Jakarta. Indonesian Economists Alliance (AEI) said the government has yet to take concrete steps in response to its "Seven Emergency Economic Demands," despite months of advocacy and broad expert support.

The alliance said that although the demands were first submitted in September 2025 and have since been backed by hundreds of economists and policy experts, the government’s response has remained largely administrative and has yet to translate into substantive policy changes.

As of Jan. 20, the petition had been signed by 436 economists and 262 non-economists from Indonesia and abroad. Yose Rizal Damuri, executive director of the Center for Strategic and International Studies and an AEI member, said the alliance had been invited to discussions with several state institutions, including Danantara Indonesia and the Coordinating Ministry for Economic Affairs, but without tangible follow-up.

“We conveyed all of these demands. The reception was quite positive, but so far we have not seen comprehensive responses or changes that are substantive,” Yose said during a press conference at the Pakarti Centre building on Tuesday.

AEI identified budget misallocation as one of the most pressing structural problems, stressing that the issue extends beyond the central government to regional administrations. Rizki Nauli Siregar from LPEM FEB UI said weak local fiscal capacity and fragile institutions are increasingly constraining effective governance.

“We think problems such as misallocation of resources and institutional fragility are not only occurring at the national level, but are also widespread at the local level,” Rizki said, adding that these weaknesses undermine policy implementation and crisis response.

AEI economists also linked fiscal and institutional weaknesses to Indonesia’s investment and labor market challenges. Titik Anas said higher wages must be matched by productivity gains, warning that firms may otherwise lower recruitment standards or slow hiring. “If productivity and labor costs do not align, companies will recalibrate their recruitment, including by lowering job specifications,” she said.

Anas said broader job creation depends on significantly larger investment inflows. While investment increased last year based on data from the Investment Coordinating Board (BKPM), the growth remains insufficient to absorb the steady annual influx of new workers. She added that long-term certainty remains a key concern for investors, particularly in licensing and regulatory processes. Business surveys, including those by Apindo, continue to show that permit processing remains difficult at the operational level, despite government efforts to improve the investment climate.

Anas also raised concerns over the prioritization of public spending, saying education funding remains critical to implementing the Constitutional Court’s ruling on free basic education and should be safeguarded in line with constitutional mandates.

Beyond fiscal and labor issues, AEI said institutional capacity remains a key factor in disaster response and recovery, particularly in parts of Sumatra. The alliance noted that recovery has progressed unevenly, reflecting challenges in resource allocation and coordination.

Economist Elan Satriawan said recent disasters in Sumatra, Bali, and South Kalimantan highlight the importance of drawing lessons, especially as climate change is expected to increase extreme weather risks.

“With climate change, extreme conditions will likely occur more frequently. That makes it important for us to learn from recent disasters,” Elan said.

Yose added that recent disasters underscored the need to strengthen institutional readiness and budget flexibility to improve emergency response and longer-term resilience. He also noted that climate change could pose broader economic challenges, including to food security, requiring gradual adaptation in agricultural governance.

AEI added that designating disasters in Aceh, North Sumatra, and West Sumatra as national disasters could have allowed greater flexibility for inter-agency coordination and budget adjustments.

Teuku Riefky echoed the view, saying the initiative should be seen as a long-term effort. “This is a marathon, not a sprint, to bring policymaking back to an evidence-based approach,” he said.

Add as a preferred source on Google +