MINISTRY OF FINANCE

REPUBLIC OF INDONESIA

Financing Public Welfare Provision and Its Fiscal Impact

Bangkok, December 2014

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OUTLINE

1. Introduction

2. Public Welfare Provision

3. Challenges

4. Conclusion

Direction of Fiscal Policy 2015 is “ Strengthening Fiscal Policy in Order to Accelerate Sustainable Equitable Economic Growth”.

One of the 9 targets (nawacita) of the Presiden is to create the Indonesian people quality of life to be high, modern and prosperous.

Fiscal policies to support welfare program:

• 20% from budget expenditure for education

• Cash transfer as subtitute for fuel subsidy

• Implementation of National Social Security System (health = 2014, and employment = 2015)

• Rural fund

Acceleration of poverty reduction

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INTRODUCTION

Social Protection Programs :

Scholarship for the poor/Indonesian Education Card to ensure that all children at school age have access to primary education (SD, SMP) and secondary education (SMU).

School Operational Assistance/BOS to ensure that the school have enough funding to provide (primary) education.

National programme for community empowerment Urban PNPM Mandiri

Cash transfer for the poor to protect the poor from particular shock due to the policies issued by the government (ie. subsidized fuel price increase) by giving them cash transfer

National Social Security System to improve public access for health by providing health insurance for the poor.

Food subsidy for the poor

Rural Fund to empower productivity in the community.

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PUBLIC WELFARE PROVISION

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Policies in poverty reduction poverty reduction programs are grouped into four clusters, implemented in synergy to meet the basic needs and also regionally based poverty reduction.

CLUSTER I

Family Based Social Protection and Assistance

Reducing the burden of the poor

CLUSTER II

Community Empowerment

Improving the welfare of the poor

CLUSTER III

Empowerment of Micro and Small Enterprises

Increase savings and ensure the sustainability of entrepreneurship

CLUSTER IV

Programs for People

Providing some goods at an affordable price (subsidized by the Government)

Health and education assistance, Cash transfer (JAMKESMAS/PBI JKN,

JAMPERSAL, BOK, RASKIN, PKH, BOS, BEASISWA

SISWA/MAHASISWA MISKIN)

National Program of Community Empowerment

(PNPM MANDIRI)

Soft Loans for Micro and Small Enterprises (KUR)

Houses, Transportation, Water, Electricity, Fishermen welfare, Marginalized Urban

Communities

Pro-People Programs

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5.0

5.66.0

6.36.8 6.7

7.1

8.2

8.8 9.1

10.0 9.9

-

2.00

4.00

6.00

8.00

10.00

12.00

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

2010 2011 2012 2013 2014 2015

per

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tage

trill

ion

ru

pia

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Family Based Social Protection and Assistance Community Empowerment

Empowerment of Micro and Small Enterprises Others

Social Welfare on Total Expenditure (%) - RHS Social Welfare on Central Government Expenditure (%) - RHS

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Social and Welfare Program illustration 2015 Line Ministries Priorities and Target

Continuing the School Operational Assistance (BOS) program in order to complete the 9-year compulsory education for: 30.1 million elementary school students ;14.3 million junior high school students. Providing assistance for 6.9

million poor students of SD / SDLB / MI, 2.9 million poor students of SMP / SMPLB / MT, 1.3 million poor students of SMA / SMK / MA, and 194.8 thousand of higher education for underprivileged students.

The number of hospitals and Community Health Center that are accredited respectively of 61 hospitals and 50 health centers; Infants aged 0-11 months who received a complete primary immunization up to 91%

Conditional cash transfer (PKH) for 3 million very poor household, with health and education requirement. Improving the quality of 400 MSME

through classification and revitalization of cooperation agency.

Training for 25.000 Cooperatives and SMEs human resources; Facilitating 20 new entrepreneurship and strengthening SMEs

Facilitating and stimulating construction of 20.000 new housing unit and rehabilitation of 64.850 community housing

CONCLUSION

• Development always aimed for the welfare of the people

• Development continuously sought by reducing inequality, improving human resources quality, reducing poverty, as well as expanding employment.

• Pro-people development require synergy from central government and local government ensure efficiency and effectiveness of the programs implementation.

• The quality of planning and spending is strongly needed

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THANK YOU