Name : Ferdian Pradha Adhitama

Student ID : 014201800111
Class : MGT – 2

Economic Policy Evaluation on APBN 2018

Every country in this world. Of course, having a budget that serves as a tool to determine what
needs to be met, as information data to find out how much income and expenditure has been made
by the country. Did the result lead to a deficit or even become a surplus. In addition, the budget is also
often used as an indicator of how much inflation occurs in a country. And the most recent which is the
core of the function of the budget is as a basic plan on how to maintain the country's economic
condition going forward, improve economic conditions that were previously in a bad condition, and
make an anticipatory effort in order to keep the country's economy in good condition.

Likewise, Indonesia has long had its own budget system. The budget system is named APBN
(which is an acronym of Anggaran Pendapatan Belanja Negara). As for the background of the
formation of this budget system, it began with the government's desire to protect, promote welfare,
and educate the nation. As stated in the Fourth Paragraph at the Preamble of UUD 1945. To realize
this desire must require careful budget planning in terms of budget and national development that
are tailored to the conditions in Indonesia. Then in the end a basic law was established for the
formation of the APBN in Article 23 of the UUD 1945 concerning the State Expenditure Budget which
reads:

1. The state revenue and expenditure budget as a manifestation of state financial

management is set every year by law and implemented openly and is responsible for the
greatest prosperity of the people.
2. The draft state budget for revenue and expenditure is submitted by the President to be
discussed with the House of Representatives by taking into account the considerations of
the Regional Representatives Council (in Bahasa it called Dewan Perwakilan Daerah).
3. If the House of Representatives (it mean Dewan Perwakilan Rakyat) does not approve the
draft State Budget and Expenditures proposed by the President, the Government carries
out the State Revenue and Expenditure Budget last year

Even so, in fact there is still an additional legal basis that strengthens existence of APBN. The additional
legal basis is that:

 Undang-undang No 1 Tahun 1994 tentang Pendapatan dan Belanja Negara

 Keppres No 42 Tahun 2002 tentang Pedoman Pelaksanaan APBN.

Usually the APBN is made and is valid for 1 year which if approved is from January 1 to December
31. So that every year the budget planned in the APBN is always different. Depends on the current
economic conditions in Indonesia and the current economic policies of the government. This is done
so that the government can find out the financial problems that have occurred in the past year,
evaluating the financial policies that have been implemented. Both fiscal policy and monetary policy.
And submit the latest budget which is expected to be better than the previous year. For example in
this essay the author takes the APBN 2018 as material for discussion. The reason is that the first one
will soon be in late 2018 where at the end of the year the Indonesian Ministry of Finance will report
on the results of Indonesia's final financial condition and make the year close. As well as drafting the
state expenditure budget (RAPBN) for 2019. The goal is because the author wants to know how much
economic and financial development and growth in Indonesia. Then the second reason is because the
author will also analyze whether the implementation of the APBN 2018 in this field is in accordance
with the draft that was prepared in which the government at that time said that the APBN 2018 was
the best financial budget ever made for Indonesia. As well as writing several evaluations on what
should be corrected for the next few years.

Please note that in 2018 is the fourth year of the development program carried out by the Working
Cabinet under the leadership of President Joko Widodo. The aim is to achieve development goals in
order to realize prosperity and social justice for the people of Indonesia. It is on this basis that the
drafting of the APBN 2018 at that time took the concept of the fiscal policy theme, namely
"Strengthening Fiscal Management to Accelerate Equitable Growth"

Then there are three fiscal strategies that have been made by the government of President Jokowi
which will be implemented in 2018 at that time. The three strategies are as follows :

1. Optimizing state revenues while maintaining an investment climate.

2. Efficient spending and increased productive spending to support government priority
programs.
3. Encourage efficient, innovative and sustainable financing

Apart from the three fiscal strategies that will later be applied by the government. The 2018
state budget is also based on global and domestic economic conditions. Although in the previous year
2017 was a slightly bad year because at that time the House of Representatives had not agreed to the
2017 State Budget Draft that had previously been made. So that the government at that time was
forced to go back to using the APBN 2016 while making a new draft budget, namely the RAPBN-P 2017.
But after the 2017 APBN-P had closed the financial year, then it was preparing the RAPBN 2018 at that
time. The government has made the basic macroeconomic assumptions of Indonesia in 2018 which is
of course derived from Indonesia's latest economic and financial conditions. The basic assumptions of
macroeconomics are like this :

1. Economic growth is estimated at 5.4 percent.

2. Inflation can be controlled in the range of 3.5 percent.
3. The exchange rate of the Rupiah against the US Dollar is estimated to be at Rp. 13,400
per US dollar.
4. The interest rate for SPN in 3 months is 5.2 percent
5. Indonesia Crude Pride (ICP) estimated to reach an average of US$48.0 per barrel
6. Oil and gas lifting in 2018 is estimated to reach 800 thousand barrels per day and
1,200 thousand barrels of oil equivalent per day.

This assumption is then contained in the following table :

 Basic Macroeconomic Assumptions 2018

Assumption Realization Until APBN-P 2017 RAPBN 2018 APBN 2018

Category Sept 2017
Economic growth 5,01* 5,2 5,4 5,4
(%)
Inflation (% yoy 3,7 4,3 3,5 3,5
/year over year)
Exchange rate 13.331 13.400 13.500 13.400
(Rp/USD)
SPN Interest (%) 5,0 5,2 5,3 5,2
Crude Oil Prices 48,9 48 48 48
(US$/barrel)
Oli Lifting 794,2** 815 800 800
(thousand
barrel/day)
Gas Lifting 1.112,8** 1.150 1.200 1.200
(thousand
barrel/day)

Cost Recovery in the APBN 2018 of 10.0 billion USD is lower than the RAPBN 2018 of 10.7 billion USD.

*)Realization of Semester I 2017

**) Realization until August 2017

Source : www.kemenkeu.go.id

Based on the table above, it can be seen that there is a slightly significant increase in the
Indonesian economy compared to the previous year. Just mention the economic growth that
increased from the period until September 2017 which was only in the range of 5.01 percent, then
increased to 5.2 percent in the APBN 2017. Until the APBN 2018 , the rate of economic growth was
5.4 percent. Then at the inflation rate of around 3.5 percent, of course this is still a fairly good category
when compared to 2017 which actually rose sharply to 4.3 percent from the original expected to only
remain 3.7 percent. The amount of the rupiah exchange rate against the US dollar was relatively
stable. Although initially predicted to rise in the RAPBN 2018 from Rp. 13,400 to Rp. 13,500. But in
fact the rupiah exchange rate remained in the same position as the previous year. As with the rupiah
exchange rate, the value of SBN interest rates also remained unchanged, which remained at 5.2
percent. The slight change seen from the comparison table above is in the oil price section. Which is
a slight decrease from US $ 48.9 per barrel to US $ 48 per barrel. Then in oil lifting, the government
seems to deliberately slightly make it down from initially 815 thousand barrels per day to only 800
thousand barrels per day. And finally in gas lifting here also experienced a slight increase from the
beginning of 1,150 thousand per barrel to 1,200 thousand per barrel

From the elaboration of the data, it can be concluded that it seems that macroeconomics in
Indonesia has more influence from outside international factors than from within Indonesia itself. This
is because at that time global trade competition was experiencing a very fierce increase but on the
other hand there was still a shadow of the issue of protectionism and a slowdown in demand from
China, the European Union and Japan. And also the price of ready-to-export commodities that have
been produced by local producers in Indonesia is still weak. In addition, some geopolitical tensions
that have taken place in the Middle East and Asia have also influenced the magnitude of
macroeconomic indicators in Indonesia. The rest is the influence of domestic factors currently being
tried by the government, namely the level of trust and purchasing power of the people, confidence in
business people, increasing the role of the private sector through investment and direct investment
loans, and improving the balance of payments and strengthening foreign exchange reserves.

1. Country income

Source : www.kemenkeu.go.id

In the APBN 2018 posture, revenues from state revenues are projected at Rp 1,894.7 trillion.
This amount comes from tax revenues of Rp 1,618.1 trillion, Non-Tax State Revenues (PNBP) of Rp
275.4 trillion and Grant of Rp 1.2 trillion. However, if we pay attention again, there are additional
things where this makes the Indonesian economy look better when compared to the previous year.
Although with consequences there are some that the government must sacrifice. For example, in
terms of budget financing, which has decreased from Rp. 362.9 trillion in 2017 to Rp. 325.9 trillion.
Perhaps this decline can be said because the government is reducing the amount of state debt that
the government has used to reduce the deficit by promoting fiscal policies such as holding a Tax
Amnesty program, increasing customs revenues, increasing non-tax state revenues etc. Although
Indonesia's debt from year to year is still increasing. In addition, there has been a slight increase in
state expenditure which has been the source of problems for the Indonesian economy. This can be
seen from the above data, in which the total Indonesian state expenditure is in the range of IDR
2,220.7 trillion. This of course increases higher when compared to 2017 where according to Outlook
2017. The state budget is only around Rp 2,098.9 trillion and also exceeds the prediction previously
made in the RAPBN 2018 which targets the state budget of only Rp 2,204.4 trillion. But the unique
Budget Deficit on GDP is actually only around 2.19% different when referring to the previous year
where the Budget Deficit on GDP was 2.67%.

Source : www.kemenkeu.go.id

Then from the data above is the data on tax revenues currently emphasized by the
government. One reason is to improve the investment climate of the business sector, including the
provision of incentives and to optimize economic potential as well as a step to reform the taxation
system in Indonesia. The taxation efforts that have been carried out by the government are making a
policy of Automatic Exchange of Information (AEoI) with the aim of increasing the tax base and
preventing tax avoidance and erosion practices. Strengthening data and Taxation Information System
is more up to date and integrated through e-filling and e-invoicing, Building tax compliance and
awareness by making a number of services such as e-service, mobile tax units, Micro KPP, and
outbound calls. Improving the ease and acceleration of services at ports and airports as well as
enforcing smuggling.

Source: www.kemenkeu.go.id

Then in the field of Non-Tax State Revenues (PNBP), the achievement of targets being pursued
by the government has received support from a number of steps in efficiency of natural resource
management, improvement of BUMN performance, improvement of PNBP regulations and
improvement of PNBP management in Ministries / Institutions. The result is that the increase in PNBP
originally targeted in the 2018 RAPBN is Rp. 267.9 trillion to Rp. 275.4 trillion with a growth rate of 5.8
percent. This increase in foam is said to be far better when compared to 2017 where PNBP was only
Rp. 260.2 trillion with a growth rate of 5.1 percent.

2. State Expenditures

Source : www.kemenkeu.go.id

State expenditure in the APBN 2018, the government and the House of Representatives of the
Republic of Indonesia have agreed on the state budget of Rp. 2,220.7 trillion. The amount of funds
includes the central government budget that has been determined in the amount of Rp 1,454.5 trillion,
as well as the transfer of funds to the autonomous region and village funds of Rp 766.2 trillion. The
state budget will be focused on catching up with Indonesia's gap in the provision of infrastructure,
both in urban and regional areas, as well as in the border and outermost areas. The temporary
development targets currently being pursued include a new 865 km road, 8,695 m long bridge, and
13.405 units of flats. While the rest is the target of long-term infrastructure development that is still
ongoing and has been carried out since the last years. The infrastructure is in the form of fast train
construction between Jakarta-Bandung, the construction of LRT (Light Rail Transit) that connects the
Jabodetabek area, infrastructure development in areas outside Java, especially for the Papua region,
development and development of Patimban port and Cilamaya port. And the construction of 8
airports.

Source : www.kemenkeu.go.id

The government has also implemented the mandate of legislation by fulfilling spending in the
APBN 2018 (mandatory spending), as the education budget in the APBN 2018 is maintained at 20%. In
the field of education it has been directed to improve access, distribution and quality of education.
Among them is by increasing access to the Smart Indonesia program (In bahasa called Program
Indonesia Pintar) which reaches 19.7 million students, increasing the School Operational Assistance
(In bahasa called Bantuan Operasional Sekolah or usually abbreviated be BOS) program, carrying out
a number of developments, rehabilitating schools and classrooms along with improving school
facilities by implementing technology-based education, increasing teacher professional allowance
having the status of a civil servant and non civil servant, and providing Bidik Misi scholarship funds to
401.5 thousand students in order to build sustainable education.

Source : www.kemenkeu.go.id

To overcome public health problems that have been an issue that often occurs in Indonesia.
The government has set other mandatory spending where the health sector budget is maintained at
5%. In the APBN 2018, the health budget has also been directed at improving the quality of health
services. Both in terms of the supply of drugs and medical equipment, as well as in terms of health
services. Strengthening preventive promotive health programs that have been intensified by the
government such as the Healthy Indonesia program, Immunization for children aged 0-11 months,
holding family planning equality through increasing access and quality of services, promoting drug and
food certification and maintaining and improving the quality of the Health Insurance program National
for contribution assistance recipients (PBI) to reach 92.2 million people, where this program has been
integrated with BPJS Kesehatan.

Source : www.kemenkeu.go.id

The transfers to the regions and village funds in the 2018 State Budget are allocated Rp. 766.2
trillion. This allocation aims to improve the distribution of financial and economic capacity between
regions, improve quality and reduce inequality in public services between regions, and support efforts
to accelerate poverty alleviation in the regions. But there are some interesting points relating to
transfers to the regions and village funds in the APBN 2018. These points are among them
 1. The DAU is directed at reducing inequality of capacity between regions with the aim
of improving the equity index to 0.5947.
2. Physical DAK is directed to catch up with public service infrastructure with targets
including facilities and infrastructure for public health centers with 15.7 thousand
units, irrigation 51 thousand ha, rehabilitation of irrigation networks 771.9 thousand
ha, stimulation of new housing development 225.8 thousand households.
3. Non-physical DAK is directed to reduce the burden on the public on public services
with the target of BOS 47.4 Million students, 1.2 million teacher professional
allowances (TPG), and health operational assistance (BOK) 9,785 puskesmas.
4. The Village Fund is directed towards poverty alleviation through a reduction in the
proportion of allocations that are evenly distributed and an increase in formula
allocation, giving greater weight to the number of poor people and affirmations to
underdeveloped and very lagging regions with a high number of poor people, with an
average village allocation of Rp1.15 Billion for 74,958 villages.

3. Financing Management

Source : www.kemenkeu.go.id

Based on estimates of state revenues and planned state expenditures, the budget deficit in
the 2018 APBN is estimated to reach Rp. 325.9 trillion (2.19 percent of GDP). This amount is lower
than the 2017 Budget Change outlook of 2.67% of GDP. The primary balance also dropped to negative
Rp87.3 trillion from the outlook for 2017 of negative Rp144.3 trillion. The budget deficit will be closed
with budget financing sources that refer to policies to control the debt to GDP ratio within the safe
limits and efficiency of budget financing in order to achieve fiscal sustainability. In addition, financing
the 2018 budget is also directed at financing investments in order to support infrastructure
development, improve the quality of education, and MSMEs.

4. Opinion and Evaluation from APBN 2018

Based on the explanation from the data. It can be concluded that the APBN 2018 was indeed
promised to bring a number of effects of changes to Indonesia's economy and finance which at that
time experienced a slightly bad level. Even though there are several other points that can be used as
comparisons that the APBN may be better than the APBN 2018. But at least the changes contained in
the APBN 2018 can restore fiscal and taxation conditions which initially experienced a lot of
speculation and misuse of data by a number of community to avoid tax bills. In addition, the steps
taken by the government also increasingly emphasize efforts to reform the taxation policy and the
investment climate of the business world which at that time had been stalled. On the other hand, the
APBN 2018 also brings fresh air to the development of infrastructure in this country. Where in this
budget the government really makes the development and development of infrastructure a top
priority which in the future can also be utilized by the Indonesian people in the future. Surely the
infrastructure being built can increase efficiency and productivity which will be able to boost the
production of local products in large quantities and have competitiveness with products from abroad.
Both in terms of price, quantity and quality. In addition, improvements were also felt in other fields
such as education, health, and regional transfers and village funds. Maybe this is because to improve
people's welfare, create economic equality throughout the territory of Indonesia, and reduce all
economic and financial inequality among the people. In accordance with the theme of the concept
promoted in the APBN 2018, namely making a number of policies that can accelerate growth and
uphold welfare justice.

But there are many things that must be evaluated in this APBN 2018. One of the first is the
balance of payments in the country that is on the brink of deficit. Even though the government has
carried out large-scale fiscal policy reforms, in reality the balance sheet actually has not become
balanced or a surplus. This is due to the basis of the APBN 2018 which makes infrastructure a
development priority. So the consequence is that the government will indirectly increase external debt
to cover the lack of infrastructure development funds that only rely on income from taxation and non-
tax state income. In addition to this budget, the government seems to override monetary policy
somewhat. Because the government is optimistic that the union's exchange rate against the dollar will
always be stable. But another reality is that the prediction of the exchange rate of the rupiah against
the dollar, which is around Rp. 13,400 per dollar, is only the beginning because after entering the last
few months until now. The rupiah exchange rate against the US dollar weakened to reach Rp. 14,821
per US dollar. It even once had the weakest point at the beginning of October 2018 which was around
Rp. 15,246 per US dollar. Although in the end it did not last for a long time. But still for now it is still
considered a weak category. This is related to the global trade map which is currently hot after the
United States decided to declare a trade war with China which affects the entire economy in the Asian
region. Including Indonesia itself which was affected by the impact of the trade war between the
United States and China. This is because China is one of Indonesia's economic business partners in
addition to other developed countries such as the United States and Japan. Coupled with the existence
of a long-standing protection policy by the European Union, the economy in Indonesia has increasingly
weakened.
 So the evaluation of the 2018 State Budget is to become a reference for making Indonesia's
financial and economic policies later. Particularly for the 2019 State Budget, which is currently being
drafted, the government must put more emphasis on monetary policy in order to increase the
exchange rate so that it does not get worse. Because if the exchange rate of the rupiah is left weaker,
it can lead to a weakening of people's purchasing power, causing the price of raw materials to increase
further, which results in the price of a product rising, causing dependence on foreign debt, massive
unemployment, etc. In addition, the next year's APBN is better focused on balancing the balance of
payments which has been on the brink of a deficit. By way of increasing policies to invite people to
want to invest in the country. That is minimal by holding a savings program and investing in local
companies, as well as slowly reducing dependence on foreign debt. Then the next way the government
must do is improve the quality of human resources such as strengthening the quality of the education
system, improving the quality and availability of teachers, creating synergies between the central
government and local governments in improving the quality of education quality, expanding and
expanding special scholarship programs, and most importantly is preparing educators to be responsive
and adaptive to the development of increasingly sophisticated digital technology. And other efforts
that must be carried out by the government are to lure local entrepreneurs as the main staple of the
economy to overcome Indonesia's balance of payments that has a deficit.
 Source Data

 www.kemenkeu.go.id
 www.wikipedia.com
 https://data.worldbank.org/country/indonesia
 Parkin, Micahel.2015. Economic 12th edition for Global edition. London: Pearson