International Relations Kushay's Matter Bank

[AK] Facts About Indonesia – Failures of Jokowinomics

This note will discuss the criticisms of Jokowi’s 2014-2019 economic policies. Source:

At beginning of Jokowi’s term, he sets a very ambitious program of constructing 35,000 MW of electricity by 2019. What about it now? PLN slashes the target to only 13,000 MW citing “unexpectedly low demand”. Of all that, only 1,362 MW of plant is now operational. Why?

The government aren’t willing to inject cash to PLN *and* also doesn’t allow them to increase electricity price as both moves would be a political suicide in the 2019 elections. This leads to PLN having massive financial loss.

To reduce their loss from spending on this infrastructure program, PLN sets a price ceiling on coal they buy, and also reduces the rate they pay to independent power producers (which provides power to 75% to PLN). This in turn reduces the amount of private actors that are willing to cooperate with them.

This shows that the “Jokowinomics” model of developing infrastructure through maintaining monopoly of public services while using state power to inject cash and speed-up bureaucratic process doesn’t work. Because the involved stakeholders (PLN and Government) aren’t able to be on the same page for a long period of time. Now PLN (and other State Owned Enterprises) opts into the bond markets (borrowing money) to finance their operations.

Leave a Reply

Your email address will not be published. Required fields are marked *