19: The Try Stimulus
19: The Try Stimulus
3rd May 1998:
At 8 PM, Minister of Mining and Energy Djiteng Marsudi accompanied by State Secretary Edi Sudrajat announced that the government will be cutting subsidies to fuel and electricity. As a result fuel prices will go up by 30% and electricity prices by 50%. The rises will take effect at midnight 4th May.
Edi supplemented the minister’s announcement by saying that “Simply put”, the government is serious about addressing the economic crisis. He said that there will be a further announcement from the government the next morning about the next step to address the economic crisis.
The news was well hidden. At the end, only the President and the Minister of Mining and Energy by how much the rises were going to be. Normally after these announcements, there would be a rush by car owners to petrol stations so that they can fill up their tanks using the still cheap petrol prices. However, the short amount of time between the announcement of the price rise and the price rise itself as well as anticipation at what the government has to announce meant that most of the populace adopted a “wait and see” approach.
4th May 1998:
At 8 AM, the President chaired a meeting attended by Vice President Sumarlin and the entire cabinet. During the meeting, the President announced his intention to implement a stimulus package to kick start economic activity and create employment.
Meanwhile the Presidential Palace was being prepared for a press conference. It was 9.30 AM when the President appeared accompanied by Vice President Sumarlin.
“Ladies and gentlemen and fellow Indonesians wherever you may be.
I have just chaired a meeting attended by the full cabinet and what I am telling you now will be little different to what I have said to them.
During my initial period in office, the government has managed to limit the damage of what had initially been a financial crisis but which had grown to become an economic crisis. Even so, the steps which have been taken are not sufficient.
The decline of the Rupiah’s value has been arrested but unemployment is on the increase. We have also exercised prudent policies regarding our budget and yet at the same time, the economy has continued to slow down
The Indonesian government has, is, and will continue to pursue policies to restore the confidence of the market. The cuts to the fuel and electricity subsidies which I have approved and which was announced last night are further prove of this commitment.
But such policies and measures are nothing if the government fails to address the slowing economy and the risk to economic and social fabric that that will bring.
In the near two months since my re-election and with the assistance of the Vice President and the cabinet, we have formulated a set of measures to decisively put Indonesia on the path of economic recovery.
Accordingly, I hereby announce a stimulus package to create employment, encourage economic activity, and guide Indonesia towards a fair and prosperous society based on Pancasila.
Infrastructure:
Having conducted a review of projects which have been suspended or put under indefinite review, I now announce that the following infrastructure projects has been placed back on the agenda with construction to start at the latest 6 months from today and funding arrangements to be earmarked from future budgets:
Roads:
*Bandung Inner Ring Road
*East Surabaya Outer Ring Road
*Semarang-Solo Toll Road
*Tangerang-Jakarta Outer Ring Road
*Gresik-Tuban Toll Road
*Ujung Pandang Toll Road Expansion
*Solo-Yogyakarta Toll Road
*Surabaya-Gresik Toll Road
Transportation:
*Jakarta-Solo Railway and Freight
*Jakarta-Surabaya Railway and Freight
*Development of Lombok Airport
*Construction of Benoa Harbour in Bali
*Construction of Lhokseumawe Multipurpose Terminal in Aceh
Education:
The government will also take this opportunity to renew its focus on education and the Compulsory 9 Year Education Program. The government will construct 3,000 new Junior High School buildings in this fiscal year; each building to consist of three classrooms, a library, and a laboratory.
Housing:
In the field of housing, we will be constructing 50 towers of social housing apartments. We will be targeting the construction of these towers in large cities such as Jakarta, Surabaya, Medan, and Ujung Pandang to provide housing for urban workers.
Furthermore, 40,000 defense houses will be constructed and a further 80,000 existing houses to be refurbished. We will be targeting the constructions and refurbishments of defense housing to be used to accomodate families.
Employment Creation:
Through the initiation of the projects above we hope to absorb those who have been unemployed in recent times; manual workers, field supervisors, architects, engineers, and contractors. Whether you have been laid off or have seen work slow down or are about to graduate from university, we hope you will take this opportunity as it becomes available.
Other opportunities will also be available from the following departments
*The Department of Industries, Research, and Technology will be establishing representative patent offices in major cities as well as National Industry Standard offices across the provinces and will be opening vacancies.
*The Department of Transport will be conducting its program to ensure that all cars on Indonesian roads are fitted with seatbelts and will be opening vacancies for seatbelt inspectors.
The government is also seeking to encourage entrepreneurship. The Department of Manpower and Small Business, the Department of Education, and the Department of Female Empowerment, Youth, and Sports are cooperating to set up business crash courses.
Conclusion:
The total cost for all the measure taken for this stimulus package is 0.8% of GDP.
Given that we have reached a budget surplus of 1% of GDP, this will leave us with a buffer against deficit of 0.2% of GDP. It is not the government’s intention to go into deficit as that will run an inflationary risk and therefore the risk of the Rupiah losing its value.
To further strengthen the Rupiah, the projects that have been approved will be using domestic contractors with a minimum amount of imported material.
Fellow Indonesians, such are the measures we have taken in the government’s stimulus package.
It is not by any means the final step to be taken in the nation’s economic recovery, but it is a significant one.
With God’s grace, this government intends to implement this stimulus package and Insya Allah, this nation can make its economic recovery.”
5th May 1998:
Cabinet ministers with stimulus programs to implement held a joint press conference. With Minister of Information and Telecommunication Ginandjar Kartasasmita sitting in the middle, Minister of Public Works, Housing, and Urban Development Sutjipto, Minister of Transportation Soerjadi Soedirdja, Minister of Education Wardiman Djojonegoro, Minister of Defense and Security Wismoyo Arismunandar, Minister of Civil Service and Development Supervision Rachmat Witoelar all fronted the press.
*On the scope of the stimulus: “I think this is the right amount of stimulus to be put into the economy given the constraints of the budget and the state of the economy at the moment.”- Ginandjar Kartasasmita.
*On the emphasis on infrastructure: “Whether it be roads or rails or ports, this stimulus package shows the importance of infrastructure in the economy. In the short run we hope to create employment directly related to these projects, in the long run employment because of the economic activity that uses these infrastructures”- Sutjipto.
*On the state providing employment: “Do we need teachers to man the junior high schools to be constructed? Absolutely. Do we need that many seatbelt inspectors, though? I’m not so sure. We’ll take them on for now but hopefully the economy will improve and they will find better opportunities in the private sector. And maybe they can also create employment for themselves and others by becoming small businessmen”- Rachmat Witoelar.
*On the mood in the Cabinet when the President announced the stimulus package: “I think we were galvanized and inspired because of the President’s seriousness towards recovering Indonesia’s economy”- Wismoyo Arismunandar.
Reaction to the stimulus package is positive. The Rupiah bounced to Rp. 4,698 in response to the announcement of the stimulus. At Washington DC, IMF Managing Director Michel Camdessus said that while Indonesia has done is not strictly what the IMF would recommend to nations facing economic crisis, it has still managed to remain within the IMF's parameters by keeping a buffer against budget deficits and cut subsidies. "They are still ticking our boxes so we can't really complain", he said.
Indonesianist R. William Liddle comments that the government continues to enjoy the trust of the market and makes note of the fact that people tended to wait for what the government would announce next rather than rushing to the petrol station to get petrol before the price rise becomes effective.
The press corps are already dubbing the stimulus as the “Try Stimulus”.
Chairman of Muhammadiyah Amien Rais welcomes the stimulus package but said that it could have come earlier and without “the need to look for the IMF’s approval before moving ahead”.
6th May 1998:
BJ Habibie returns home from a close to two month trip overseas to Germany.
Chairman of the PDI Soerjadi said that he is not so sure that Sutjipto is up to the task of implementing the infrastructure portion of the President’s stimulus package. “Mr. Sutjipto has been wholly concerned with the defense of Megawati Soekarnoputri’s breakaway PDI in East Java over the past 5 years, one would be surprised if he has any clear opinion on where the nation’s infrastructure direction should be”, said Soerjadi.
7th May 1998:
The President today swore in the head of three important government agencies:
Head of the Investment Coordinating Agency (BKPM): Prof. Mari Elka Pangestu. Pangestu will be making a historic step as the first head of a government agency of Chinese ethnicity. She is an economist who obtained her doctorate at the ANU.
Head of the National Family Planning Coordinating Agency (BKKBN): dr. Nafsiah Mboi. Mboi is a physician with an interest in HIV/AIDS prevention but is better known as the wife of former Governor of East Nusa Tenggara and military doctor Ben Mboi.
Head of the Logistics Affairs Agency (Bulog): Lt. Gen. (Ret.) I Gede Awet Sara. Sara is a close friend of Try’s. Both are Army Engineers and studied at the Army Engineering Academy together. He was Inspector General of ABRI when Try was Commander of ABRI. He was formerly Ambassador to Thailand (1994-1997).
9th May 1998:
The President and the First Lady today is heading to the Halim Perdanakusuma Airport. The President is scheduled to depart to Egypt where he will be attending the G-15 Summit in Cairo.
On the way to the airport, Try and his wife Tuti shared the ride with Edi Sudrajat and Minister of Home Affairs Harsudiono Hartas. He used the opportunity to catch up on various political issues.
Both Edi and Harsudiono concurred that Tutut will be gunning for the Chairwomanship of Golkar at the next Golkar National Congress. But both are ambivalent about the idea of backing Harmoko against Tutut.
“We all know that he ended up supporting you at the MPR Session because he detests the idea of Tutut and Habibie being president”, said Edi.
“But I suspect the reverse will be true as well at the Golkar Congress. You’ll probably end up supporting him because you don’t want to see Tutut becoming the Chairwoman of Golkar”, added Harsudiono.
“I don’t know if it’ll come to that”, said Try “But I’d like you two to come up with a short list of possible Chairman of Golkar candidates to be put up against Tutut.”
The President departed accompanied by State Secretary Edi Sudrajat, Minister of Foreign Affairs Ali Alatas, Minister of Economics and National Development Planning Soedradjad Djiwandono, Minister of Trade Dorodjatun Kuntjoro-Jakti, and Head of BKPM Mari Elka Pangestu.
The delegation was seen off by Vice President JB Sumarlin, Minister of Home Affairs Harsudiono Hartas, Minister of Defense and Security Wismoyo Arismunandar, Minister of Information and Telecommunications Ginandjar Kartasamita, Minister of Finance Mar’ie Muhammad, Commander of ABRI Wiranto, Chief of BAKIN Ari Sudewo.
------
Ok guys, I’m back after a hiatus and decided to post the things that hve been stuck in the pipeline.
The idea of the “Try Stimulus” had been germinating for quite a while. I lived in Australia during the GFC and was somewhat inspired by the Rudd Stimulus. I adjusted what was in the stimulus and how big the stimulus is to Indonesian conditions.
The roads and transportation projects I mentioned by name are from Presidential Decision 39/1997. This was a decision signed off by Soeharto in September 1997 which determines which government projects may go ahead, suspended, or put under review during the financial crisis. The link may be found below.
https://peraturan.bkpm.go.id/jdih/userfiles/batang/Kepres_39_1997.pdf
The presidential decision truly underlines how bad OTL Indonesia fared in the Asian Financial Crisis. It was only revoked in 2002 under Megawati Soekarnoputri and to this day, work is still being done to complete the list of projects on that list especially as regards the toll roads.
Obviously a busy time for Try as he works through economic recovery and the Golkar National Congress appearing on the horizon. This is not counting “other” matters that are going on that his subordinates are preparing to bring to him.
3rd May 1998:
At 8 PM, Minister of Mining and Energy Djiteng Marsudi accompanied by State Secretary Edi Sudrajat announced that the government will be cutting subsidies to fuel and electricity. As a result fuel prices will go up by 30% and electricity prices by 50%. The rises will take effect at midnight 4th May.
Edi supplemented the minister’s announcement by saying that “Simply put”, the government is serious about addressing the economic crisis. He said that there will be a further announcement from the government the next morning about the next step to address the economic crisis.
The news was well hidden. At the end, only the President and the Minister of Mining and Energy by how much the rises were going to be. Normally after these announcements, there would be a rush by car owners to petrol stations so that they can fill up their tanks using the still cheap petrol prices. However, the short amount of time between the announcement of the price rise and the price rise itself as well as anticipation at what the government has to announce meant that most of the populace adopted a “wait and see” approach.
4th May 1998:
At 8 AM, the President chaired a meeting attended by Vice President Sumarlin and the entire cabinet. During the meeting, the President announced his intention to implement a stimulus package to kick start economic activity and create employment.
Meanwhile the Presidential Palace was being prepared for a press conference. It was 9.30 AM when the President appeared accompanied by Vice President Sumarlin.
“Ladies and gentlemen and fellow Indonesians wherever you may be.
I have just chaired a meeting attended by the full cabinet and what I am telling you now will be little different to what I have said to them.
During my initial period in office, the government has managed to limit the damage of what had initially been a financial crisis but which had grown to become an economic crisis. Even so, the steps which have been taken are not sufficient.
The decline of the Rupiah’s value has been arrested but unemployment is on the increase. We have also exercised prudent policies regarding our budget and yet at the same time, the economy has continued to slow down
The Indonesian government has, is, and will continue to pursue policies to restore the confidence of the market. The cuts to the fuel and electricity subsidies which I have approved and which was announced last night are further prove of this commitment.
But such policies and measures are nothing if the government fails to address the slowing economy and the risk to economic and social fabric that that will bring.
In the near two months since my re-election and with the assistance of the Vice President and the cabinet, we have formulated a set of measures to decisively put Indonesia on the path of economic recovery.
Accordingly, I hereby announce a stimulus package to create employment, encourage economic activity, and guide Indonesia towards a fair and prosperous society based on Pancasila.
Infrastructure:
Having conducted a review of projects which have been suspended or put under indefinite review, I now announce that the following infrastructure projects has been placed back on the agenda with construction to start at the latest 6 months from today and funding arrangements to be earmarked from future budgets:
Roads:
*Bandung Inner Ring Road
*East Surabaya Outer Ring Road
*Semarang-Solo Toll Road
*Tangerang-Jakarta Outer Ring Road
*Gresik-Tuban Toll Road
*Ujung Pandang Toll Road Expansion
*Solo-Yogyakarta Toll Road
*Surabaya-Gresik Toll Road
Transportation:
*Jakarta-Solo Railway and Freight
*Jakarta-Surabaya Railway and Freight
*Development of Lombok Airport
*Construction of Benoa Harbour in Bali
*Construction of Lhokseumawe Multipurpose Terminal in Aceh
Education:
The government will also take this opportunity to renew its focus on education and the Compulsory 9 Year Education Program. The government will construct 3,000 new Junior High School buildings in this fiscal year; each building to consist of three classrooms, a library, and a laboratory.
Housing:
In the field of housing, we will be constructing 50 towers of social housing apartments. We will be targeting the construction of these towers in large cities such as Jakarta, Surabaya, Medan, and Ujung Pandang to provide housing for urban workers.
Furthermore, 40,000 defense houses will be constructed and a further 80,000 existing houses to be refurbished. We will be targeting the constructions and refurbishments of defense housing to be used to accomodate families.
Employment Creation:
Through the initiation of the projects above we hope to absorb those who have been unemployed in recent times; manual workers, field supervisors, architects, engineers, and contractors. Whether you have been laid off or have seen work slow down or are about to graduate from university, we hope you will take this opportunity as it becomes available.
Other opportunities will also be available from the following departments
*The Department of Industries, Research, and Technology will be establishing representative patent offices in major cities as well as National Industry Standard offices across the provinces and will be opening vacancies.
*The Department of Transport will be conducting its program to ensure that all cars on Indonesian roads are fitted with seatbelts and will be opening vacancies for seatbelt inspectors.
The government is also seeking to encourage entrepreneurship. The Department of Manpower and Small Business, the Department of Education, and the Department of Female Empowerment, Youth, and Sports are cooperating to set up business crash courses.
Conclusion:
The total cost for all the measure taken for this stimulus package is 0.8% of GDP.
Given that we have reached a budget surplus of 1% of GDP, this will leave us with a buffer against deficit of 0.2% of GDP. It is not the government’s intention to go into deficit as that will run an inflationary risk and therefore the risk of the Rupiah losing its value.
To further strengthen the Rupiah, the projects that have been approved will be using domestic contractors with a minimum amount of imported material.
Fellow Indonesians, such are the measures we have taken in the government’s stimulus package.
It is not by any means the final step to be taken in the nation’s economic recovery, but it is a significant one.
With God’s grace, this government intends to implement this stimulus package and Insya Allah, this nation can make its economic recovery.”
5th May 1998:
Cabinet ministers with stimulus programs to implement held a joint press conference. With Minister of Information and Telecommunication Ginandjar Kartasasmita sitting in the middle, Minister of Public Works, Housing, and Urban Development Sutjipto, Minister of Transportation Soerjadi Soedirdja, Minister of Education Wardiman Djojonegoro, Minister of Defense and Security Wismoyo Arismunandar, Minister of Civil Service and Development Supervision Rachmat Witoelar all fronted the press.
*On the scope of the stimulus: “I think this is the right amount of stimulus to be put into the economy given the constraints of the budget and the state of the economy at the moment.”- Ginandjar Kartasasmita.
*On the emphasis on infrastructure: “Whether it be roads or rails or ports, this stimulus package shows the importance of infrastructure in the economy. In the short run we hope to create employment directly related to these projects, in the long run employment because of the economic activity that uses these infrastructures”- Sutjipto.
*On the state providing employment: “Do we need teachers to man the junior high schools to be constructed? Absolutely. Do we need that many seatbelt inspectors, though? I’m not so sure. We’ll take them on for now but hopefully the economy will improve and they will find better opportunities in the private sector. And maybe they can also create employment for themselves and others by becoming small businessmen”- Rachmat Witoelar.
*On the mood in the Cabinet when the President announced the stimulus package: “I think we were galvanized and inspired because of the President’s seriousness towards recovering Indonesia’s economy”- Wismoyo Arismunandar.
Reaction to the stimulus package is positive. The Rupiah bounced to Rp. 4,698 in response to the announcement of the stimulus. At Washington DC, IMF Managing Director Michel Camdessus said that while Indonesia has done is not strictly what the IMF would recommend to nations facing economic crisis, it has still managed to remain within the IMF's parameters by keeping a buffer against budget deficits and cut subsidies. "They are still ticking our boxes so we can't really complain", he said.
Indonesianist R. William Liddle comments that the government continues to enjoy the trust of the market and makes note of the fact that people tended to wait for what the government would announce next rather than rushing to the petrol station to get petrol before the price rise becomes effective.
The press corps are already dubbing the stimulus as the “Try Stimulus”.
Chairman of Muhammadiyah Amien Rais welcomes the stimulus package but said that it could have come earlier and without “the need to look for the IMF’s approval before moving ahead”.
6th May 1998:
BJ Habibie returns home from a close to two month trip overseas to Germany.
Chairman of the PDI Soerjadi said that he is not so sure that Sutjipto is up to the task of implementing the infrastructure portion of the President’s stimulus package. “Mr. Sutjipto has been wholly concerned with the defense of Megawati Soekarnoputri’s breakaway PDI in East Java over the past 5 years, one would be surprised if he has any clear opinion on where the nation’s infrastructure direction should be”, said Soerjadi.
7th May 1998:
The President today swore in the head of three important government agencies:
Head of the Investment Coordinating Agency (BKPM): Prof. Mari Elka Pangestu. Pangestu will be making a historic step as the first head of a government agency of Chinese ethnicity. She is an economist who obtained her doctorate at the ANU.
Head of the National Family Planning Coordinating Agency (BKKBN): dr. Nafsiah Mboi. Mboi is a physician with an interest in HIV/AIDS prevention but is better known as the wife of former Governor of East Nusa Tenggara and military doctor Ben Mboi.
Head of the Logistics Affairs Agency (Bulog): Lt. Gen. (Ret.) I Gede Awet Sara. Sara is a close friend of Try’s. Both are Army Engineers and studied at the Army Engineering Academy together. He was Inspector General of ABRI when Try was Commander of ABRI. He was formerly Ambassador to Thailand (1994-1997).
9th May 1998:
The President and the First Lady today is heading to the Halim Perdanakusuma Airport. The President is scheduled to depart to Egypt where he will be attending the G-15 Summit in Cairo.
On the way to the airport, Try and his wife Tuti shared the ride with Edi Sudrajat and Minister of Home Affairs Harsudiono Hartas. He used the opportunity to catch up on various political issues.
Both Edi and Harsudiono concurred that Tutut will be gunning for the Chairwomanship of Golkar at the next Golkar National Congress. But both are ambivalent about the idea of backing Harmoko against Tutut.
“We all know that he ended up supporting you at the MPR Session because he detests the idea of Tutut and Habibie being president”, said Edi.
“But I suspect the reverse will be true as well at the Golkar Congress. You’ll probably end up supporting him because you don’t want to see Tutut becoming the Chairwoman of Golkar”, added Harsudiono.
“I don’t know if it’ll come to that”, said Try “But I’d like you two to come up with a short list of possible Chairman of Golkar candidates to be put up against Tutut.”
The President departed accompanied by State Secretary Edi Sudrajat, Minister of Foreign Affairs Ali Alatas, Minister of Economics and National Development Planning Soedradjad Djiwandono, Minister of Trade Dorodjatun Kuntjoro-Jakti, and Head of BKPM Mari Elka Pangestu.
The delegation was seen off by Vice President JB Sumarlin, Minister of Home Affairs Harsudiono Hartas, Minister of Defense and Security Wismoyo Arismunandar, Minister of Information and Telecommunications Ginandjar Kartasamita, Minister of Finance Mar’ie Muhammad, Commander of ABRI Wiranto, Chief of BAKIN Ari Sudewo.
------
Ok guys, I’m back after a hiatus and decided to post the things that hve been stuck in the pipeline.
The idea of the “Try Stimulus” had been germinating for quite a while. I lived in Australia during the GFC and was somewhat inspired by the Rudd Stimulus. I adjusted what was in the stimulus and how big the stimulus is to Indonesian conditions.
The roads and transportation projects I mentioned by name are from Presidential Decision 39/1997. This was a decision signed off by Soeharto in September 1997 which determines which government projects may go ahead, suspended, or put under review during the financial crisis. The link may be found below.
https://peraturan.bkpm.go.id/jdih/userfiles/batang/Kepres_39_1997.pdf
The presidential decision truly underlines how bad OTL Indonesia fared in the Asian Financial Crisis. It was only revoked in 2002 under Megawati Soekarnoputri and to this day, work is still being done to complete the list of projects on that list especially as regards the toll roads.
Obviously a busy time for Try as he works through economic recovery and the Golkar National Congress appearing on the horizon. This is not counting “other” matters that are going on that his subordinates are preparing to bring to him.
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