Broken rice bowls; The real cost of the Big Push for Infrastructure

Independent Observer

IO, Jakarta – The second Presidential Candidate Debates will be held at the Sultan Hotel, Jakarta, on 17 February 2019. The debate will be centered on energy, the environment, infrastructure, food and natural resources. Of these important issues, Independent Observer will critique only two of the basic ones: food and infrastructure.

The public service monitoring agency Ombudsman RI has issued an early warning concerning the import of four food commodities approved by President Jokowi’s Government: rice, sugar, corn and salt. The Ombudsman has stated that this early warning is necessary, in view of the political intensity surrounding the upcoming 2019 Presidential Elections. Ombudsman RI Commissioner Ahmad Alamsyah Saragih reported the findings of his Agency concerning a comparison of total food imports in these four commodities, between the time President Joko Widodo (Jokowi) assumed power, and when Susilo Bambang Yudhoyono (SBY) was in office.

The four food commodities the Ombudsman decided to monitor are rice, sugar, corn, and salt, because these are the most essential for the public. Therefore, it is necessary to monitor their import, as a public service.

Let’s discuss the first commodity: rice. During the five years of SBY’s final term, total rice imported amounted to 6.6 million tons, while Jokowi has already imported 4.7 million tons of rice within four years. “So, it all depends on this year: will there still be more imports?” Ahmad asked, rhetorically.

Secondly, sugar. SBY imported 12.7 million tons of sugar within the five years of his second term, while Jokowi already imported 17.2 million tons of sugar within the past four years. The Ombuds­man predicted that there will continue to be sugar imports for certain types that local sugar production cannot fulfill.

Third, corn. Alamsyah stated that corn imports did not spike drastically, because the Government has implemented a policy of substituting corn for wheat in the livestock feed industry since 2015. However, Jokowi has imported a total of 12.5 million tons of corn and wheat for feed purposes up until 2018, while SBY imported 12.9 million tons throughout his final term. However, the Ombudsman predicts that corn imports 2019 will cause Jokowi’s total imports to exceed the amount imported during SBY’s second term.

Fourth, salt. SBY imported 11.3 million tons of salt in five years, while Jokowi imported 10 million tons within four years. In order to satisfy industrial needs, it is expected that another 2 million tons or more will be brought in from overseas in 2019.

Therefore, Alamsyah concluded that Jokowi’s Government has imported more of these commodities within its four years in comparison to imports during the final term of SBY’s Government. Note that the total of corn and salt imports during Jokowi’s term is still lower than that of SBY’s. However, this comparison was made with the amount imported during 5 years of SBY’s rule. Alamsyah believes that total imports will be higher, because Jokowi will not be able to avoid importing critical commodities like sugar, salt, and corn in 2019.

Other than the commodities mentioned by the Ombudsman, soybean imports have also increased over the past 4 years. In 2014, Indonesia imported 1.9 million tons of soybeans, increasing to 2.2 million tons in 2015. In 2017, the Government minimized soybean imports to 500,000 tons – a major improvement from that of the previous year at 2.3 million tons. However, in 2018 soybean imports increased again. In only the first semester, the Government imported 1.17 million tons. It is estimated that national soybean consumption in 2018 reached 3.05 million tons, while national production was only 864,000 tons.

Throughout 2018, a number of other food commodities recorded the biggest increase of imports so far. In mid-2018, a press release from Statistics Indonesia (Badan Pusat Statistik – “BPS”) stated that per August, milk, butter, and egg imports saw their greatest increase, at 94.19% or USD 48.6 million. At the end of the year, according to BPS release per December 2018, the biggest increase was in the imports of fruit commodities at 68.90% or USD 69.8 million.

The policy of importing various food products is undoubtedly made with President Jokowi’s approval. He admitted himself during the first Presidential and Vice-Presidential Candidate debate held at Bidakara Hotel, South Jakarta, on Thursday (17/01/2019). “Later, when we have already finished our debate, then I will make the decision to import or not,” Jokowi replied when Prabowo asked him about the difference of opinion held by officials about import policies.

On the other hand, National Democratic (Nasional Demokrat – “Nasdem”) Party General Secretary Johnny Plate stated that President Joko Widodo adopted a policy of food imports because available foods are insufficient to cover the nation’s needs for a specific period. Johnny admitted to having sat in on a meeting held between the President and the Coordinating Minister of the Economy before major food imports policy is approved. Food imports policy is decided after long consideration. “Thus, the President had a decision to make, such as now: food data must be validated, but how long are we supposed to wait until it’s completed? The people are hungry already. The President must make a decision, so as to finally approve imports,” he said.

Other than food issues, infrastructure construction as President Jokowi’s “sales point” is now being heavily criticized. Is the infrastructure constructed to satisfy the people’s need, or were it erected grandly for the sake of trumpeting progress? Even though President Jokowi stated that construction of infrastructure is expected to increase and stimulate competition among regions throughout Indonesia – meaning that it is also part of the program for realizing justice equally for all the people – such is yet to manifest. Where is the evidence?

Senior economist Kwik Kian Gie considers that while the Government under Joko Widodo’s leadership has constructed massive infrastructure, it has not properly calculated the capacity of the State Budget for funding projects. As a former Coordinating Minister of the Economy, Finance, and Industry, he considers that the intense construction of infrastructure by Jokowi’s Government is not properly timed. As an example of the lack of planning in various aspects, Kwik points to the construction of the highway in Papua. The road is of extremely high quality and cost a huge amount to construct, but only about 500 vehicles take it on average every day.

Food Imports Hurt Local Farmers
Senior economist Rizal Ramli (RR) points to how Indonesia, with its abundant natural and human resources, should always maintain sovereignty in the food sector. Indonesia should be a food exporting country in Asia. “But nowadays it has turned int the biggest importer in the world of foods like sugar, rice, and corn,” he said.

Rizal stated that this is because President Jokowi’s policy has been inconsistent, fluctuating between its purpose, strategies, policies and personnel. He regrets the fact that President Jokowi’s food policy imports are “lawless”. “The purpose is for us to progress with our production in order to achieve food sovereignty, but the actual policy is ‘lawless importing’ that hurts local farmers and impedes production. This is why our imports are so extremely high,” he said. Total imports, he said, accounted for Rp 23 trillion, or nearly double the budget of the Ministry of Agriculture. “In the end, we have excess salt imports at 1.5 million tons, excess sugar imports at 2 million tons, and excess rice imports at 1 million tons.”

RR stated that food sovereignty is extremely important for a country in order to prevent it from being at the mercy of another. However, the Government currently imports all kinds of foodstuff – even the basics such as rice and sugar. “We are told to work, work, and work, but who does the Government work for? Our government import foodstuffs so lawlessly – it tells the people to work, work, and work, but it is the farmers of Thailand and Vietnam and other countries that enjoy the result of our work, because such imports derive from them,” he said.

RR stated that in order to strengthen food sovereignty in the Homeland, the Government must abolish the cartel quota system that applies to a number of primary food commodities. Just place a levy of 25%-30% on farmers who participate in the satisfaction of primary food needs. This would protect farmers and anyone can join, just through competition. Furthermore, in order to satisfy food needs and to strengthen food security and sovereignty in the Homeland, the Government needs open up a million hectares of farmland for agricultural commodities.

Using a mere Rp 1 trillion of the budget, imagine how much farmland Indonesia could create. With the opening of new lands, there are also many new job opportunities for the people. For example, 1 million hectares of new paddy fields, half a million hectares of sugarcane, 1 million hectares of cornfield. The million hectares of new farmlands should not be opened in Kalimantan, but in Sulawesi. In the future, RR hopes that we should stop being the warehouse of imports, but rather the food storage warehouse of Asia.

RR sees that it is unclear who the current Government supports. “If you are campaigning for food sovereignty, stop this import, reduce that import, etc. But within four years, it is the exact opposite that happens: Indonesia has become the king of imports, the number one in importing sugar and other foodstuffs. This hurts farmers,” he said.

He believes that the commitment of Presidential Candidates on the elimination of cartels is something important for the people to hear, approaching Presidential Elections in less than 2 months. He told Prabowo that if in April Prabowo wins, food import tycoons will approach him and his nearest people with trillions of rupiah in tribute. “Pak Prabowo told me that he has become the general chairman of the Federation of Indonesian Farmers’ Associations (Himpunan Kerukunan Tani Indonesia – “HKTI”) after he left the Army. If he supports food cartels, it’s like he is shooting himself in the foot. That’s good,” Rizal Ramli said.

Rizal further said that he has already given the same information to Presidential Candidate Jokowi through the media. “I asked Pak Jokowi if we are going to continue our current import quota system or not. If yes, he should admit it, so that the people need not vote for him in the upcoming Presidential Elections.”

Significantly Increasing Imports
Dwi Andreas Santoso, Professor of Agriculture at the Bogor Institute of Agriculture (Institut Pertanian Bogor – “IPB”) said that it is during Jokowi’s rule imports soared. From 2014 to 2018, import expenditures of 21 commodities increased from 18.3 million tons to 22 million tons. The import expenditure of 7 primary commodities, i.e. rice, corn, wheat, garlic, cassava, soybean, and sugarcane sugar totaled 27 million tons in 2018, increasing about 5 million tons from that of 2014.

Andreas admitted that avoiding all imports of food is impossible, but the most sensible thing to do is to reduce them. What is most relevant with this issue is land availability. Farmlands actually shrank by 646,000 hectares within the past 5 years. There has been no serious effort to withhold the conversion of farmlands. Another relevant thing is that the number of farmers continues to decrease, because farmers no longer have land or have such a pitifully small plot of land that it is not economically viable, forcing them to seek work elsewhere.

Therefore, new farmlands need to be created. This is easier said than done. Java Island should have been kept as Indonesia’s food storage. Let no single executive or legislative official have the idea that Java should be sacrificed as a center of industry and services. Furthermore, improving farmers’ welfare by changing the mechanism of subsidies to cash money would improve food production. Currently, the Government already spent Rp 408 trillion for agriculture and food in 4 years (2014-2018) in the form of subsidies for fertilizer, seeds, agricultural tools and machines, etc. From this Rp 408 trillion, how much do farmers actually get? “I think there is something amiss with the budget; therefore, cash payment to farmers should better protect price levels at farmers’ levels,” he said.

An agricultural production data mismatch between the Ministry Trade and the Ministry Agriculture prevents us from planning imports more accurately. If we have accurate production data and stock data, our food governance will be better and we can import only what we need. “President Jokowi said that he approved imports during the first Presidential Candidate Debate. This shows that within the past 2 years, the President has already understood this data mess. Last year, for example, our sugar import dependence was already 84%. Any president will face this issue,” Andreas said.

According to the Mandate of Food Law No. 18 of 2012 concerning Food, the Government needs to form an agency called the Food Authority Agency placed directly under the President or the Ministry of Food in order to clean up the mess of our current food governance. In order to prevent import policies from sacrificing farmers, the Government needs to review both international and bilateral food-related agreements. We need tough and smart thinkers and regulators who actually understand the current situation, not just spout out rhetoric.

On the other hand, Nawir Messi, an Economist from the Institute for Development of Economics and Finance (INDEF), stated that a special agency for handling food issues is unnecessary, as we already have the Indonesian Bureau of Logistics (Badan Urusan Logistik – “Bulog”). As long as Bulog functions properly and maintains an effective price policy, prices should remain profitable at farmer level without being a burden on consumers. Bulog should be synchronizing two issues: first, ensuring that prices at farmer level do not fall too deeply during harvest time, and second, providing incentives for farmers.

Consumer prices do not excessively spike because Bulog stabilizes them and maintains inflation levels effectively. However, Bulog unfortunately only regulates rice and sugar prices. It does not regulate beef prices, for example, while these remain a problem because the lower-middle and lower classes still do not have sufficient access to meat. “If imports are made far before harvest time, it will not hurt farmers. Market planning is extremely important so that farmers do not get hurt and consumers do not get burdened. What we do wrong is that we import foodstuffs right at harvest time, which hurts farmers,” Nawir said.

Hermanto Siregar, the General Chairman of Indonesia’s Agricultural Association (Perhimpunan Ekonomi Indonesia – “PERHEPI”), said that imports can be reduced by increasing and improving agricultural commodity production using the latest technology, superior seeds, prevention of diseases, and good cultivation methods. Infrastructure should not only be concentrated on things such as toll roads, but also agricultural-related infrastructure such as irrigation facilities.

Our food issues are not handled optimally. For example, our farmland is are so constricted and our agricultural infrastructure is insufficient. Our farmers can only operate 3000 square meters of farmlands each, much lower than the amount of land owned by farmers in Thailand, who can get to 4 or 5 hectares each.

Other than sufficient land, we need to provide sufficient amounts of fertilizer at the right time. Fertilizer is generally not properly available during planting season. Our fertilizer production is actually sufficient, but some fraudulent producers hold their stock back in order to artificially drive up fertilizer prices. This always occurs right during planting season: that’s when fertilizers actually become scarce. This is ironic, because we already export fertilizer.

Mis-aimed Infrastructure
Suhendra Ratu Prawiranegara, Public Infrastructure Observer, said that infrastructure construction during Joko Widodo’s Government fails to have significant impact. In fact, toll roads actually cause negative impact for small and medium businesses. “Many batik, salted egg, and garlic and onion businesses along the Northern Coast of Java have closed down. Jokowi’s Government failed to anticipate this,” he said.

The Government means to improve connectivity between regions with infrastructure construction. However, Suhendra notes that villages remain isolated from one another. It would be wise for us not to simplify the meaning behind the term “connectivity”. “Connectivity” is essentially comprised of primary, secondary, and subsidiary networks. To take a concrete example, are village roads “connected” to regency or provincial roads through this construction? This touches the people directly and must be prioritized.

As it turns out, the ratio between asphalt and non-asphalt roads in Indonesia is just about the same, or about 50% each. “Until 2016, Indonesia has a total road length of 500,000 km, but half is not asphalted. What has been constructed then? Toll roads are not ‘basic need’ infrastructure! Infrastructure construction should touch on basic needs such as village roads, neighborhood roads, irrigation roads, drinking water facilities. These are the people’s basic needs!”

Most Expensive Toll Roads in Southeast Asia
Other than failing to respond to people’s basic infrastructure needs, Suhendra also has data that shows that Indonesia’s toll roads are the most expensive in Southeast Asia.  “The data we collected comes from various sources in several countries, including Malaysia and Brazil. For example, the toll fees for traveling from Johor Baru to Kuala Lumpur is about RM 50.50, for a distance of about 350 kilometers,” he said. If we convert into Rupiah, RM 1.00 is Rp 3,400.00. Therefore, the per kilometer toll fee for Kuala Lumpur-Johor Baru is a mere Rp 490.00. With the performance, standard of service, and facilities available in this route, the toll fee is extremely cheap.

The next example is toll fees in the South American country of Brazil. The average toll fee in this country is a mere Rp 420.00 per kilometer. Suhendra stated that the Brazil’s toll roads are an example of how to provide good service and performance. “It’s rare that the toll roads there get jammed. The safety of toll road users is the main concern. They also implement special prioritization for the elderly and pregnant women, who need not queue at toll gates,” he said.

The comparison with the Trans-Java toll road tariff that averages Rp 1,000.00-Rp 1,500.00 per kilometer shows just how much cheaper the fees in Malaysia and Brazil are. “If we say that it’s cheaper than the toll fees in the Jakarta, Bogor, and Ciawi (Jagorawi) and Cikampek routes, we should be able to see it from various perspectives. These two toll routes should have been free already, because the business concession for Jagorawi ended several years ago. How come toll user fees are still imposed on them?” Suhendra queried.

Suhendra added that since the concession period for Cikampek toll road ended in 2018, Toll Road Enterprises, toll road management, and the Government should also make it free for use. “We should not keep on imposing toll fees that burden the public users of these roads,” he said.

Not only are the toll fees too high, Suhendra stated that the toll roads constructed by the current Government are still far from stipulated standards. This is also an issue being highlighted by the
Indonesian Consumers Organization (Yayasan Lembaga Konsumen Indonesia – “YLKI”). He stated that the Minimum Service Standards (Standar Pelayanan Minimal – “SPM”) for toll roads are actually already regulated in the Regulation of the Minister of Public Works No. 16/PRT/M/2014. “If I may be honest, I would say that nearly all of Indonesia’s toll roads are still far from satisfying the requirements stipulated in these regulations,” he said.

One of the most important service standards that the Government has not provided to the public who use the toll roads are public road lighting (penerangan jalan umum – “PJU”) throughout the length of the toll roads, or 100%. “Guardrails must also be 100% installed, land space belonging to the road (ruang milik jalan – “rumija”) fences, garages, etc. All these SPMs must be satisfied for as long as the toll road operates,” Suhendra said.

Suhendra’s statement also denies the Government’s argument, which states that toll road facilities will be adjusted and improved along with increased volume and traffic of the toll roads. “This is erroneous, groundless, and shows a failure to understand the law. The SPM of toll roads means that these are the technical and non-technical basic requirements for toll roads,” he said.

Suhendra further mentions the fact that the roughness of toll roads must satisfy technical requirements. Furthermore, toll roads must not contain any holes or cracks throughout both the main lane and all shoulders of the road. This is because it affects the safety and security of toll road users. “To say it simply, because road users already pay toll fees, their rights must also be satisfied. They must have smooth traffic, comfort, safety, and security when using the toll roads,” he said.

Immobilized Potentials
Suhendra also describes the list of infrastructure projects that were constructed without mature planning that might become immobilized. The Trans-Java toll road project is placed at the top of the list. This is because it is only used during the three major national holidays of Eid-el-Fitr, Christmas, and New Year. He noted that this road is fully used only 15 days in a year. “Outside of these long holidays, the toll roads are quiet and tend to remain empty,” he said.

Not only are they badly planned, Jokowi’s Government constructed these toll roads not for the people’s interest, but for the developers who create their projects along these roads. For example, the Jakarta-Cikampek overpass toll road. Suhendra believes that the primary reason for its construction is the Meikarta project. “The expense for the toll road overpass more than doubles that of ordinary toll roads at Rp 350 billion/km. The cost for building ordinary toll roads is a mere Rp 150 billion/km,” he said.

Not just toll roads: Suhendra also highlights the construction or expansion of a number of barely-used airports. This includes the expansion of VIP airplane parking in Ngurah Rai Airport, Bali, nearing the IMF-World Bank meeting held last year. This expansion cost Rp 2.2 trillion. “Then there are Kertajari Airport in West Java and Silangit Airport in North Sumatra that always lack passengers, despite the billions of Rupiah spent on their construction. Why do we keep on constructing if they are barely used and have no economic value? I can only hope that this is not for image-building,” he said cattily. “Let’s not forget the construction of Balang Island Bridge in East Kalimantan, which costs Rp 1.4 trillion and which might also be immobilized because there are no access roads to the bridge yet. So, the bridge is completed, but it is not functional because nobody can use it. How did they plan the program anyway? Don’t they know that they are drawing off not a small amount of the State budget for constructing this bridge?”

Suhendra also includes the Palembang LRT in his list of badly-planned infrastructure showcases, as a burden on State finances. Since its inauguration in 2018, the first LRT in Indonesia only generates income at 10% of the operational costs of Rp 10 billion per month. “There is a gap of Rp 9 billion a month that we need to subsidize for it, and that is for how long?” Suhendra said. “If we want to tie it with the Asian Games last year, what was exactly the function of the Palembang LRT? The priority should be placed on the venues for the competitions and their supporting facilities. But at the time, the LRT seemed to be the primary project for the Asian Games in Palembang!”

On the other hand, Suhendra said, the Government’s appointment for executing these ambitious, rushed infrastructure projects is actually a detriment for State-owned construction companies. He noted that at least four State-owned construction companies are currently burdened with debt because they were handling the Government’s infrastructure program. “This is the natural consequence of Government policy that does not consider long-term consequences. It’s like they’re saying to this unfortunate companies, “Finish these assignments, I don’t care and I don’t want to know how you do it!” This causes these State-owned enterprises to go into debt and bear such huge financial responsibility,” he said. “Construction of infrastructure with poor utilization is clearly a form of wastage and inefficiency.” (Dessy Aipipidely, Ekawati)