019 State Budget Draft, namely: First, it concerns the government’s efforts to mobilize sources of state revenue and optimize taxes; Second, the aspect of state spending and its achievements on SDGs; Third, the government’s efforts to allocate state spending to encourage an increase in quality public spending (health); Fourth, environmental and energy issues.


Mobilization of sources of state revenue and optimization of taxes.

State revenues and grants are projected to reach Rp2,142 trillion, of which 83% is contributed by the taxation sector. The government is actually carrying out a Tax Amnesty and Tax Holiday program to encourage greater revenue. However, Tax Amnesty has not been able to target its objectives as stated in Law no. 11 of 2016 concerning tax amnesty, namely accelerating economic growth and restructuring through the transfer of assets which will have an impact on strengthening the rupiah exchange rate. However, in practice, the rupiah exchange rate has weakened even more after the implementation of the Tax amnesty program.

Tax Amnesty also has not had a maximum impact in increasing taxpayer participation. The total number of tax Amnesty participants was only 965,983 taxpayers or if it was compared, it was only equivalent to 2.95% of taxpayers in 2016. “Tax Amnesty, in this case, has not been able to become a solution for state revenue, but from a long-term point of view there is a declaration of assets worth Rp 4,800 Trillion should be appreciated because it can be a good starting capital, ”said Misbah Hasan, Director of the National Secretariat of Fitra. “The government, in this case, must then be consistent with the original objective of implementing Tax Amnesty and not only be satisfied with domestic tax revenues,” he explained.

The government through Minister of Finance Sri Mulyani revealed that 2019 will be a tough year for state finances because a lot of forest-debt from previous governments will mature. In the financial notes and the 2019 Draft State Budget, it is explained that the total payment of debt interest in 2019 is Rp. 275.4 trillion or 17.1 percent of the total State Expenditure. This figure is higher than spending on education functions which averaged only 11 percent and health which was only 4 percent (average in 5 years). From time to time, debt remains one of the government’s mainstays in overcoming the shortage of sources of state financing. In 2019, it is estimated that state financing originating from debt will be 259,279.1 trillion or 15% of total State Expenditure.

Related to this, Misbah Hasan, Director of the National Secretariat of Fitra, said that from time to time, debt is still one of the government’s mainstays in overcoming the lack of sources of state financing. In 2019, it is estimated that state financing originating from debt will be 259,279.1 trillion or 15% of total State Expenditure. Even until the end of 2018, the government will return to debt to pay off debt, to cover the negative primary balance until the end of this year of Rp. 64.8 trillion rupiah.


Aspects of State Expenditures and Achievements to the SDGs

Minister of Finance Sri Mulyani stated that the 2019 State Revenue and Expenditure Budget Bill (RAPBN) would no longer focus on infrastructure, but rather on efforts to develop Human Resources. The 2019 Draft State Budget will target areas such as education, health, and social affairs as its main focus. INFID’s Program Manager, Siti Khoirun Nikmah, appreciated the government’s move. According to him, this policy is a positive step in supporting the acceleration of the achievement of SDGs indicator points.

However, Nikmah noted that the existing budgets had to be allocated and used appropriately in order to provide optimal results. “The budget should be aimed at funding programs that have been strategically identified to support the achievement of the SDGs. One of them is providing access to job training for women and young people, ensuring the availability of sanitation for all, and ensuring a reduction in the maternal mortality rate, “he said. Thus, such a large portion of the budget will also have implications for the optimal achievement of predetermined goals.

Allocation of State Expenditures to Encourage Quality Improvement of Public Expenditures.

The value of this health budget increases from year to year. In 2019, the health budget grew by 13.6 percent compared to the previous year. The government in the 2019 Draft State Budget allocated a health budget of up to 122 trillion rupiah out of total state expenditure which reached 2,439.7 trillion rupiah. This is in accordance with the mandate of the State Budget which requires an allocation for the health sector of 5 percent. The health budget consists of allocations through central government spending through the Ministry of Health, BPOM, and BBKBN as much as 88.2 trillion rupiah, in addition to transfers to regions and village funds which reach 33.7 trillion rupiah.

The budget is aimed at programs to accelerate participation in national health insurance, increase access and health services, promote a healthy lifestyle through Germas, and accelerate stunting reduction through the Program for Results (PforR) scheme.

JKN membership coverage until June 2018 reached 75.5 percent of the total population. Meanwhile, the participation target in 2019 must be 100 percent. Ah Maftuchan, Executive Director of Perkumpulan Prakarsa said, “This participation target will be difficult to achieve if the government does not explicitly strive to increase the compliance of employers in registering their employees for BPJS Health membership.” In fact, the segments of Non-Receiving Wage Workers (PBPU) and Workers Receiving Business Entity Wages (PPUBU) are very potent and many have not yet become JKN participants.

On the other hand, the deficit problem in the Social Security Administering Body (BPJS) continues to occur. This occurs due to the poor management of BPJS Kesehatan in terms of receiving contributions and financing to a low level of collectability. BPJS Kesehatan financing through cigarette taxes also needs to be optimized so that it does not trigger more people to smoke.

“The state as a party that is obliged to fulfill the basic rights of its citizens to access health services must ensure that the addition of PBI participants is right on target so that the state ensures that it is fair and transparent,” said Ah Maftuchan.


Mineral and Energy Resources

Publish What You Pay (PWYP) Indonesia highlights a number of critical aspects related to the 2019 State Budget Draft. In the 2019 Draft State Budget, the energy subsidy aspect this year is still greater than non-energy subsidies. The government through the DPR Budget Agency has agreed on an energy subsidy figure of Rp. 157.79 trillion rupiah. This amount means an increase of ± 63% when compared to the allocation of the previous fiscal year which was IDR 94.53 trillion.

Energy subsidies still dominate the overall subsidy budget component. This indicates that energy is a very vulnerable sector (mainly due to price volatility). “With the momentum of soaring world oil prices this year, this is no reason for the government to increase the energy subsidy budget. Considering that next year is a political year, the government should not take populist policies which in turn will burden the state budget, ”said PWYP Indonesia researcher Meliana. “The rationalization of subsidies must also be directed towards other allocations such as more strategic ones such as poverty alleviation programs and fulfillment of basic needs that have a positive impact on the achievement of sustainable development,” he added.

This year, in the midst of rising world oil prices, the government itself has set an assumption for the Indonesian crude oil price (ICP) at US $ 70 per barrel. This figure is actually a number that also has a potential vulnerability, because the current volatility in the current dynamic has the possibility that the average oil price has the potential to soar to the US $ 80 figure range.

Macro assumptions for oil prices (ICP) clearly have to be taken carefully with moderate ranges given the volatility character of oil prices and global geopolitical conditions — especially in the midst of a trade war situation that needs to be anticipated to affect oil prices.

The government sets the oil lifting assumption of 775 thousand barrels per day (BOPD). The lifting assumption must be determined with full consideration, because if not in the future the projected figure is vulnerable to not being achieved. The oil lifting assumption must take into account the sluggish investment situation in the upstream oil and gas sector and the transition conditions of several oil and gas blocks from the old manager to the new manager. Another aspect that should be considered in determining the lifting target is the fluctuation of oil prices.

Researcher of Publish What You Pay Indonesia, Meliana Lumbantoruan then also highlighted aspects of Cost Recovery. Cost Recovery needs to pay attention to BPK’s findings which recorded that since 2010-2016 the potential state loss from the oil and gas sector was IDR 17.64 trillion and US $ 66.47 million (Total 18.24 trillion assuming US $ 1 = IDR 9000). necessary to prevent cases of potential state losses from oil and gas Non-Tax State Revenue (PNBP) due to cost recovery of oil and gas cooperation contract contractors (KKKS Migas) that do not comply with the regulations “, because they impose costs. which should not be charged in cost recovery, “he said.

In addition, Meliana also highlighted the issue of PNBP SDA and Oil and Gas which are still the mainstays. The government is targeting SDA Oil and Gas revenue of IDR 144.32 trillion and PNBP SDA of IDR 30.01 trillion. “PNBP dependence on sectors tends to encourage exploitation of natural resources. The government, in this case, cannot set aside environmental preservation, including for example implementing an Ecological Fiscal Transfer policy, “he concluded.