This Week's Headlines (Jun 8 - 14, 2024)

14 Jun 2024

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Government debt reaches Rp 8.3 quadrillion in April


Government debt rose to Rp 8.33 quadrillion (US$513 billion) in April from Rp 8.26 quadrillion in the preceding month but remains well below the legal threshold. 


Government debt rose to Rp 8.33 quadrillion (US$513 billion) in April from Rp 8.26 quadrillion in the preceding month.  


Despite the increase, the debt level, amounting to 38.64 percent of the nation’s gross domestic product (GDP), remains well below the legal cap set at 60% of GDP.  


During a meeting on Thursday, Finance Minister Sri Mulyani Indrawati said the ratio demonstrated sound state budget management.  


"If we look at the ratio of Indonesia's debt to GDP, despite the [disruption caused by the coronavirus pandemic] in 2020, where the deficit jumped to 6.1%, we were able to consolidate the fiscal [situation] in a very short time,” she said, as quoted by Kumparan. 


“[Therefore], the ups and downs in our debt ratio are closely monitored and reflect our commitment to good state budget management.”  


According to the May 2024 edition of the Buku APBN Kita (Our State Budget Book) published by the ministry, 71.18% of Indonesia's government debt is sourced domestically. The government aims to use foreign debt only as a supplementary source. 


Sri Mulyani explained that the primary instrument for state debt funding was Government Securities (SBN), which account for 87.94% of the total debt. She said debt financing via the issuance of SBN bonds helped the development of the domestic financial market. 


The remaining 12.06% of the Rp 8.33 quadrillion debt is in the form of loans.  


The government faces Rp 800 trillion in maturing debt in 2025. This entails Rp 705.5 trillion in SBN and Rp 94.83 trillion in loans. 


The minister expressed confidence in managing the maturing debt, provided that budget economic conditions and political stability remained favorable.  


Indonesia’s level of government debt, which is the result of accrued annual budget deficits and payments for servicing outstanding debt, compares favorably to that of peer countries. The Philippines, Thailand and Malaysia have ratios near or above 60% of GDP, though Vietnam’s level is similar to Indonesia’s. 


Last year, Indonesia’s state budget deficit came in lower than initially planned at just 1.65% of GDP, which was significantly lower than the corresponding figures in all of those other four countries. 


Source: The Jakarta Post 



ByteDance confirms layoff plan at its Indonesian unit


China's ByteDance will lay off staff at its Indonesian unit following a deal where it bought a local e-commerce firm and combined it with its TikTok operation, a spokesperson said on Friday. ByteDance, the owner of TikTok, did not say how many employees would be affected. Bloomberg had earlier reported there would be 450 jobs cut. 


In January ByteDance completed a deal to buy a majority stake in Tokopedia, an Indonesian e-commerce firm, from the GoTo group. 


ByteDance spokesperson Nuraini Razak told Reuters in a statement the company would "make necessary adjustments" as a result of the combination of TikTok and Tokopedia. 


"We identified areas to strengthen our organisation and better align our teams with company goals," she said, adding the company would "aim to support employees throughout this transition". 


ByteDance had its own e-commerce operation in Indonesia via its TikTok app, but that was banned under an Indonesian rule that social media applications could not operate as an e-commerce platform. 


Tokopedia is one of the leading e-commerce platforms in Southeast Asia's largest economy. 


Source: Reuters 



Indonesian ministry pilots four-day work week to test impact on productivity, well-being


Employees of the Ministry of State-owned Enterprises may apply to work four days a week every fortnight. It is unclear if other government ministries will follow suit. 


Indonesia's Ministry of State-owned Enterprises has begun piloting four-day work weeks to improve the well-being of its employees. 


Called the Compressed Work Schedule, the programme began this week and will be piloted over the next two months, reported news outlet Kompas.  


During the trial, the ministry’s employees may apply to work four days a week every fortnight. To qualify, they must work a minimum of 40 hours in four days, have measurable work output and have their supervisors approve their request.  


The ministry’s secretary Rabin Indrajad Hattari said the trial aims to find out if four-day weeks increase the productivity of employees.  


It will also look out for managers who are effective in managing teams under a four-day work system.  


"The team may be working too hard, so the manager must be able to ensure that the team should have the opportunity to have a work-life balance, that's the point," Mr. Rabin said as quoted by Kompas. 


According to Mr. Rabin, a survey conducted in January by the ministry on employees' stress levels found there was a need for better work-life balance.   


"This is one of the programmes to improve the well-being of employees," Mr. Rabin said. 


The four-day work week was proposed by Minister of State-owned Enterprises Erick Thohir in March as a way to improve mental health among staff. According to him, 70% of the country’s younger generation have mental health issues that affect productivity. 


Mr. Thohir said giving staff three days off does not mean that they can be lazy; the four-day week is simply an alternative they can opt for twice a month. 


It is unclear if the trial will extend to other government ministries. With about 400 employees, the state-owned enterprises ministry is one of the smallest among Indonesia’s 34 ministries.  


However, Mr. Thohir said previously that state-owned enterprises can consider the option. Indonesia’s 41 state-owned enterprises hire about 1.6 million people. 


Globally, more countries and companies have adopted four-day work weeks following the COVID-19 pandemic.  


Countries with the arrangement include Germany, Belgium, the United Kingdom, Spain and Portugal, according to Euro News.  


In Asia, several cities in Japan have begun to pilot four-day work weeks. The Japanese government has also introduced such a system, but for employees with particular responsibilities such as looking after children or another family member. The plan will be implemented in Japan for all employees in April 2025. 


Most firms in Indonesia that have adopted four-day weeks are startups – Sharia fintech peer-to-peer lender Alami, e-commerce payments platform Bolt and the fundraising platform Kickstarter, for instance. 


Dr. Eko Sakapurnama, a human resource management strategist and lecturer at the University of Indonesia’s faculty of administrative sciences, said compressed work schedules may provide benefits such as reducing stress, improving mental health and increasing job satisfaction. 


For it to be a success, however, companies should meet criteria such as having a strong work culture and commitment, measurable performance measurement and organisational readiness and maturity, wrote Dr. Eko on the university’s website. 


Besides four-day weeks, other flexible work arrangements include allowing employees to work from home. 


Source: CNA