The Effectiveness Of Fiscal Policy Analysis On Agricultural Sector Performance With Emphasis On Agroindustry In Indonesia

Oleh :
Darsono - - Fak. Pertanian

Indonesia economy where agricultures as single biggest sector which recently facing poor agriculture performance. The problem lies in the weak connection between agriculture as source primary commodities with agroindustrial development. This agriculture structural problem, should be understood and can be analyzed in the context goverment fiscal allocation that hypothetically may or not supported both agriculture and agroindustrial development. The objectives of this research, are; (1) to analyze the agregate performance of agricultural sector and agroindustry, (2) to analyze the relationship between fiscal policy instruments with performance of agricultural and agroindustrial development, (3) to analyze the effectiveness of fiscal policy instrument o n the performance of agricultural and agroindustrial development, and (4) to examining the relationship of agricultural sector with agroindustrial performance under certain fiscal instruments. The result of analysis, in general show that fiscal policy was not effective for improving the performance of agricultural sector and agroindustry. Poor performance of agricultural sector was found in the declining contribution of output and value added. The agroindutries competitive level, although increase in absolute term but it was consistently declined. The long term fiscal policy that have strong influence o n agricultural and agroindustrial, are: agricultural research and development, agricultural infrastructure, fiscal decentralization, income tax, and value added tax. The agriculture sector and 1/ agroindustries response to fiscal instruments shocks was adjusted in the relatively long term~ for agriculture it take 8 years and agroindustries 7 years. The fiscal instruments element that would have effects o n the performance of agriculture, are: value added tax, agricultural subsidy, agricultural research and development budget, budget for ,j agricultural infrastructure, and fiscal decentralization. Instruments of fiscal policy, in the long term is viwed as an effective tool for improving the performance of agroindustry. The instrument are: value added tax, budget for agricultural infrastructure, and fiscal decentralization. While shocks for agroindustries performance from agriculture show it take 7 years to reach stability. The performance of agriculture sector that have a push effect o n agroindustries are: GDP of agriculture, export, and import of agricultural products. Some important implications derived from result of analysis is that, in order to i develop a high performance of agriculture and agroindustries, it is suggested government of Indonesia should improve the fiscal instrument (implied budget allocation) especially focused o n: budget of agricultural research and development, agricultural infrastructure, fiscal decentralization, income tax, and value added tax.