President: Maintain Purchasing Power

Sri Mulyani said that the APBN would support and protect the public from the impacts of the global pressures now being felt all over the world.

KOMPAS/AGUS SUSANTO

Residents buy vegetables at the Perumnas Klender Market, East Jakarta, Tuesday (29/3/2022). At the beginning of this year, the government again used the State Revenue and Expenditure Budget to reduce the negative impact of rising prices for basic .

JAKARTA, KOMPAS — President Joko “Jokowi” Widodo has instructed his ministers to maintain purchasing power amid the soaring prices of basic necessities, especially food and energy, which have been affected by the geopolitical situation and the Russia-Ukraine war, among other factors.

The ministers were also asked to assess detailed developments in food and energy prices as well as policy options within the framework of maintaining purchasing power. Social protection was also to be strengthened. The President emphasized these matters on Tuesday (5/4/2022) at a plenary Cabinet meeting on anticipating the global situation and economic developments at the State Palace in Jakarta.

In a statement following the meeting, Coordinating Economic Minister Airlangga Hartarto explained that the geopolitical situation had some effects on the increase in commodity prices and inflation. “As directed by the President, social protection needs to be further augmented,” said Airlangga.

The condition of the global market was transmitted to the country and had a particular impact on imported food commodities such as soybeans, beef, sugar and wheat flour. The increase in the global price of crude palm oil (CPO) had also increased the domestic price of cooking oil.

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The prices of cooking oils in basic and premium packaging, which previously ranged between Rp 11,000 and Rp 18,000 per liter, were still high on Tuesday (5/4), ranging between Rp 23,500 and Rp 26,100 per liter. Meanwhile, bulk cooking oil had reached Rp 18,800 per liter, far above the previous price range of between Rp 9,000 and Rp 11,500 per liter.

Apart from the price of food, the prices of energy, animal feed and fertilizers were also rising. PT Pertamina Patra Niaga had already twice raised the price of unsubsidized liquefied petroleum gas (LPG), once in December 2021 and once in February 2022. LPG in 12-kilogram canisters that originally cost Rp 162,000 each was now Rp 182,000.

The price of animal feed had also been affected, as the prices of some imported basic materials were still high. The same was true of fertilizer prices, which were affected by the prices of raw materials still imported from Russia.

KOMPAS/JUMARTO YULIANUS

Residents line up to buy packaged cooking oil at the Ramadhan 1443 Hijriah Cheap Market location, Monday (4/4/2022). The cheap market was held in the yard of the South Kalimantan Provincial Trade Office, in Banjarmasin. At the cheap market location, Alif brand packaged cooking oil is sold for Rp. 22,000 per liter..

Social protection

Airlangga said that several social protection programs were being readied to maintain purchasing power, including unconditional cash aid (BLT) for cooking oil, village BLT, wage subsidies and presidential aid (banpres) for micro entrepreneurs.

On Friday (1/4), the President announced that the government would provide BLT for cooking oil to 20.5 million families registered with the Non-cash Food Aid (BPNT) and the Family Hope Program (PKH). The BLT would also be given to 2.5 million street vendors selling fried snacks.

Cash aid of Rp 100,000 per month per beneficiary would be distributed as a lump sum to cover the three months of April, May and June. The total cooking oil BLT of Rp 300,000 would be distributed in advance in April 2022.

Presidential aid for micro entrepreneurs worth Rp 600,000 per recipient has also been proposed with a target of around 12 million (recipients).

Airlangga added that the village BLT would continue to be disbursed through the village funds already made available to each village. The newest program is the wage subsidy, a scheme for workers earning wages of less than Rp 3.5 million per month. A wage subsidy of Rp 1 million per worker would be disbursed to 8.8 million workers for a total allocation of Rp 8.8 trillion.

“Presidential aid for micro entrepreneurs worth Rp 600,000 per recipient has also been proposed with a target of around 12 million (recipients),” he said.

Besides, Airlangga continued, President Jokowi underlined that fertilizer prices were now rising. In the future, the fertilizer subsidy would be limited to priority commodities, which were rice, corn, soybeans, shallots, chilis, sugarcane and cacao. The types of subsidized fertilizer would also to be limited to urea and NPK.

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According to Airlangga, the President reiterated that the fertilizer subsidy should be targeted appropriately. Farmers were to receive subsidized fertilizers and there should be no shortage of fertilizers. This way, the food supply could be guaranteed.

“The President has instructed us to assess the food and energy prices in detail, as well as the policy choices to maintain purchasing power, the economic momentum and the state budget [APBN],” said Finance Minister Sri Mulyani Indrawati.

Therefore, the programs within the national economic recovery (PEN) framework would be carried over to this year. At present, the PEN programs had been allocated Rp 455 trillion. The funds’ usage would focus on labor intensive programs, including those under the Public Works and Housing Ministry, to create jobs.

Sri Mulyani added that the APBN would support and protect the public from the impacts of the global pressures now being felt all over the world. She vowed that the APBN would be spent in an appropriate manner to ensure the safety of the population, the security of the economy and the soundness of the APBN.

This article was translated by Aris Prawira.