Indonesia to Consider Universal Basic Income

Indonesia is studying the possibility of implementing the idea of universal basic income, or UBI, in anticipation of automation-triggered mass layoffs in the coming decades. (Antara Photo/Rahmad)

By : Jakarta Globe | on 3:43 PM October 13, 2017
Category : Business, Economy, Featured

Jakarta. Indonesia is studying the possibility of implementing the idea of universal basic income, or UBI, in anticipation of automation-triggered mass layoffs in the coming decades.

UBI, an unconditional cash transfer to all citizens, has been on center stage in global economic discussions in the past years, amid rapid developments in artificial intelligence and advanced robotic that threaten to replace human workers in manufacturing and service jobs.

"If robots destroy employment opportunities, then UBI should be introduced," Finance Minister Sri Mulyani Indrawati said on the sidelines of an annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington DC on Thursday (12/10), as quoted by Antaranews.com.

Sri Mulyani said the Ministry of Finance will discuss with the Ministry of Industry and the Ministry of Labor the possibility of introducing UBI.

"The problem is in the design, and we need to increase our capacity to do this," Sri Mulyani said.

The IMF warns, however, that universal basic income should apply to countries with low tax capacity, as they need tax revenue to invest in education and health.

At 11 percent, Indonesia's tax ratio is among the lowest in the world.

Still, according to Sri Mulyani, Indonesia has been spending enough for education and health —20 percent and 5 percent of the annual state budget is allocated to these sectors respectively. Since the past decades, the largest economy in Southeast Asia has been implementing a progressive taxation scheme — taxing the rich at a higher rate than the poor — to address inequality.

Also, under president Joko "Jokowi" Widodo, the government introduced a conditional cash transfer program designed to help poor households.

These, according to the finance minister, make Indonesia ready to take the next step toward UBI.

"We will take a close look at it, because we have a large population with a majority of young demographics," Sri Mulyani said.

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