Declining Purchasing Power, Where Is the Proof?
The government does not agree with claims that purchasing power is declining in Indonesia, according to the National Development Planning Minister Bambang Sumantri Brodjonegoro.
Speaking at a Media Round Table event at Bappenas on 4 August 2017, he said Indonesia’s economy grew about 5% in the first half of 2017. In addition, value added tax (VAT) data during the first half was higher than in the same period in 2016. The amount of exports not subject to VAT also increased.
“All of these economic indicators reflect growth. It [doesn’t add up] when there are claims saying that there is a decline in purchasing power,” Bambang said.
Bambang added that Bank of Indonesia recently published data showing that the amount of community savings in the banking system has significantly increased. In fact, the current value of public savings is the highest in the country’s banking history.
According to the minister, this might be the public’s response towards current tax policies. Again, this information contradicts assumptions that there has been a decline in purchasing power.
Bambang explained that the falling number of visitors at Jakarta’s shopping malls should not be used as a reference to conclude that there is a decline in purchasing power. He pointed out that the value of financial technology or online transactions have increased significantly at the same time.
“It is possible that even though [fintech] transactions are still small in percentage, they are very large in value. Remember, the disruption of information technology does not only happen at certain retail sectors, but almost all [sectors] have been penetrated,” Bambang said.
Indonesia’s fintech transactions totaled US$14 billion in 2016 and are expected to reach US$20 billion in 2017.
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