YAKARTA (Reuters) – Indonesia will need to use the coronavirus pandemic to revive Southeast Asia’s largest economy, President Joko Widodo said Friday, proposing a budget of $187 billion by 2021 that includes more spending on physical care, adding vaccines and infrastructure.
Widodo made the statements in his annual report on the state of the union and the budget before parliament. Due to precautions opposing coronaviruses, less than a portion of lawmakers were provided for his speech, the rest saw him online.
Describing the existing economic scenario as a “computer failure,” he said Indonesia, along with other countries, will have to “stop, restart and restart.”
“We want to capitalize on the crisis as a condiment to make a big leap,” he said.
Widodo proposed 2021 2747.5 trillion rupees ($186.65 billion), 0.3% more than this year.
He said the budget deficit is expected to fall to 5.5% of GDP from 6.34% in 2020, the highest in more than a decade as the government sought to pull the economy out of the pandemic.
Indonesia recorded the highest number of coronavirus deaths in Southeast Asia, the government pushed to reopen the economy.
Economic expansion is expected to pick up to 4.5% -5.5% next year, Widodo said, with government’s projections of expansion stagnant this year and a 5% increase in 2019.
The budget showed that “the government is positive about its expectations for economic recovery, although we generally see that the recovery in evolving economies has been slow,” said Josua Pardede, an economist at Permata Bank.
Widodo, which has allocated $1.7 billion for COVID-19 vaccines and research, said accelerating fitness sector reform is a highly sensitive priority as well as strengthening food supply chains, adding a recently planned food park on the island of Borneo.
He also highlighted plans to reduce imports of oil through palm oil fuel, adding the progression of the public green oil company Pertamina, which is effectively manufactured with 100 percent palm oil.
The so-called D100 would mean a minimum of 1 million tons of palm trees produced through farmers with a production capacity of 20,000 barrels consistent with a day, Widodo said, without giving a deadline.
Cash and food aid, tax breaks and small business systems would continue next year, but fall to $24 billion this year.
For the economic recovery, $28 billion in infrastructure expenditures have been proposed.
Additional report through Maikel Jefriando; Editing through Ed Davies and Alex Richardson
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