Still Low, Domestic Product Expenditure Absorption Speeds Up

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Masih Rendah, Serapan Belanja Produk Dalam Negeri Dikebut

JAKARTA, KOMPAS – Four months before the end of the year, there is still a lot of unspent budget in the State Revenue and Expenditure Budget. The central and regional governments are urged to optimize the remaining budget to accelerate the absorption of domestic products, especially goods and services produced by micro, small, and medium-sized enterprises.

By the end of the first semester of 2023, the state budget (APBN) has only been absorbed by 41 percent, which is Rp 1,255.7 trillion out of the total budget ceiling of Rp 3,061.2 trillion. This means that towards the end of the year, there is still 60 percent of APBN left or Rp 1,805.5 trillion that has not been spent by ministries, institutions, and local governments.

Of the total expenditure realization, government procurement of goods and services is still low, reaching only 34.9 percent of the total value in the general procurement plan (RUP) amounting to IDR 1,112.45 trillion with 5.3 million procurement packages.

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In detail, the realization of the State Budget Expenditure Plan until the end of July 2023 is Rp 387.81 trillion with 768,000 procurement packages. As much as Rp 216.36 trillion has been verified as Domestic Component Level (PDN), while the rest is still in the process of verifying Domestic Component Level (TKDN).

When opening the VI Indonesia Business Meeting and Indonesia Catalogue Expo and Forum (ICEF), Minister of Finance Sri Mulyani Indrawati hopes that ministries, institutions, and regional governments can use the last four months to accelerate the use of domestic products in accordance with the target of 95 percent of total procurement expenditures.

The absorption of domestic products is also expected to prioritize goods and services from micro, small and medium enterprises (MSMEs), small and medium-sized industries (SMIs), and artisans. The target is to achieve a realization of spending on MSME products of Rp 250 trillion from the total procurement this year.

“In the process of post-pandemic economic recovery, we must continue to promote the use of domestic products, particularly those from small and medium-sized enterprises (SMEs),” he said in Jakarta on Thursday (August 3, 2023).”

Based on data from the Government Goods/Services Procurement Policy Institute (LKPP), from 1 January to 3 August 2023, national absorption of local products with TKDN in e-catalogs has only reached IDR 34, 73 trillion. This amount is still less than the absorption of local products without TKDN worth IDR 56.11 trillion. It was also observed that the government was still buying imported products worth IDR 21.83 trillion.

Meanwhile, the transaction amount in the e-catalog is still dominated by non-MSME sector products, namely Rp 58.24 trillion even though the difference with the total absorption of MSME products is not too far. Transactions for small MSME products were recorded at Rp 29.38 trillion, medium MSMEs at Rp 15.35 trillion, and micro MSMEs at Rp 9.69 trillion.

The Acting Deputy for Digital Procurement Transformation of the LKPP, Yulianto Prihandoyo, stated that in order to encourage the absorption of local products, over the past year the government has frozen 16,000 imported products sold in e-catalogs under the name of Indonesian companies.

The most commonly found products are health equipment and electronic devices from China. According to him, the imported products that were frozen have been substituted with their domestic production equivalents. “Since we can already produce those items domestically, we froze the imported products. The procurement that we had already made was redirected to local products,” he said.

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Through the Phase VI Business Gathering and ICEF for the next three days, it is hoped that the opportunities for MSME products to be absorbed in government procurement of goods/services will increase. This year, the government requires an allocation of 40 percent for absorption of MSME products in the procurement of goods and services.

According to Yulianto, so far, the target has been achieved 33.8 percent. “Of the total participants in this business matching, 35 percent are MSMEs. We are trying really hard at the end of this year for MSME products to be absorbed more quickly,” he said.

Kompas’ monitoring on the first day of the ICEF exhibition, non-MSMEs stalls still dominated. MSME/IKM products can be counted on the fingers, generally offering catering services, making clothes/uniforms, producing health service support tools, and plastic packaging products.

CV Inti Boga Makmur Director Juan Darian, who operates in catering services, stated that his business had entered the e-catalog since last year. However, until today, he has not received any orders. Therefore, he now supplies more catering services to factories and offices in Central Java.

“To register for e-catalogue is actually not difficult. The challenge lies in getting orders after registration, as many government agencies and state-owned enterprises already have established relationships with certain vendors. New players may find it difficult to be noticed and have to frequently initiate contact,” he said.

Currently, Inti Boga has a production capacity of 10,000 food packages per day. However, the capacity has not been fully utilized due to limited market. They hope that by joining the e-catalog, they can expand their market.

“From our capacity of 10,000 packs per day, we are now only producing 2,000 packs per day. The hope is that this year we can get the first order in the e-catalog so that we can increase production according to capacity, even more,” he said.

Meanwhile, SMEs who have successfully received orders in the e-catalog enjoy a significant increase in revenue. Manager of PT Glori Karsa Abadi, Robertus Hutagalung, stated that the revenue of their plastic packaging production business increased by 50 percent after joining the e-catalog.

However, he was more fortunate because before the mandatory e-catalog procurement came into effect, he had already partnered with the Ministry of Law and Human Rights, specifically to supply lunch boxes and plastic cups to correctional institutions in several regions in Indonesia.

“After launching the e-catalog, within a year we supplied almost one million lunch boxes to prisons with a revenue increase of around IDR 1 billion. That’s only from the lunch box sales,” he said.

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