The Government should not be off guard because of Indonesia’s macro
economic attainment in the past 3 years which was impressive. The point was
that at the moment it seemed not easy to repeat the same performance of the
previous years.
At least such was the early warning sign from the World Bank recently.
According to the World Bank, Indonesia’s economic growth was predicted to be
under pressure and stuck in the range of 6.2%. However the World Bank stressed
that the problem could be overcome by the right strategy. Such was the
statement of the World Bank economist Jim Brumby in a press conference on a
three monthly economic development in Jakarta last Monday [18/2].
Jim stated that five sources of pressure to the prospect of Indonesia’s
economy were: slowdown of investment growth, the potential of slowdown in real
transactions and nominal Gross Domestic Products, trend in external balance
sheet, the burden of oil-gas subsidy and slowdown in poverty reduction process.
The pressures could result in the risk of slowdown in economic growth;
what was needed now was only the right policy and the right response to
overcome them. According to Jim, the highest risk to short term growth came
from domestic investment which contributed two fifth of growth in 2012 because
investment expenditures declined in capital intensive resources and lessening
import. So to enhance certainty in regulations and policy could support
investment climate.
In addition to the above, the case of oil-fuel subsidy which came to 2.6
percent of GDP 2012 contributed to mounting pressures to overseas trading and
burdened the fiscal sector.
In this case the Government’s inefficient expenditure was still a big
problem, especially in case of energy subsidy, for that, matter reformation was
necessary in oil-fuel subsidy
The result could even cause Indonesia’s poverty elimination plan to miss
target by one or two percent or equal to two to five million workers. Yet
Indonesia was today having notably high urbanization flow especially in middle
size cities where developments were still way behind that of big cities.
Hopefully the increase of quantity, quality and efficiency of
infra-structure investment would help to open economic opportunities from urban
conglomerations in order to support quality of public service. Betterment of
infra-structure in the villages in Java and outside Java would discourage
people to swarm from villages to cities.
The World Bank was expecting responsive act from the Government of RI to
come up with the right Policy which encompassed increase of Public investment
with emphasis on competitiveness in trading. Investment was needed for
infra-structure as it caused high logistic cost.
Today infra structure spending was in the range of three to four percent
of GDP, which was better compared to the time before crisis of 1997 which was
around 7 percent. But as neighboring countries were able to suppress logistic
cost efficiently so Indonesia had to strive hard to make sure that competitiveness
was well maintained.
The policy to build adequate infra structure and logistic could step up
economic growth moreover Indonesia was still having notably strong economic
resistance to withstand global crisis.
Reduction of subsidy for oil fuel could help to maintaining fiscal
health so efficiency of budget could be allocated for infra-structure building.
The problem of inter-insular and inter city connectivity could be solved with
infra-structure and transportation development. Regions would open their doors
wider to drum up potential investors.
The Government needed not to be overanxious that control over oil-fuel
policy would dim Government’s aura. As long as the Government was able to
explain well to the people the underlying ground of oil price increase, surely
the public would understand. The general impression today was that the Government
was afraid to play before the game is even started so there was never any
courage to set the right price for oil price based on accountable price.
Other noteworthy point was that the trend of buying commercial aircrafts
by airlines lately indicated that inter-regional connectivity would no longer
pose as big problem. Mobility of passengers and goods would run smoothly at all
times which would propel economic growth. The sectors of manufacturing,
trading, hotels and restaurants, construction and telecommunication would get
the positive impact of better connectivity and logistics.
The improvement in infra-structure would jack up Indonesia’s
competitiveness among global invertors. By that policy Indonesia could pursue
higher growth, benefit from the positive side of urbanization and to increase
income, and to provide employment opportunities of high quality. The high
number of people at productive age and the rising middle class of high
purchasing power were valuable asset for the nation whereby to maintain growth
momentum.
To the workers, the Government must be able to open job opportunities.
To the middle class group, the Government must be able to make the best of
their role not just in expenditure for consumption, but many of them were
motivated to become entrepreneurs because of their strong capital, skill and
competence.
Even the group of productive workers with high education background must
be motivated to pursue the role of entrepreneurs. Now the opportunities to
become entrepreneurs were widely open with better access to supporting bodies
especially financial institutions.
Some high strata banks, Government or private, were getting more
aggressive in extending corporate aids to educate hundreds or even thousands of
university students and young businesspeople to become entrepreneurs. With the
number of entrepreneurs of around two percent of total population of 240
million, Indonesia needed more entrepreneurs. So the need to increase the
number of entrepreneurs to five percent of total population was the ideal
bottom-line for sustainable economic growth.
The development of industry and creative economy was a starting point
for young entrepreneurs to start business. The success stories of young
entrepreneurs exposed in the print media, relied more on creativity, including
there in workers of art like animation, movie maker, fashion, mode and film.
Certainly it needed diligence and dedication to become a strong and firm
entrepreneur. (SS)
Business News - March 22,2013
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