Monday, 3 June 2013


Some observers consider that Indonesia’s economic growth at 6% - 6.5% not yet has an effect on real sector development. Consequently, economic growth could not yet accelerate labor-intensive industry sector. It means that high economic growth is not ideal in promoting labor absorption. With a quite high growth in 2011 at 6.5%, number of additional workers absorbed is only 1.5 million workers. While, in fact, government’s target for last year is 1% economic growth to absorb 450,000 workers. And, with 6.5% growth, it could have absorbed 2.92 million workers. It shows that economic growth quality is not yet optimal.

General Chairman of Indonesian Entrepreneurs Association (Apindo), Sofjan Wanandi, on Thursday (12/6), stated that in the past 10 years, Indonesia’s economic growth has been mainly accelerated by non-labor-intensive industries. Consequently, the gap between the rich and the poor and unemployment increase. While, many entrepreneurs did not want to enter labor-intensive industries, maybe because of the law, or the profit is too small. And, problem of legal certainly and labor regulation are complained by labor-intensive industry operators in Indonesia. Besides unemployment, alleviation of property and gap between the rich and the poor still become a problem that must be fought by the government from economic growth realization. Therefore, quality aspect of growth must be improved, Sofjan said.

Sofjan believed that the government should improve growth quality. Therefore, there should be a stronger policy because the Medium-Term Development Plan (RPJM) target is reduction of open unemployment by 5% - 6% by 2014. According to him, growth of labor-intensive sectors, like agriculture and manufacturing, must be accelerated. He sees that growth of these sectors is not yet optimal.

Government’s role is very important in promoting growth of agriculture and manufacturing industry sectors. There must be more policy and budget support to improve agricultural infrastructures so that irrigation system will improve and farmers could work more optimally. And, agro-industry sector must also be seriously improved. Conducive industrial policy, adequate electricity and infrastructure for proper distribution are very important to prevent de-industrialization which is becoming more evident.

Sofjan reminded the government to evaluate economic growth quality, particularly its influence on creation of work opportunities and alleviation of poverty. The government should also be more progressive in directing fiscal policy to solve problem in the upstream sector which is the cause of poverty originating from rural and agricultural areas. He stated firmly that these are important points for improvement of direction of development policy and fiscal policy now and in the future. Economic growth having a rising trend should be maintained in the midst of global economic uncertainly.

Sofjan explained that in the current national public policy, poverty elimination is no longer considered as a residual target, but it has become an explicit target of a development process. This change of paradigm has caused achievement of economic growth at 6%, but the condition is not always better than the one where economic growth rate is only at 4% or 5%; as poverty alleviation and creation of work opportunities accompanying economic growth will also become important aspects in quality assessment of economic growth. The important thing is how the growth could co-relate with increase of work opportunities and acceleration of real sector, he said. 

Business News - December 12, 2012

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