Indonesia’s Unique Economic Performance and Its Challenges for the Long Run

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In the midst of the global crisis, year 2011 was a milestone for Indonesia’s economic performance. The country achieved a 6.5% growth or the highest growth since its 7.8% on 1996. Gross national income per capita itself was boosted IDR30.8 million (US$3,542.9) from IDR 27.1 million (US$3,010.1).

Crops such as corn are being brought to Gorontalo docks to be exported to foreign country. Pictured by Rayendra L. Toruan

‘The Asian Tiger’ may be proud to its achievement, especially when the rest of the world are declining, some even experiencing minus growth. But to maintain it in the long run, the country has yet to develop and boldly execute its unique strategy since various fundamental areas need to be treated seriously.

Analyzing the 2011 GDP, Indonesia’s worth were IDR7,421.1trillion based on basic price or IDR2,463.2 trillion based on constant price. Domestic consumption were the biggest contributor for it displayed a 54.3% proportion, while the rest are investments 32%, government spending 9% and export-import 1.4% (26.3 % – 24.9 %).

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The numbers are great, but Indonesia’s GDP distribution was not equally absorbed throughout its national regions. Java Island still dominant in absorbing national GDP which indicated by 57.6% proportion, while Sumatra was only able to absorb 57.6%, Kalimantan 9.6%, Sulawesi 4.6% and other islands 4.7%. Middle and eastern Indonesia’s region which have abundant natural resources call for a more equal GDP distribution and a wise investment planning.

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Other challenge is, industry sector which provide massive ground work need to seriously concern by the government in cooperation with private business.

Agriculture sector, livestock, forestry and fishery only contributed 14.7% to 2011 GDP. This is a drawback if we compare it to 2010 which has 15.3% contribution.  Processing industry itself only contributed 24.3% on 2011, while in 2010 it has contributed for as many as 24.8% proportion. In the long run, the constant declining of these sectors may cause unemployment number to soar.

Processing industry and other industry still facing fundamental problems on infrastructure, bureaucracy, taxes and corruption. Some others may face problems in licensing, land supply and capital. It is very urgent for the government to attend these fundamental problems as good economical numbers in 2011 may only good memories of the past in the gloomy or stagnant future.

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