Several times before the
World Bank had given their views, input and recommendation to the Indonesian
Government various aspects of economy but so far the respond to it was unknown
The World Bank believed that the Indonesia Government
must pursue growth at close to 9% and join the high-income club in 2030 to
avoid the middle income trap in 2030. Such was written in the World Bank’s
report entitled “Avoiding the trap.”
The world was waiting for Indonesia to emerge as the
world’s economic leader. To meet the objective, Indonesia must step up
competitiveness by playing catch up with regress and cover up the
infra-structure gap and enhance market function.
The positive step would bring significant impact on the
promotion of productivity ad income. Besides, the steps needed better
management of Government expenditure and minimize efficiency, like oil subsidy.
Such was statement of World Bank’s Country Director for Indonesia Rodrigo
Chaves as quoted from World Bank’s internet site.
Furthermore with rising electronic-literate generation
and rising labor cost in China, Indonesia gained stronger competitiveness in
term of investment and stood a better chance to escape the middle income trap.
The world Bank’s rated although access to education in
Indonesia had increased significantly, the great challenge was step up quality
of education to make skillful and competent workforce.
Not less important was infra structure building. The
World Bank’s rated that all the infra-structure development exercised by the
Government and private sector in Indonesia constituted only% pg GDP or about
half the need, which caused the nation to lose at least 1% of economic growth
each year.
Reduction of oil subsidy would enable the government to
allocate the available fund for infra structure building and other pressing
need. Re allocation of budget at
provincial level would increase support to infra structure building.
With support of better provincial Governments, public
service could be improved, such as health, sanitation, and wastage treatment.
In line with development of infra structure and human resources and consistent
regulations would enhance growth.
It would be necessary to ease permit facilitation in some
sectors. However, at the same time the new regulation allowed more discretion to ministries and institution. Internal
experience showed that the policy most advantageous to the public was
transparent policy with zero discretion.
With the above reformation, the World Bank was sure
Indonesia could rise and avoid the Middle Income Trap [MIT]. The risk was loud
an clear so the Government of RI must be ready to anticipate it.
Unless ready, Indonesia stood a chance to be trapped in
MT the way it happened to Ghana who was buoyed by high economic growth and
forgot to fill it with development especially infra-structure.
From the World Bank’s recommendation, the Government was
called for to give serious attention to that matter. Surely not all of World
Bank’s recommendation was worth
accepting, but at least they were considerable because their view was
substantially valid. (SS)
Business News - July 2, 2014
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