State Finance to be Overburdened

The plan to allocate Rp 1.75 quadrillion to buy the primary weaponry System needs to be reconsidered. During the COVID-19 pandemic, the management of state finances must be prioritized to restore people\'s lives.

Kompas/Hendra A Setyawan

Defense Minister Prabowo Subianto (center) before attending a hearing with Commission I of the DPR at the Parliament Complex, Senayan, Jakarta, Wednesday (2/6/2021). The closed-door meeting discussed the budget, the defense equipment to be purchased, as well as the national defense system.

JAKARTA, KOMPAS — The plan to allocate Rp 1.75 quadrillion (US$122.22 billion) to buy the primary weaponry system (Alutsista) from foreign loans is considered to be burdensome for state finances. The government still needs to prioritize the budget to recover from the impact of the COVID-19 pandemic.

A draft presidential regulation (Perpres) related to the fulfillment of defense and security equipment needs of the Defense Ministry and the Indonesian Military (TNI) for 2020-2024, which is still being worked out, mentions the need for a budget for the procurement of defense and security equipment until 2044. Its value reaches $124.995 billion.

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> > The Alutsista We Desire

A senior economist at the Institute for Development of Economics and Finance, Didik J Rachbini, contacted from Jakarta on Thursday (3/6/2021), said the plan to propose the Rp 1.75 quadrillion Alutsista expenditure budget needs to be reconsidered. During the COVID-19 pandemic, the management of state finances must be prioritized to restore people\'s lives.

The Rp 1.75 quadrillion budget, which will come from foreign loans, will add to the government\'s debt burden. In fact, during the pandemic, government debt has increased.

Debt payment

Based on the Finance Ministry\'s records, the government\'s debt position as of the end of March was Rp 6.445 quadrillion or 41.64 percent of gross domestic product (GDP).

According to Didik, the obligation to pay the principal and interest of the government\'s foreign debt installments is already very high, reaching Rp 772 trillion in 2020. If debt continues to grow, the allocation for debt payments in the State Budget (APBN) could reach Rp 1 quadrillion a year.

Didik pointed out that the poor management of the state budget will open the door to a crisis in the next few years. The government after the era of President Joko “Jokowi” Widodo will bear more debt. In addition, poor financial management can present a bad image of Indonesia for foreign investors.

KOMPAS/SEKAR GANDHAWANGI

A senior economist at the Institute for Development of Economics and Finance, Didik J Rachbini

The Civil Society Coalition for Security Sector Reform said the plan to modernize Indonesia’s defense equipment was not appropriate during a pandemic. The government must prioritize the budget for health care and other sectors affected by the pandemic.

Al Araf, a member of the Civil Society Coalition for Security Sector Reform, said that although it cannot be denied that the modernization of defense equipment was important, the effort must be carried out gradually.

"Starting from the short, medium and long term," he said.

The deputy chairman of Commission I of the House of Representatives, Abdul Kharis Almasyhari, said questions about the draft presidential regulation and the estimated budget of Rp 1.75 quadrillion were raised at the Commission I hearing with Defense Minister Prabowo Subianto on Wednesday (2/6). However, the provisions on the draft presidential regulation are the domain of the executive or the president.

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Therefore, the House Commission I did not discuss it in detail.

"It\'s still a plan. It will be OK, if it’s approved by the President. If not, how? It\'s something like this, when someone makes a proposal, someone else finds it out, even though it\'s not necessarily approved by the President. We in the House do not want to discuss something that is still vague,” he said.

Even though it is still a plan, a member of the House Commission I, Effendi Simbolon, hoped the plan will be elaborated in detail with a clear payment scheme.

"He always said that this did not interfere with the state budget. Who says it\'s not a burden, as it is a debt? When you are in debt, and until 2044 the Indonesian people have to pay [that debt], isn\'t it a burden?" he said.

KOMPAS/AGUIDO ADRI

A number of fighter planes form a formation crossing over the joint training location of the Indonesian National Armed Forces at Monitor Point 12 of the Asembagus Marine Combat Training Center, Situbondo, East Java, Thursday (12/9/2019).

According to him, the House basically agreed that there should be a modernization of the Alutsista. The condition of the Alutsista needs attention because it is generally old. However, procurement planning, payment schemes and budgeting must be clear. The involvement of all parties, especially the three matra (elements) of the TNI, must be taken into consideration in the preparation of the Alutsista modernization scenario.

After the hearing at the House Commission I, Defense Minister Prabowo said the plan was still being discussed with the National Development Planning Ministry/National Development Planning Agency, Finance Ministry, and other stakeholders. He said that most of the Alutsista is already old and it is time to replace them (Kompas, 3/6/2021).

Openly

A senior researcher in the field of defense at the Centre for Strategic and International Studies (CSIS) Jakarta, Evan A Laksmana, said discussions on the draft presidential regulation on defense equipment should be carried out openly.

“The items to be purchased, what companies will be the provider and the payment mechanism must be transparent. In this case, it is the state money that will be used. There must be accountability," he said.

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> Weapons System Modernization needs Consistency

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The chairman of the Public Information Commission, Gede Narayana, said the document, which was still in the form of a draft, had not included public information. The contents of the document are still subject to change.

“However, in its process, public agencies must provide space for public participation. Participation can be done through the relevant community components," said Gede.

This article was translated by Hyginus Hardoyo.