Indonesia’s Battle to Overcome Its Fiscal Challenges
INDONESIA STUDIES PROGRAMME WEBINAR
About the Webinar
Indonesia has been facing a difficult challenge to increase its tax revenue to finance its growing fiscal needs. The country has one of the lowest tax ratios to GDP in ASEAN. Various factors have constrained the government’s ability to increase tax revenues, such as the informality of employment relationships, small firms, limited banking systems, etc.
The pandemic has further pressured the government’s fiscal space. Revenues are down from a slowdown brought about by social restrictions, while expenditures are up, driven by extensive health and social assistance spending. This has led to a widening budget deficit. There is a challenge to achieve a balance between raising enough debt to cover the deficit while ensuring that it does not overwhelm fiscal sustainability.
To address the country’s fiscal challenge, parliament has passed a new tax law designed to boost government tax revenue to meet its 2023 fiscal commitments. This tax law consists of a rise in value-added tax (VAT) and income tax rates, tax amnesty programme, and carbon tax. However, the desired outcomes are not assured, as the pandemic is still evolving. This webinar is based on ongoing collaborative research sponsored by the Rajawali Foundation to provide insights into Indonesia’s efforts to recover from the pandemic and overcome its structural constraints. It will highlight some policy options to increase tax revenue and restructure expenditures.
About the Speaker
Muhamad Chatib Basri was Minister of Finance of Indonesia (2013-2014). Previously he was the Chairman of the Indonesian Investment Coordinating Board. His expertise is in International Trade, Macroeconomics, and Political Economy. He was Ash Centre Senior Fellow at the Harvard Kennedy School, Harvard University (2015-2016); Pacific Leadership Fellow at the Centre on Global Transformation, University of California at San Diego (2016); NTUC Professor of International Economic Relation, RSIS, NTU, Singapore (2016); He was also a Thee Kian Wie Distinguished Visiting Professor at the Australian National University (2016-2017).
Dr Basri is Chairman of the PT Bank Mandiri Tbk and Chairman of the PT XL-Axiata. He teaches at the Department of Economics, University of Indonesia, and Co-founded CReco Research Institute in 2010. Dr Basri is a member of the World Bank Advisory Council on Gender and Development. He was a member of the Asia Pacific Regional Advisory Group of the International Monetary Fund (IMF) and was a member of the High-Level Trade Experts Group. He is the author of several papers in international journals and actively writes for various leading newspapers and magazines in Indonesia.
About the Discussant
Richard Borsuk has worked as a journalist in Southeast Asia for more than 40 years, including 11 years in Jakarta as the Wall Street Journal’s Indonesia correspondent. He co-authored a book on modern Indonesian history, “Liem Sioe Liong’s Salim Group: The Business Pillar of Suharto’s Indonesia”, published in 2014 by ISEAS. Borsuk majored in Asian Studies at the University of Wisconsin. He works with Researching Southeast Asia Pte Ltd, a consultancy, and is an adjunct senior fellow at the S. Rajaratnam School of International Studies (RSIS).
Registration
This webinar will be delivered online entirely. You can join the webinar at the specified date and time using devices (computer, phone, or tablet) with internet connection.
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If you have questions for the speaker, please key in your questions via the Q&A, stating your name and affiliation. The moderator will field them to the speaker during the Q&A session.