What is holding Indonesia's economy back? | Counting the Cost

Indonesia's economy isn't growing as fast as President Joko Widodo had promised it would when he was elected five years ago. But the president, who is also known as Jokowi, has put the economy at the centre of his pitch to voters for the April elections once again. He is spending huge sums to try to get re-elected for a second term, giving regional governments billions as well as giving hand-outs to the country's poorest.

While Indonesia is well on its way to becoming a $2 trillion economy in the next five years, a population of more than 250 million people strung across more than 17,000 islands is being held back by - among other things - poor infrastructure.

The World Bank estimates that Indonesia has an infrastructure gap of $1.5 trillion compared with other emerging markets. Widodo is halfway through a 10-year, $327bn programme to construct new airports, highways and ports.

Indonesia's first subway has opened in the country's capital, Jakarta last week - a development that's seen as crucial to tackling some of the world's worst congestion costing Indonesia billions in lost revenue.
So what is holding Indonesia's economy back? And could it damage the president's hopes for re-election?

"I think there's a number of factors ... [holding back the economy]," says Gareth Leather, senior economist at Capital Economics. "I think more fundamentally, it's just been a failure to revitalise the manufacturing sector, which, when he [Joko Widodo] set out five years ago was one of his key aims ... In Indonesia, it's incredibly expensive to hire and fire workers. And what that means is that people are reluctant to set up manufacturing facilities in Indonesia when they could so much more cheaply in neighbouring, say Vietnam for example. I think that's been the key reason why growth has failed to come anywhere near the government's target."

According to Leather, Widodo "has made some reasonable progress in infrastructure spendings ... The key thing that he really needs to do is press ahead with these labour market reforms ... I think without that then Indonesia is really going to struggle to attract the kind of manufacturing sector that it needs to really raise growth above the five percent that we seem to be stuck at the moment.

"If you look at the most successful Asian economies since the second World War ... What they all had in common was a very competitive export-orientated manufacturing sector. Now this is something that Indonesia really struggled to create and generate .... Until you see the big changes in the labour market - and also land reform is another area that he hasn't really touched on - Indonesia is really going to struggle."

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#AlJazeeraEnglish #Indonesia #CountingtheCost

[hotdamn]

as a south east asian people living in philippines. i want indonesia as a superpower to balance the power againts china, u.s and other superpower and also our protector.

[princedominicc.lazaga]

Oh hi there! I love indonesia



Greetings from philippines 🇵🇭🇵🇭🇵🇭

[MrLutfi]

Gambar yang diambil Aljazeera adalah gambar yang lama, beberapa tahun yang lalu. Sekarang sungai dan danau di jakarta bersih tidak ada sampah!!!

[hullopillow]

Indonesia has all the natural prerequisites to be a regional power : landmass, arable land, domestic markets, natural resources. But despite all that, One factor brings down everything : its Human Resources. The blame is on both the government and the general populace. That is the total opposite of Singapore that has nothing but only human resource, and she shine against all odds.

[editorizal]

Indonesia is facing the challenge of "natural resource curse" and "early deindustrialization" where a country has good economic growth but its manufacturing sector is slowing down. Indonesia also cannot take advantage of US-China where many companies in China move their factories to developing countries. Investment grows slowly because of internal problems; complicated and corrupt bureaucracies while external, other factors developing countries had good regulation and low salary. And don't forget about low prices of world commodities. The Digital Economy Industry also accelerates deindustrialization. And for politicians, Stop! protectionism campaign and scare for poor people with foreign investment.

Jokowi administration has prioritized infrastructure development as one of the ways to unlock the country's economic potential. Since 2016 Indonesia's economy has been recovered, since the economic growth rate has continued to increase from year to year. Whereas previously in 2012 to 2015 Indonesia's economic growth declined.

So I am still optimistic that Indonesia and the global economy will grow a bigger event in coming years. Last month Standard Chartered released a prediction by 2030, Indonesia Emerge as Asia's Third Giant 🇮🇩🇮🇳🇨🇳

[mjstc]

Name a better duo than al Jazeera and slums, I'll wait..

[raisasafa]

Berita aljazera selalu menampilkan kekumuhan Indonesia gak pernah aljazera menyampaikan berita positive dgn video yg baik

[Rabbittomaru]

*CORRUPTION*
that what is holding us.

[JemiPurwanto]

Nice point of view of Indonesia's economic issues from Al Jazeera! Indeed the one of crucial matters that holds the key is the labour or human resources quality and quantity.

[commentator]

No., what government do right now is rebuild and rearrange the base pilar in this country., i’m study in economy, and i agree with this step., it’s long term investment, don’t expect it to get profit immediately., This is part of business, you need to invest first but don’t expect your money will return as soon as possible, you only need to wait, wait until your investment develop., at least you already build the base pillar..,
Trust me, 10-15 years later, you’ll see the impact of this pillar, what we need is just be patient, waiting calmly without critize anything cause you can’t see anything change in your eyes right now

[DGraze]

ingat negara kita sekarang masih dalam ikatan perjanjian hutang.
bila prabowo berniat menjadikan negara kita self sufficient country, kek nya masih belom saatnya. dah garreth juga bilang, kalo dengan policy itu dijalankan, negara kita bisa kehilangan banyak investor.
dan yag disayangkan menurut garreth, pemerintahan jokowi tidak bisa menambah perkembangan kita ke 7%. tapi ini juga bisa jadi dikarenakan fokus jokowi kepada infrasuktur indonesia.
jadi kalo saya mo cari aman untuk 5 tahun ke depan. pilih ....





jangan golput

[ramasaputra]

Betul sekali, UMR yang kemahalan beresiko mengagalkan para investor untuk membangun Manufaktur di negeri ini.

[muhammadsecret]

LOL Aljazeera focus on slum on Jakarta which is very small. Not a fair coverage. I also dont believe the slum is actually in Jakarta.

[hullopillow]

Indonesia should only be proud when their domestic firms can master everything from manufacturing tunnel boring machines, to railway grade steel, till making the entire train out of domestic components. There is no use clamouring about something when your people dont have the core capability to build it yourselves. Sadly, Indonesia dont seem to be able to even wake up to that idea.

[abdinoyogenggong]

Money politics thats the biggest problem.. People select by money, not by quality.. For take it back they become corrupt.

[ndukulusudikucho_]

Hard working People, they love their Country, it's hard to find them in Europe or America. Greetings from Tanzania

[asupit]

I think its not just the infrastructures that should be prioritized. The people must look up on the world's development and how the country is being left behind. I mean, look at Singapura or Malaysia. They were younger but much more incredible than us. In the other hand our people doesn't really care with that and prioritized some unnecessary things which slows our economy and holding back investors. THE PEOPLE MUST LEARN. NOT TO BE STUPID ENOUGH TO BE PROUD OF UNPROVEN AND UNIMPORTANT THINGS. LOOK AT THE INTERNATIONAL LEVEL. WE ARE LEFT BEHIND. WHY ARE WE KEEP ON HOLDING BACK OUR SELF. SOEKARNO ONCE SAYS WE SHOULD BE A PART OF THE INTERNATIONAL COMMUNITY. YET WE DID THE OPPOSITE. WE DISREGARD THE BEST MINISTERS, LEADERS AND SO ON. NO NO THIS ISN'T ABOUT THE COMING ELECTION. BUT THIS IS THE FACT.

[dwiwahyono]

Politicians would rather promise free stuff increasing both budgetary burden and demand instead of cutting subsidies and government budget while boosting the supply side economy by regulation or the lack thereof.

[overcrank]

Indonesia labour market is indeed expensive.

[김나나-ev]

Hey, that's 2013.It's so different now.