DIGIVESTASI - The large size of the cabinet in President Prabowo Subianto and Vice President Gibran Rakabuming Raka's administration is expected to hinder Indonesia's ambition of achieving 8% economic growth. The sheer number of regulations that need adjustment makes it challenging for government programs to be implemented swiftly from the outset. Prabowo has appointed 109 ministers and deputy ministers across 48 ministries, a significant increase compared to President Joko Widodo’s administration, which only had 34 ministries.

“Before the cabinet inauguration, I was optimistic that the 8% target could be achieved in five years. But after seeing the cabinet size exceed 100 members, that target feels increasingly unrealistic,” said INDEF economist Ariyo DP Irhamna in a virtual discussion on Monday, December 23, 2024.

Ariyo explained that this large cabinet structure slows down the government’s ability to adjust regulations inherited from the previous administration, creating bottlenecks in launching programs promptly.

He cited changes in governmental structure, such as the dissolution of the Coordinating Ministry for Maritime Affairs and Investment (Marves), which previously oversaw the National Water Resources Council. As a result of such changes, related presidential regulations need to be revised, causing overlaps and delays as ministries await each other’s actions.

As a comparison, Ariyo mentioned countries like Argentina and Vietnam, which have opted to streamline their cabinets, resulting in a positive global image and significant economic impacts. Argentina, for example, emerged from a crisis in 2023 after President Javier Milei reduced the number of ministries from 19 to 8 as part of bureaucratic reform.

"Argentina's reform was highlighted by the World Bank and OECD, demonstrating how bureaucratic reform drives economic growth," Ariyo explained. This reform not only increased investor confidence but also inspired other nations, including the United States.

In the U.S., President-elect Donald Trump appointed Tesla CEO Elon Musk to lead the Government Efficiency Council to reduce wasteful spending and ineffective bureaucracy. Meanwhile, Vietnam has decreased its number of ministries and civil servants while lowering its value-added tax (VAT), aligning with global trends to promote bureaucratic efficiency.

However, Ariyo emphasized that Prabowo’s administration has taken the opposite approach by increasing the number of ministries rather than streamlining them.

The challenge of achieving the economic growth target also stems from the substantial investment needed. Head of the INDEF Center of Sharia Economics, Dr. Handi Risza, noted that Indonesia would require an additional investment of IDR 13–14 quadrillion over the next five years, with investment growth needing to reach 11–19%, significantly higher than the current average of 5–6%.

“Investment growth cannot remain at 5–6%. To reach IDR 13–14 quadrillion, investment growth must be between 11–19% because investment contributes 30% to economic growth,” Handi said.

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