Province and Local Finances in Indonesia during COVID-19 Pandemic

  • 9 April 2021 Author: Riatu Mariatul Qibthiyyah Abstract In the year 2020, in response to COVID-19 health crisis, there were series of adjustment adopted by provinces and local governments. From their stated revised budget, most of provinces and local governments responded by shifting spending allocation to COVID-19 related activities mitigation, rather than by expanding expenditures. Lower-level government average expenditures growth in 2020 is -10.11% and -12.11% respectively for provinces and local governments. Expenditure contraction occurred in all provinces and only 12.4% of local governments show of a positive growth in its public expenditures. On the type of expenditures adjustment, a high increase of emergency spending which covered of 3.3% of total provinces and local government expenditures, may also translate to higher health expenditures. Based on aggregate provincial level data and given that COVID-19 fatalities were concentrated in Java-Bali region, the preliminary results show that emergency spending seem effective in reducing COVID-19 fatalities for the case of provinces in Java-Bali region.…
    09 Apr
    09 Apr
  • 2 March 2021 Author: Kiki Verico Abstract This paper is the second part of the first paper published by the LPEM UI on January 18 2021 (Verico, 2021a). This first part discussed Indonesia’s output gap, the global pandemic’s impact, and the scenario to avoid the middle-income trap by 2040. In this second part, the paper figures out the manufacturing sector performance from 1968 until 2019, before the global pandemic hit Indonesia’s economy. Indonesia’s economy needs an adjustment that depends on the pandemic containment to achieve even higher economic growth to compensate for economic contraction during the pandemic. This paper finds that Indonesia’s manufacture can boost economic growth, decrease open unemployment and improve productivity. This paper argues that Indonesia can achieve the second wave of the Chenery-Syrquin phenomenon of economic transformation from service to manufacturing through two scenarios: one, medium to long-run over the enhancement of the backward linkage of global value chains (GVCs), and two, natural short-run with the role of information and communication technology (ICT).…
    02 Mar
    02 Mar
  • Abstract This paper showed that Indonesia’s output-gap has been improving since 2007 until the global pandemic hit Indonesia in 2020. The ultimate indicator for this improvement was the constant decrease in open unemployment. Okun’s Law calculation proved that Indonesia’s actual economic growth was higher than minimum economic growth to generate jobs. This paper also confirmed the Phillips Curve phenomenon that actual inflation was higher than expected inflation.  Indonesia’s average economic growth from 2007–2019 has increased above its natural long-run economic growth level. The 1global pandemic decreased Indonesia’s economic growth and increased its open unemployment rate in 2020. Indonesia’s economy needs an adjustment which depends on the pandemic containment. This adjustment will be affecting Indonesia’s scenario in avoiding the Middle-Income Trap before 2040 regarding the end of the demographic bonus era. This paper attempts to estimate the impact of the global pandemic on the economy, referring to the Spanish Flu’s impact on the global trade openness and how Indonesia adjusts its economy in the short-run and navigates its economic transformation in the long-run.…
    18 Jan
    18 Jan
  • Abstract Indonesia and Australia had agreed to seal the deal for a bilateral economic agreement entitled Indonesia-Australia Comprehensive Economic Partnership Agreement (IA CEPA). After about ten years since both countries committed to having a bilateral agreement, IA CEPA had entered into force on July 5th, 2020. This paper has two aims. Firstly, assessing potential trade and long-run investment relations with the combination of RCA (Revealed Comparative Advantage) and CMSA (Constant Market Share Analysis) with ToT (Terms of Trade) and Net Export (NX) as the filter. Secondly, measuring the potential impacts from tariff rate elimination utilizing the GTAP (Global Trade Analysis Project) model. This paper finds that both countries have complementarity relations that Indonesia can gain to improve manufacturing productivity, and Australia can benefit from sunrise to sunset relations. This paper proves that CEPA matches their need to increase their economic benefits, revealed that they could share mutual benefits and sustainable economic relations.…
    12 Dec
    12 Dec
  • Abstract Despite many advantages of women’s higher role in literature, GoI seems to lack commitment in addressing women empowerment issues as their priority agenda. Having more empowered women in our society becomes more salient as several studies suggest that it will lead to better financial outcomes such as saving in the household. In the era of the COVID-19 pandemic, where one could lose their source of income easily due to social restriction, having a society with a higher saving level is essential. By exploiting three waves (2000, 2007, 2014) of Indonesian Family Life Survey (IFLS) data and employing Fixed-Effect panel data analysis, this study found that a limited increase in the role of a wife in the household’s financial decision-making process will lead to a higher level of saving outcome, thus provide more resilience society toward the pandemic situation.…
    26 Oct
    26 Oct
  • Abstract The main purpose of this study is to provide and to compare a detailed statistical overview of commuting patterns, spatial commuting flows, and travel-to-work behavior of workers who work and live reside within the Jakarta Metropolitan Area (JMA). The descriptive analysis is based on the results of two cross-sectional JMA Commuting Surveys, which conducted by the Indonesia Central Statistics Agency (BPS) in 2014 and 2019. By comparing the results of two surveys, we find that the commuting indicators have been decreased, except for the travel cost. The average commuting distance and the commuting time decrease by 5,16 percent and 11,6 percent, respectively. Meanwhile, the average travel cost rises by 21,6 percent. Among 169 possible origin-destination sets, a commute route from Depok to South Jakarta has been consistently become the largest commuting flows during the last five years. Respondents who live in Jakarta subregions and commute by private vehicles tend to have a lower willingness to shift to public transport than those from other cities. In terms of the use of non-privately owned vehicles, most of the commuter respondents switch from non-dedicated lane buses to the online-ride hailing services as the travel reliability of certain public transport services within the JMA has been reduced during the period of 2014-2019. Our findings also emphasize the important role of online-ride hailing services in providing better opportunities, particularly for female commuters, to access job locations.…
    29 Aug
    29 Aug
  • Abstract Transport development has been widely recognized as one of the major drivers in shaping urban forms. While recent literature has documented the urban-land use effect of transport networks between cities, little is known about the effect within cities. Using the Global Human Layer Settlement (GHSL) data provided by European Commission Joint-Project, this paper aims to find any causation between highway expansion and urban sprawl within the Jakarta Metropolitan Area, one of the most urbanized areas in the developing countries. Employing historical transport infrastructures as instruments, the result shows that areas experiencing the most improvement in highways access are converging slower than those with small improvement. This paper adds a piece of enticing evidence for urban economics literature that highway expansion may not always lead to a sprawling development of urban areas, but it can hamper its growth into a more compact urban form. Our results also confirm the existence of transport-led urban expansion in the JMA over the last three decades.…
    14 Aug
    14 Aug
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