CHALLENGE OF NEW FINANCE MINISTER

By Nugroho SBM

Controversy of the resignation of Finance Minister Sri Mulyani Indrawati (SMI) to become the Managing Director of the World Bank is still ongoing. Actually there are many things more important that need to be discussed, namely a number of challenges facing the Indonesian economy which later faced by the new Finance Minister.

The first challenge is how to make the real sector can move quickly. To be able to move quickly the real sector required a large injection of funds from banks in the form of credit. Credits can be used if the loan rate affordable by the business world or the real sector. Until now, loan interest rates are still perched in the range of 13-16 percent. Whereas the BI rate as the reference is trimmed to 6.25 percent.Due to the high loan rate then the number ratio between loan and deposit or loan to deposit ratio (LDR) of banks in Indonesia is still ranged between 60 and 70 per cent.This means that the total customer deposits in the banking funds disbursed by the bank in the form of loans only 60-70 percent. Value of banking loans disbursed this year estimated at about Rp 210 trillion (BI version).Whereas the government's 2010 budget to target loans channeled Rp 450 trillion to encourage economic growth target for 2010 of 5.3 percent

There are some factors that cause mortgage interest rates remain high, which is a territory under the Ministry of Finance of the high interest rates of state bonds or debentures (SUN) issued by MOF.
Until now, interest rates still ranged from 10 until 15 per cent. As a result, banks preferred to place the funds from third parties in bonds or risk-free bond because more than if they are channeled into credit.

Very Slow

The second challenge is how to create cash flow budget as one of the main economic driver. Before the era of reform in all areas must be recognized that government funds from the state budget was one of the main economic driver. One reason is the current release of funds from the state budget on time and very fast.

It's quick disbursement is often followed by leakage of funds here and there, but nevertheless the rapid melting is very helpful to move the economy.
Currently the state budget disbursement has been very slow and there are several suspected causes. First, many public officials afraid to get caught because of the corruption case was not careful in the use of state budget funds or budget.
Actions which violate the relevant procedures although personally do not use their money, could be categorized as corruption. It is an irony that the prevention of corruption it causes serious obstacles within the state budget or the budget disbursement.Second, the bureaucracy in the use of state budget funds and the budget is more complicated. Some examples could be mentioned for purposes of buying a computer just USD 6 million in a government agency takes 20 documents, for the disbursement of salary required five persons concerned, a very complicated tender procedures, and others.
So the solution, the new minister must be brave proposals to the competent parties to revise various laws that inhibit the release of funds the state budget and budget, without compromising the transparency and good governance

The third challenge was considering revamping the tax is a tax principal in the state budget revenues. Approximately 70 percent of state revenues in the budget (in the state budget in 2009) comes from taxes.
Positive things that have made Sri Mulyani was to act firmly against companies owned by government officials, the Bakrie Group, which tries mengemplang taxes.

Another thing that is still a big homework until Ministry of Finance today is combating the mafia tax. Lack of salary as a cause of corruption and mafia behavior in the tax department's environment, particularly in the Directorate General of Taxation, who responded with the remuneration had been unsuccessful in preventing corruption and the mafia tax.

In addition to the three challenges, the homework to be completed new Finance Minister, there are several other requirements that must be possessed. For example he must be from professionals and not so free from political parties from interest groups so that policies can be objective.

Several times a presidential spokesman has stressed this, live-awaited realization. Besides honesty, she also must be firm and not wishy-washy decisions in order not to destabilize the economy. Finance minister should also be an honest figure. (10)


- Nugroho SBM SE MSP, a researcher at Regulatory Impact Assessment (RIA)Center Diponegoro University and a lecturer at Diponegoro University Faculty of Economics