Three Challenges For Indonesia In The Future World Bank Version

Capture the screen of World Bank Indonesia Lead Economist Frederico Gill Sander. (Mery Handayani / VOI)

JAKARTA - World Bank Indonesia Lead Economist Frederico Gill Sander said, in the future there are three challenges that will be faced by Indonesia. Apart from the COVID-19 pandemic which has had a negative impact and there is no certainty when it will end, Indonesia will also experience an economic recession following Singapore.

"There are three challenges, namely the impact of COVID-19, recession, and debt pressure that need to be resolved in the coming years," he said at the launch of the Indonesia Economic Prospect, Thursday, July 16.

Frederico said, to improve the pandemic curve, Indonesia must have a capable health system to handle new cases until a vaccine is found. However, with a note that this system can make people confident and feel safe in the midst of the COVID-19 pandemic.

"Many people are not convinced yet. This solid health system needs to increase confidence," he said.

Furthermore, Frederico also advised the Indonesian government to increase testing capacity. Because, to avoid an increase in new positive cases, you need to do as many tests as possible. Then there needs to be tracing of the confirmed cases.

Second, recession. Frederico said the World Bank survey showed that many companies had experienced a decline in sales and there was still a need for people and bodies for liquidity support. In addition, social assistance to individuals is of great help to society in the midst of a recession.

"Three important things that need to be underlined are Integrated Social Welfare Data (DTKS). There needs to be a modernization of social assistance to distribute social assistance effectively. Informal workers are important for us to pay attention to. Companies in many sectors must survive and recover, this must be maintained in order to avoid it. from bankruptcy. Those who are affected need to be given more liquidity assistance, "he said.

Furthermore, Frederico said, in times of economic recession, the Indonesian government must pay attention to companies that rely heavily on face to face. This is because these companies have been severely affected.

"We also need to prevent spillovers from the real to the financial sector. NPL needs to be maintained. We need to update the recovery with a better framework. There needs to be risk management so that the financial sector has a stronger foundation," he said.

Third, from the debt side, it will increase and reduce fiscal space, if it is not managed properly. Frederico said macro stability would be a challenge in itself and hinder recovery.

"A more targeted subsidy is needed, subsidies such as LPG need to be diverted to direct cash assistance," he said.

In addition, Frederico said, there was a need for tax reform. According to him, no country can become a high-income country if the tax ratio is only 1 digit.