Waiting For The Performance Of The Tidar Valley Glow Cabinet In Overcoming An Increasingly Difficult Economy

Photo illustration by Andry Winarko VOI

President Prabowo Subianto held a retreat for all members of the Red and White Cabinet (KMP) at the Military Academy, the Tidar Valley area, Magelang, Central Java. This does not mean that the militaristic, treatment for KMP personnel is to establish synergy and cohesiveness in facing the challenges of the Prabowo-Gibran government in the next five years.

In his statement, the Head of the Presidential Communication Office, Hasan Nasbi, explained that the series of retreat events including the rows of KMP members could be symbolized to equalize the frequency and movement of government steps in the future.

"We have to move in tune with the same goal. The government does not work alone, but as a team. In addition, KMP members must also reflect on the cohesiveness of a football team, where all players must have the same beliefs and goals," he said, Friday, October 25, 2024.

Indeed, the challenges that Prabowo's government will face are not cans, especially in the economic field. As is known, Prabowo in the campaign in the 2024 presidential election had Asta Cita or eight superior government programs. Of the eight programs, five of them are related to economic issues. This indicates that the economic sector is Prabowo's concern.

In terms of macroeconomics, the Prabowo government will face major challenges in managing the budget deficit which is projected to reach IDR 616 trillion by 2025. This deficit is a direct impact of the aggressive fiscal policy carried out by the previous government.

Law observer and anti-corruption activist, Hardjuno Wiwoho, said that this budget deficit is an accumulation of debts taken during President Joko Widodo's time to finance various strategic infrastructure projects. Although successful in moving the economy, the debt burden borne is quite large.

The 2025 State Revenue and Expenditure Budget (APBN), which was passed on October 17, 2024, has estimated a budget deficit of IDR 616 trillion. Most of this deficit was closed through debt financing of IDR 775 trillion, which is a consequence of previous debt policies.

This is not a policy that can be changed immediately. President Prabowo inherited a fiscal situation that is already full of debt pressure. Even though he started managing the budget in 2025, the policies made by the previous government still greatly influenced the space for the new government's fiscal movement, "explained Hardjuno.

However, he is optimistic that the Prabowo government will be able to take thorough steps in overcoming this situation. For example, at the first cabinet meeting after being inaugurated, Prabowo emphasized the importance of more careful financial management, especially regarding the supervision of potential budget leaks and corruption.

In addition, Prabowo also emphasized the importance of strengthening state financial supervision in efforts to manage deficits and debts. This is an important step to reduce the country's financial burden which is getting heavier due to old debts. Development programs will continue, but with strict supervision so that budget leakage does not occur," Hardjuno added.

He emphasized that the Prabowo government must also balance deficit financing with the need to maintain economic growth and protect the interests of the people. One of the steps that can be taken is to ensure investment in the productive sector and maintain the efficiency of state spending.

Poverty And Unemployment Are Government Challenges In The Real Sector

As for the real sector, the economic policy analyst of the Indonesian Employers' Association (Apindo), Ajib Hamdani, revealed that there are several basic economic challenges that must be faced by the government in the future. One of them is the high unemployment rate. IMF data as of April 2024 noted that Indonesia's unemployment rate reached 5.2 percent. Compared to ASEAN countries, Indonesia's unemployment rate occupies the first position.

"The achievement of investment that has always been over-target for the last five years cannot be the main solution for absorbing more labor," he said.

In fact, in recent years there has been a paradox where more and more phenomena of termination of employment (PHK) at a time when the capital-output ratio rate (ICOR) continues to increase. This means that investment has decreased its contribution to economic growth.

Another problem that must be faced by the Prabowo government is related to poverty. The Central Statistics Agency (BPS) noted that the number of poor people in Indonesia reached 9.03 percent or 25.22 million people as of March 2024. However, another fact is that the poor group who received contributions (PBI) from the BPJS Health center reached more than 96 million people.

Ajib against the government really encourages pro-distribution policies and encourages poverty reduction. With more than 60 percent of gross domestic product (GDP) supported by household consumption, economic growth will be sustainable if poverty can continue to be reduced and people's purchasing power is increased.

"This means that the government must be observant with initial data as a policy foundation in the future. There are still many who become a burden with the size of the poor, whether 25 million or 96 million people," he added.

UI economist Teguh Dartanto also hopes that the Prabowo government can prepare solutions in responding to several economic challenges that will occur. Even though at this time, Indonesia's economic condition is considered still good and stable. According to him, the government must prepare steps to overcome problems such as deflation (price reduction) and layoffs.

"Strategic steps are needed to respond to deflation for five consecutive months, a decrease of about 9.5 million middle class people, layoffs, and added uncertainty conditions abroad. Alert is better than complacent," he said.

He explained, in September 2024, BPS noted that Indonesia's deflation reached 0.12 percent. This deflation is the fifth in a row throughout the year. This is also the worst in the last five years of President Joko Widodo's administration.

Because of this deflation, the indicators of income or money in the community are getting less or their income is decreasing. He revealed that one of the drivers was termination of employment (PHK) in a number of areas.

Data from the Ministry of Manpower noted that around 53,993 workers were laid off as of October 2024, most of which occurred in the manufacturing industry with three provinces recording the largest figures, namely Central Java, Banten, and Jakarta.

In addition, the number of middle class residents who have always been proud of as one of the economic progress has decreased. BPS noted that the percentage of middle class population based on expenditures had decreased from 21.4 percent in 2019 to 17.1 percent in 2024, "explained Teguh.

He said that the provision of social assistance funds to date is still needed not only for lower economic groups, but also for the middle class who are laid off so that they do not fall into poverty. The new government should not make many unrealistic promises and make various unproductive statements. In addition, the government must quickly provide solutions to the decline in the number of middle class and also mid class protests with realistic programs," said Teguh.

Economic challenges in the real sector above are in accordance with the results of the latest survey by LSI Denny JA which revealed that there are two economic problems that are the main challenges of President Prabowo Subianto's administration. The results of the survey show that as many as 65 percent of the community find it increasingly difficult to find work.

A total of 65 percent of the community stated that jobs or jobs are increasingly difficult to obtain. Of course this is a major challenge compared to the future government how to create wider jobs," said SIGI Director of LSI Denny JA, Ardian Sopa.

Furthermore, as many as 64 percent of survey respondents stated that meeting basic needs was increasingly difficult. "As many as 64 percent of the community stated that meeting basic needs was getting tougher and difficult," said Ardian.

One of the real challenges that must be faced by the Prabowo government is related to the status of PT Sri Rejeki Isman Tbk or Sritex (SRIL). The largest textile factory in Southeast Asia was cut off by the Semarang Commercial District Court on October 21, 2024, as stated in the case decision with number 2/Pdt. Sus Homologation/2024/PN Niaga Smg.

Sritex company management revealed that the current number of employees in the Sritex group is 50,000, of which 14,112 employees will be directly affected by the bankruptcy decision. A thumbs up deserves to be given to President Prabowo. This is because he immediately moved quickly by instructing the four ministries to collaborate to develop a Sritex rescue scheme in order to maintain labor stability and avoid mass layoffs.

The four ministries involved in this rescue effort are the Ministry of Industry, Ministry of Finance, Ministry of SOEs, and Ministry of Manpower. The four ministries are working together to formulate solutions to maintain Sritex operations so that companies can continue to operate and protect employee rights.

In a written statement, Saturday, October 26, 2024, Minister of Industry Agus Gumiwang Kartasasmita emphasized that this effort is a priority for the government, considering that Sritex is an important pillar in the national textile industry and plays a major role in employment.

He explained that the Ministry of Finance plays a role in reviewing financial support that allows, while the Ministry of SOEs will identify the possibility of BUMN involvement in saving Sritex. On the other hand, the Ministry of Manpower is focused on the aspect of job protection and ensures that employee rights are fulfilled during the restructuring period.

"We will immediately finalize the necessary steps and provide recommendations so that the policies taken can have a positive impact on the stability of the company's workforce and sustainability," said Gumiwang.

With the completion of the retreat period of KIM members, now the public is certainly waiting for whether the event in the Tidar Valley is able to answer the elite challenges, aka the difficult economy during the Prabowo Subianto administration. Nearby, of course, whether the tuah of the Tidar Valley is able to save at least thousands of Sritex employees from the threat of layoffs, or in fact increasing the number of unemployed and poverty rates.