The Sustainable Madani Foundation summarizes several important events related to the economic-political conditions that occurred in the past week (July 6, 2021 – July 12, 2021). Here are the excerpts:
1. Indonesia has been demoted to a lower-middle-income country.
The World Bank has classified Indonesia as a lower-middle-income country. However, on July 1, 2020, the World Bank had already upgraded Indonesia's status to an upper-middle-income country. This downgrade was caused by Indonesia's Gross National Income (GNI) per capita dropping to US$3,870 in 2020, from US$4,050 in 2019. Besides Indonesia, three other countries have similar issues: Mauritius, Romania, and Samoa.
The World Bank annually changes its GNI per capita classification to determine each country's ranking. In 2019, the GNI per capita classification consisted of four categories: low-income countries with a GNI per capita of US$1,035; lower-middle-income countries with a GNI per capita of US$1,036–US$4,045; upper-middle-income countries with a GNI per capita of US$4,046–US$12,535; and high-income countries with a GNI per capita above US$12,535.
Meanwhile, in 2020, the classification changed. These include low-income countries with a GNI per capita of US$1,045, lower-middle-income countries with a GNI per capita of US$1,046–US$4,095, upper-middle-income countries with a GNI per capita of US$4,096–US$12,695, and high-income countries with a GNI per capita above US$12,695.
2. Ministry of Environment and Forestry Cancels Two Carbon Projects Owned by International NGOs
The Ministry of Environment and Forestry (KLHK) has canceled two carbon projects run by international non-governmental organizations (NGOs). The two projects were scheduled to be implemented in Sebangau National Park, Central Kalimantan, and Batang Gadis National Park, North Sumatra. Minister Siti Nurbaya emphasized that carbon projects in Indonesia involving state forest areas must not be allowed to proceed illegally.
As a follow-up to the minister's directive, the Director General of Natural Resources and Ecosystem Conservation (KSDAE) of the Ministry of Environment and Forestry (KLHK), Wiratno, has ordered the heads of the National Parks and Natural Resources Conservation Centers (UPTs) throughout Indonesia to conduct inventories and investigations. He has ordered that any activities related to the declaration of carbon projects involving conservation areas and protected forests be halted if found to have violated regulations.
3. President Jokowi Urged to Extend the Presidential Instruction on the Palm Oil Moratorium
The moratorium on palm oil plantation permits imposed by the government in 2018 will expire on September 19, 2021. Several parties have called for this policy to be extended, considering that improvements in palm oil governance have yet to be achieved.
These issues range from plantations in forest areas to low productivity. Addressing these issues could have positive impacts, including support for global markets, increased productivity, and the achievement of climate commitments.
To push for these goals, the Palm Oil Moratorium Coalition is urging the president to extend the temporary suspension of palm oil permits. The legal basis for the moratorium also needs to be strengthened and accompanied by more specific targets.
Two and a half years into the policy, implementation of the palm oil moratorium remains far from its intended target. For example, synergy between palm oil concession data across ministerial institutions remains suboptimal.
According to the coalition's policy paper, other factors hindering the implementation of the palm oil moratorium include the lack of dedicated budget allocations and human resources at the regional level. Furthermore, policy dissemination to local governments remains minimal. Sectoral egos between ministries and job rotations during policy implementation have also been identified. From a social and political perspective, the issuance of Law Number 11 of 2020 concerning Job Creation is considered to have undermined the spirit of improving palm oil governance.
The palm oil moratorium policy itself can provide a pathway to meet international market demands for sustainable palm oil products. Through its implementation, the government can improve governance to produce palm oil products that are acceptable to the global market.
The call to extend the oil palm moratorium was also previously voiced by the Indonesian Palm Oil Forum (Popsi). In a press release, Popsi Chairman Pahala Sibuea urged the government to focus on increasing oil palm farmer productivity through a smallholder oil palm replanting program, addressing low selling prices, assisting with mapping, and resolving overlapping land claims.
4. Coal Prices Rise, Producers Propose Production Increases
Producers of this commodity, nicknamed "black gold," are capitalizing on the continued rise in coal prices to increase production. The Ministry of Energy and Mineral Resources (ESDM) set the Indonesian coal reference price (HBA) at US$115.35 per ton in July 2021. This figure is up US$15.02 per ton from US$100.33 per ton in May.
The Ministry of Energy and Mineral Resources (ESDM) has recorded approximately 100 coal mining companies requesting increased production targets. Sujatmiko, Director of Coal Development and Business at the Directorate General of Minerals and Coal (Minerba), stated that several companies have submitted changes to their 2021 Work Plan and Budget (RKAB).
This increase in production targets also coincides with the increase in production quotas this year. The government has increased the national coal production target quota this year by 75 million tons to 625 million tons. This year's coal production quota was initially set at 550 million tons.
5. BPK: Corruption Prevention by the Corruption Eradication Commission (KPK) Has Not Been Effective
The Supreme Audit Agency (BPK) of the Republic of Indonesia stated that the implementation of corruption prevention and management of confiscated and seized assets by Firli Bahuri and his colleagues has not been effective. This was stated in the BPK's Semester II 2020 Audit Results Summary (IHPS) report, quoted from the BPK's official website on Sunday (July 11). The BPK has completed a performance audit of the effectiveness of the prevention and management functions of confiscated and seized assets from corruption crimes (Tipikor) from 2015 to the first semester of 2020 at the Corruption Eradication Commission (KPK) and other relevant agencies.
The BPK found 10 issues, which were formulated into three main problems. First , changes to the KPK regulations do not fully support the duties and functions of coordinating the prevention and management of confiscated and seized objects. Among them, said the BPK, the preparation of KPK Regulation (Perkom) Number 7 of 2020 concerning the Organization and Work Procedures (Ortaka) of the BPK has not been supported by adequate studies, analysis, and harmonization. Next, there are duties and functions that are no longer regulated in Perkom 7 of 2020. These include the authority and work units implementing the KPK's prevention coordination tasks, the duties and functions of the Directorate of Asset Tracking, Evidence Management, and Execution (Labuksi), the implementing function of the information and data system application development of the Labuksi Directorate, and job descriptions related to the management of confiscated money and gratuities.
Second , corruption prevention efforts through coordination and monitoring functions in the Monitoring Center for Prevention (MCP) activities have not been implemented adequately. These include three parts. Third , the implementation of the enforcement and execution functions has not supported the management of entrusted/confiscated objects, confiscated goods, and confiscated execution objects adequately. Among them, said the BPK, the Directorate of Investigation has not been optimal in controlling and supervising the management of entrusted objects/goods that are still controlled by the investigation/investigation task force.
