INDONESIA’S ECONOMIC GROWTH UNHEALTHY

          Indonesia’s economy in the 1^st quarter of 2011 grows by 6.3%. National Bureau of Statistics (BPS) recorded that economic growth in the 1^st quarter of 2012 grows by 1.4% if compared to the 4^th quarter of 2012. But, economic growth in January-March 2012 is still supported by public consumption. Public contribution is at 2.8%, followed by formation of Gross Fixed Capital (investment) at 2.3%. The lowest is government spending. Contribution of government spending is only at 0.4%. The remaining is contributed by export.

            According to Thomas Darmawan, Chairman of Indonesian Fishery Processing and Marketing Association (AP5I), economic growth which is mainly accelerated by consumption sector reflects an unhealthy growth. He stated that Indonesia’ economic strength lies in a quite high public consumption. This is because of high number of population. Indonesia’s economic growth will be better if public consumption, and this is unhealthy”. Thomas said.

            He was optimistic that in 2012, consumption sector will still become the supporter of economic growth. Increase in per capita income per person in 2012 is believed to continue and to accelerate public consumption outside the food and beverage sector. He explained that the huge amount of per capita income of the society in 2012 will promote creation of new groups that could support economic growth. This will certainly continue until this year due to national economic improvement.

            He assumed that the shift from lower to middle class also created a new consumption pattern for the society from and beverage sector to other life supporting sectors, such as electronics and technological goods. 60% of public consumption which is contributed by food and beverage sector has started to shift to non-food and beverage sector.

            He expected that next year, there will a shift in the main accelerator of Indonesia’s economy. In the beginning, Indonesia’s economy was supported by consumption, but in the future it will be supported by investment. Thomas also expected that investment in the form of gross fixed capital will give a large contribution. “Hopefully, there will be a shift in the main accelerator of our economy, which has so far been dominantly accelerated by public consumption”, he said.

            To balance high public consumption, movement space of the businesses must be open widely. The real sector must be given a flexible opportunity to cultivate all existing economic potency. At least, it could create labor absorption and even distribution of income. He considered that the National Awakening Day must become a turning point in perceiving Indonesia’s economy and favoring to entrepreneurs. He admitted that so far the government has not been favoring the business community because the businesses are still facing classic problems. He considers that the government has not yet responded properly as there are many problem like bureaucracy and infrastructure which are not yet handled properly so that it hampers Indonesia’s economic growth.

            According to him, economic growth in 2012 will be unqualified if it is only supported by domestic consumption sector that cannot reduce unemployment rate. He considered that Indonesia’s economic growth not yet shows a spirit toward a qualified growth which is to the right target. So far, accelerating of economic growth to increase GDP is mainly contributed by household consumption. While in fact, consumption mainly originates from import.     

Business News - May 23, 2012