Thursday, 10 July 2014


The Indonesian Employers Association (APINDO) considered that the development of the manufacturing industry is still difficult to be done intensively in eastern Indonesia because the businesses faced problems of legal certainty, availability of human resources, and infrastructure support. Central government policies which tend to overlapping with local regulation cause investment in the manufacturing industry in eastern Indonesia still difficult to develop.

Sofyan Wanandi, General Chairman of APINDO, in Jakarta, on Tuesday (June 24), stated overlapping policies, too many licensing, not to mention the availability of human resources and unsupportive infrastructures, eventually cause soaring cost production, thereby inhibiting the development of the manufacturing industry. According to Sofyan, the problem actually occurs in all part of Indonesia, it is much more complex due to development imbalances between the western and the eastern parts of Indonesia.

These conditions also cause multinational companies to hold in the manufacturing sectors in Eastern Indonesia although the eastern part of Indonesia has a quite abundant natural resources and raw materials. Based on data of the central bank, economic growth in eastern Indonesia only reached 4.6% or lower than the national average which reached 5.2% in the first quarter of 2014.

Sofyan advised that the local governments in Eastern Indonesia should build a center of economic growth in each region by optimizing the natural resource potentials. According to Sofyan, there should be one region in each province designated as a natural potential-based economic center to attract investment activities from investors.

In eastern Indonesia, said Sofyan, the development of economic growth centers could be done trough mining, agriculture and fisheries-based industries. Meanwhile, the three sectors are the backbone of the economy of eastern Indonesia as a whole. According to him, the development of economic growth centers will be an attraction for investors to plan investment activities appropriately, based on regional potential.

Infrastructure is currently one of the things highlighted by entrepreneurs in economic development. Without infrastructure support, it is difficult to hope that national competitiveness would be adequate in facing the increasingly competitive global competition. The Master Plan for the Acceleration and Expansion of Indonesia Economic Development (MP3EI) is expected to be the locomotive of infrastructure development throughout Indonesia in the years ahead.

The government has also committed to accelerating regional infrastructure in six economic corridors that could be seen from the increasing number of infrastructure budget allocation which reached 20%, or a total of IDR 213 trillion in the short term. In 2013, the government has allocated IDR 17 trillion to facilitate the preparation of development planning documents in various regencies/cities. Infrastructure development is a tactical step to continue to focus on Indonesian economic growth, particularly in the development of economy in Eastern Indonesia.

He also saw that there are at least four issues that are considered to be inhibiting the progress of development in Eastern Indonesia. The four issues are natural resources which are not optimally manage, human resource quality, lack of infrastructure, as well as institutional system that needs to be improved. He reminded that Eastern Indonesia requires development and spur competitiveness.

Another obstacle, according to him, is industrial development and investment in Eastern Indonesia, due to the provision of land and infrastructures, such as roads and ports. From the banking sector, access to capital is still an obstacle for the local businesses. And, the quantity and quality of transportation infrastructures and energy generation is less supportive to production efficiency and goods distribution. (E)

Business News - June 27, 2014

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