Coordinating Minister Airlangga: Central and Regional Government Synergy Needed to Control Inflation

Coordinating Minister for the Economy Airlangga Hartarto (center) with President Joko Widodo. (F.Special)

batampos – Coordinating Minister for Economic Affairs Airlangga Hartarto admitted that currently Indonesia’s inflation is still at the level of 4 to 5 percent. Even though inflation in various developed countries is already in the range of 8 to 10 percent.

In line with President Jokowi’s directives when giving directions to regional heads, at the JCC, Jakarta, Thursday (29/9), according to the Coordinating Minister for the Economy, to control inflation in Indonesia, synergy and cooperation between the central and regional governments are needed.

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Airlangga emphasized that global economic uncertainty, food and energy crises have put all countries in the world on the verge of high inflation risk. In fact, the exchange rate of all countries against the US dollar was also under pressure. Airlangga admitted, as of Thursday (29/9/2022) at 16.30 WIB, the rupiah exchange rate weakened 6.5 percent.

Worse conditions experienced by various countries, such as the Japanese Yen weakened 20.4 percent, the Chinese Yuan weakened 15 percent, to the pound sterling exchange rate which weakened 19.8 percent.

Airlangga said the central government was trying to keep the Indonesian economy under control. However, he stressed, cooperation between the center and the regions is needed to be able to keep inflation under control, price stability, and people’s purchasing power.

“The synergy between TPIP and TPID continues to be carried out through various steps and programs, which aim to maintain price affordability, ensure supply availability, and ensure smooth distribution,” said Coordinating Minister Airlangga.
The head of the Central Inflation Control Team (TPIP) added that the central and regional governments must work together to maintain production and supply of basic commodities. He gave an example, if in a condition of a shortage of red chili supply which makes prices soar, the region is tasked with inviting local farmers to plant chilies to meet the supply.

“TPIP and TPID must continue to identify surplus and deficit areas, as well as be good facilitators, to encourage cooperation between regions in an effort to control inflation,” said Airlangga.
In addition, local governments are also asked to take care of transportation costs from the production site to the market. This distribution cost can be borne by the APBD, both provincial and district/city.

According to Airlangga, local governments can assist production and transportation to maintain supply through the General Transfer Fund (DTU) and Unexpected Expenditures (BTT) which are regulated through the Minister of Finance Regulation and the Minister of Home Affairs Circular Letter.

The chairman of the Golkar Party emphasized that regional governments are asked to pay attention to three strategies to help control inflation in their respective regions. First, the use of BTT is based on the Decree of the Minister of Home Affairs Number 500/4825/SJ concerning the Use of Unexpected Expenditures in the Context of Controlling Inflation in the Regions.

Two, local government support of around two percent of the General Transfer Fund is needed to anticipate the impact of inflation after the fuel price adjustment.

Airlangga said, from the central government’s point of view, his party has allocated Regional Incentive Funds as an appreciation to regional governments that have succeeded in controlling inflation. The assessment will focus on the performance of local governments in controlling inflation, which is calculated based on the realization of inflation from May to August 2022. (*)