Lawmakers approved on Wednesday the economic growth target for 2017 with little objection, a signal that lawmakers now see eye-to-eye with the government on next year’s challenging economic situation.
The decision was made at the House of Representatives’ Budget Committee (Banggar) after deliberations on the issue were postponed for a week.
It only took Banggar members five minutes to approve the 5.1 percent growth projection, which is lower than the 5.3 percent originally presented by President Joko “Jokowi” Widodo in his speech in August.
“This means we accept the decision of Commission XI [overseeing finance] and Commission VII [overseeing energy], with a note that state revenue must not decrease,” said Banggar chairman Said Abdullah.
The swift decision apparently took Suahasil Nazara, the Finance Ministry’s Fiscal Policy Agency head who represented the government, by surprise as he later admitted that the government had invited a Central Statistics Agency (BPS) official to the meeting to provide a further explanation on next year’s economic outlook and challenges.
As reported before, the government appears to have come to terms with the lingering global economic conditions —and their ensuing domestic impact— as it has gradually changed its stance and lowered its projections during previous meetings at the House.
“The lower growth assumption will affect state revenues, but our colleagues at the Taxation Directorate General and Customs andExcise Directorate General are committed to doing their best to achieve the [revenue] target,” Suahasil told reporters after the meeting at Banggar.
The overall state revenue target remains largely unchanged as already proposed in the draft budget. Revenue contribution from non-oil and gas taxes is set at Rp 1.27 quadrillion (US$96.72 billion), while the contribution from customs and excise stands at Rp 191.2 trillion.
Both estimates are only 15 percent and 4 percent higher compared to this year’s prognosis.
Suahasil remains upbeat about the target, saying that it is still within reach as the government prepares several “extra efforts”.
Customs and Excise director general Heru Pambudi told the lawmakers that his office would shift its way of working to also support industry and smooth the streamlining of goods in the course of its usual duty of collecting revenue.
Separately, Samuel Assets Management economist Lana Soelistianingsih lauded the government and lawmakers for starting to see things more realistically, even conservatively.
“At least the target will not trigger over-expectation [in the market],” she said by phone. She added that the government needed to maintain momentum for consumer spending to achieve the economic growth target.
The government expects that consumer spending will expand by 5 percent annually in 2017, while investment will rise by 6 percent and its own spending will increase by 4.8 percent.