IO, Jakarta – The biggest sports event in Asia is done. The 18th Asian Games, which was simultaneously held in Jakarta and Palembang from 18 August to 2 September, recorded Indonesia in the 4th rank of the most wins achieved. Indonesia obtained a total of 98 medals: 31 golds, 24 silvers, and 43 bronzes. Indonesia has managed an amazing feat, a great improvement from the last Asian Games in Incheon, South Korea, in 2014. Indonesia only won 4 golds, 5 silvers, and 11 bronze medals at the time.
This amazing achievement of Indonesian athletes loosened the Government’s purse strings. The Minister of Youth and Sports (Menteri Pemuda dan Olahraga – “Menpora”) Imam Nahrawi stated that the Government spent a total of Rp 210 billion for bonuses for athletes, trainers & assistant trainers and officials who participated in the 2018 Asian Games.
According to the Minister of Finance Sri Mulyani Indrawati, the Government spent Rp 2.1 trillion for preparation and training athletes throughout 2015-2018. The funds were obtained from the State Budget (Anggaran Pendapatan dan Belanja Negara – “APBN”). This amount includes bonuses for athletets, coaches, and officials. Additionally the Government spent a further Rp 8.2 trillion to fund the preparation, opening, execution, and closing of this grand event.
Meanwhile, necessary construction in both Jakarta and Palembang for the event burnt out the greatest amount at Rp 13.7 trillion. All in all, the Government spent about Rp 24 trillion of the 2015-2018 State Budget (Anggaran Pendapatan dan Belanja Negara – “APBN”) to fund the execution of the Asian Games in Jakarta and Palembang this year.
This means that the Government spent quite a large amount of money just for hosting the Asian Games, despite such tough economic conditions. We should bear in mind how Greece faced a severe economic crisis after holding the Olympics in Athens in 2004. Now, the great stadia proudly constructed specifically for the world’s greatest sports event are now mere rotted ruins, as the Greek Government did not – and does not – have the financial capacity to maintain them. This is such a sad state of affairs in the very birthplace of such a venerable event as the Olympics.
Senior Economist Ichsanuddin Noorsy said that the total amount spent from the APBN for the Asian Games was only 0.1%. Therefore, it is not so large that it would unbalance the Budget…but it all depends on where the funding allocation comes from. The State has two major income sources, i.e. tax income and non-tax State income (Pendapatan Negara Bukan Pajak – “PNBP”), the latter comprising of miscellaneous types of income.
Another possibility is that the Government will adjust the projection rates it made. For example, total State income is set at Rp 2,000 trillion with Rp 1,900 trillion in expenditures. If the tax ratio is set at 10.7% of the income, we need only increase the amount slightly to 10.9% or 11% to cover possible expenses. This is something frequently done in accounting planning. “We can’t do that with debt, because the Audit Board (Badan Pemeriksaan Keuangan – “BPK”) performs strict audits. Furthermore, creditors like the World Bank or bilateral countries watch over debt spending very closely,” Noorsy said.
Noorsy further explains that the funding allocation for the total expense of Rp 24 trillion must be divided among several ministries, such as the Ministry of Youth and Sports, the Ministry of Transportation, and the Ministry of Foreign Affairs. The money itself may come from either tax or non-tax income, but the most important thing is to take out the allocated funds from the appropriate sources in the APBN when the allocation is made. “This is because the status is not cash budget management: it is not based in cash. This is the accrual model, so we pool the funds first before distributing them according to the allocation,” he said.
“Indonesia only spent Rp 24 trillion out of the Rp 2000 trillion budgeted, that is a very small amount. An international audit agency would also see whether the 2018 Asian Games was executed efficiently or not. Efficiency is viewed from the fact whether the holding of the event in the two cities has satisfied the criteria for holding an international-scale sports event. The most interesting cost in this issue is actually the social cost. For example, the “odd/even license plate” edict [Trans. note: only cars with odd license plate numbers can pass through certain routes in the city during rush hour on odd dates, and cars with even license numbers on even dates]. Social cost to the people increased because of this edict. At the same time, the Government still failed to provide good public transport. Just because it wants to improve its image, the Government caused the people to suffer by expanding the implementation of the odd/even license plate edict, which means that there is a further social cost to the people. This means that the total expenditure is actually not Rp 24 trillion but more than that,” Noorsy said.
On the other hand, Ninasapti Triaswati, economic observer from the University of Indonesia, believes that the budget for athlete bonus is taken out of funds reserved for that purpose. APBN is always flexible because it has a reserve budget. The total of Rp 24 trillion used for executing the 2018 Asian Games is taken out of the budget of several ministries. The main issue is whether the BPK audit shows any deviation or misuse of a budget allocation for the Asian Games, so that they fail to align with the original intents and purpose of the funding; then whether there are any budget leaks, inefficiencies, manipulations or fraud. However, thankfully none of the above variables have been found in the utilization of APBN for Asian Games purposes.
As for the post-Asian Games maintenance of sports facilities, budgets have been set aside. The question is, “Will these facilities be actually maintained or not in the future?” Ninasapti Triaswati wondered whether the Athlete Dormitories can continue proper operations in the future, because if not, then maintenance costs will be too burdensome and the facility will become useless. The only way is for it to be used not just for athletes in major events like Asian Games or National Sports Week (Pekan Olahraga Nasional – “PON”), which means that it would be part of a public / private partnership not fully owned by private parties, but remaining a Government property managed in cooperation with private parties for necessary income.
In terms of comparing Indonesia’s crisis potential with Greece’s former crisis, Nina said that the Greek economy is based on a very specific service, i.e. tourism services. However, Greece is no longer an attractive or priority destination in Europe. Furthermore, Greece was too bold by planning to host the Olympics at a cost that is far beyond its capacity. “As for the stadium and other facilities, the Government must simply manage them properly. Let us reflect on the experience of countries like Greece or Brazil that are unable to maintain the quality of their international-scale sports facilities because they are only used occasionally. The Government must naturally subsidize part of the maintenance costs, but some parts can also be commercialized or rented out and managed professionally, whether by a State-owned Enterprise (Badan Usaha Milik Negara – “BUMN”) or through a public private partnership. Naturally everything must be done transparently,” she said.
The Greek crisis is not just about the sports expense. In essence, it is about the fact that they had terrible fiscal management, or they spent more than they earned. In other words, quite a few governmental operational expenses are actually unnecessary. This is also an issue in the Indonesian government. The main issue is that Indonesia has enough debt to go bankrupt if its expenditures continue to soar bigger than its income. It is a challenge to the Government to ensure that its fiscal policies are managed carefully, because the Government is frequently inefficient in managing its facilities, infrastructure, and enterprises in comparison with private companies.
Noorsy also sees a political benefit, because the event is also part of President Joko Widodo’s campaign. However, during the 2018 Asian Games, Jokowi chose to visit the people of Lombok to share their pain after the quake disaster, while he has boldly spent Rp 24 trillion for the Asian Games event. “This is a disproportional image creation. On one hand, Jokowi entrusted Vice President JK to close the event, and on the other hand he wanted to appear in Lombok. This is an image creation that Jokowi cares about the people of Lombok who suffered from the disaster, as well as to the closing of the Asian Games. This is an image-building message. Yet Jokowi simultaneously expressed a less than positive message, i.e. that he would dare to spend Rp 24 trillion for an international event, but did not dare to spend enough for the hundreds of thousands of citizens suffering due to the quake. This is both disproportional image-building and bad political management,” he said.
The opening and closing ceremonies of the Asian Games were entrusted to GL Event, a French event organizer. “This means that we are paying for services outside, i.e. to a foreign country. In Quarter II, a number of Government agencies call the 5.27% economic growth rate “a relief”. However, the Rupiah fell 6.5% at the same time. If economic growth is calculated in Rupiah and then converted to USD, that’s actually -6.5% minus 5.27%, meaning a -1.23% drop in Rupiah value. 40% or Rp 837 trillion of our investment portfolio is owned by foreigners. The Rupiah decline is also caused by the Government’s inability to maintain the stability of our fragile macro-economic fundamentals. The Asian Games event, which brought in foreigners to shop in Indonesia, failed to strengthen our economy because we are pressured by financial capitalist forces that play in the bond market and capital market. Asian Games tourism income lost out to foreign investor expenditures,” Noorsy said.
Ninasapti further said that a major fiscal concern is that debt might be marked up before we can start to build roads or other infrastructure. This causes extremely large cost to repay the loans, extending the payment period too long and becoming a burden for future generations. “The debt to GDP ratio keeps on increasing within the past 5 years. If this keeps up, it would be dangerous because it uses up the money we could have used to develop ourselves. The Government is already burdened with debt principal instalments plus interest. If our debt stock increase due to debt mark-ups, we will suffer due to extreme waste,” she complained. (Dessy Aipipidely, Ekawati)