Infrastructure was
believed to be accelerator of Indonesia’s economic development. Indonesia’s
economic growth process relied much on infra structure like, roads, bridges,
drainage system, electricity and water supply.
The Government’s role as facilitator
and mobilizer in development was most strategic in promoting people’s welfare
and economic growth. Economic development was one of the indicators of
achievement and served as guideline in determining the course of progress for
the future.
Positive economic growth was
indicated by activities of economic advancement. By theory, economic growth of
a country was determined by accumulation of capital, i.e. investment in land,
equipment, facilities and infra structure and human resources in quality or
quantity, advancement in technology, access to information, willingness to
innovate and develop, and working ethos.
So far the Government of RI had
issued some policies to support the businessworld in executing development in
all of Indonesia.
The first priority was the
Government of RI would ask the Provincial Governments to facilitate an assure
convenience for investors to do business well. The second priority was to step
up infra structure development in all of Indonesia like roads, bridges,
harbors, airports, housing and powerhouses which would contribute to the
process of minimizing unemployment.
Beside employment, infrastructure
projects also made economy to move more dynamically. Infra structure
development means signal that the Government would seriously propel economy to
be responded positively by marketplayers. For that matter financing for
infrastructure should be allocated in APBN of APBD state budget.
Thereby unemployment was expected to
be minimized and economic infra structure needed to propel the real sector
could be developed so the real sector could be energized. The third priority
was to protect and help the low income group in their struggle for better
welfare.
In view of the above priorities it
was most relevant to maka analysis of the impact of infra structure building on
Indonesia’s economic growth. The result obtained was expected to support
prioritizing of infra structure projects. Since infra structure projects were
capital intensive, employment of workers would be the determinant factor in the
process of economic growth.
Basic infrastructure had its
positive impact on Indonesia’s economy as infrastructure facilitates played
their important role in the process of marketing, i.e. production, distribution
and sales. The policy to build infra structure was right indeed and therefore
called for support from all stakeholders.
In this case physical asset and
human capital were the key factors economic growth. Physical readiness was
complementary to capital investment.
In case of Indonesia’s economy,
although growth performance had not reached the pre-crisis level, sound
fundamental economy in tandem with betterment of micro and macro risk had caused
some international rating agencies to give positive rating to Indonesia,
thankfully Indonesia was again given the rating agencies. Amidst the said
positive state, at the medium term level Indonesia’s medium term level had to
face hard challenges, i.e. handicap in the production of complementary
components which held back the process of economic advancement.
In their latest report, World
Economic Forum (WEF) disclosed that Indonesia’s competitive edge was still low
especially on the infrastructure side, technological readiness and innovation.
WEF evaluation showed that the most binding constraints faced by Indonesia was
still in those there areas over the past few years.
More specifically the constraints in
the infra structure side was indicated by low quality of roads, harbors,
airports, railway, and power supply while the minus point in technological
readiness and innovation was in terms of technological mastery and innovation
capability which was still low.
In terms of infra structure
rehabilitation, the obstacles faced financing and legal assurance. The
allocated Government’s budget for infra structure in the past few years was
only around 1,6% of GDP. The ratio was relatively low compared to other
countries to China and India, which came to 5.3% and 7.3% of GDP.
The effort to restore infra
structure was admittedly important in minimizing imbalance of income and its
long term effect to per capita income. Infra structure building would
contribute to increasing structure building would contribute to increasing productivity
to support long term growth.
Report in World’s Development Report
1994 by the World Bank underscored that infra structure played its important
role in enhancing economic growth. Higher economic growth was posted in areas
where infra structure were better.
Review of infra structure
development program in some countries concluded that most programs were
targeted for the mind term program with focus on fulfillment of basic need and
people’s connectivity including water, energy, electricity and transportation
(roads, railways harbors and airports)
The conclusion was that economic
growth correlated significantly with infra structure quality in a certain
region by quality and quantity. In Indonesia many research studied correlation
between infra structure and economy and the result was varied.
The only thing was that infra
structure development policy concentrated in Java and West Indonesia had caused
disparity in percapita income among provinces. In the future policy for infra
structure development which was evenly distributed should be the reference in
the effort to narrow down inter-provincial gap.
Indonesia had strong growth
demographic factor, Government’s economic policy which was pro-growth, growing
middle class population and Government’s focus on infra structure development.
Room for fiscal had been widened and budget for infra structure had been
increased from Rp190 trillion to Rp.290 trillion in APBN-P Budget 2015.
The Ministry of Public Works an
People’s Housing, the Ministry of Transaportation and Ministry of Agriculture
had sizable budget allocation broken down as follows: the Ministry of Public
Works Rp.33 trillion, the Ministry of Transportation Rp20 trillion and the
Ministry of Agriculture Rp.16 trillion.
Besides there was other additional
prioritized budget for infrastructure and connectivity Rp.12,9 trillion
allocated transfer of fund to the provinces Rp.20.5 trillion. Meanwhile budget
for infra structure development for economic growth Rp.49.8 trillion,
fulfillment of basic need Rp.20.8 trillion and bridging Rp.43.5 trillion.
The fiscal reformation policy was
basic step and important part of structural reformation of strengthen
Indonesia’s fundamental economy among others by enhancing infra structure
building to strengthen national competitiveness.
APBN-P 2015 budget was also designed
to bring stimulus t Indonesia’s economy to constantly grow amidst tight
regional competition.
Infrastructure was the propeller
machine of growth; infra structure was seen as locomotive of development and
national and provincial level. From the macro economy viewpoint, infra
structure influenced marginal productivity of private capital while in the
micro production cost.
Infra structure also had Its
influence on quality of life of Man, among others in promoting consumption
quality, increase of manpower productivity and access to employment and
betterment of welfare and macro economy stabilization i.e. fiscal
sustainability, development of the credit market and the impact on the labor
market.
In a survey run in the USA, return
on investment level in infra structure against economic growth was 60%. Study
by Dunai Bank 1994 mentioned that elaticity of GDP against infra structure in a
country was between 0,07% to 0.44% which means that increase of 1% alone in
infra structure might cause GDP to grow by 7% to 44%.
The vital role of infra structure to
propel economy had been proven by success of economic program relying on infra
structure. One of them was the New Deal Program run by US President Franklin D.
Roosevelt during the Great Depression of 1933.
The policy adopted by the US
Government then was to spur on infra structure building whereby to create
positive impact on economic growth and the result was that more than 6 million
jobless people were put to work once again.
Business News - June 10, 2015
No comments:
Post a Comment