The behavior of our society is easily influenced by momentary phenomena. Behavior is temporary, while infrastructure development has long-term effects. That\'s where the dilemma comes from.
By
A PRASETYANTOKO
·5 minutes read
The following news can illustrate the link between infrastructure development and people’s behavior, as well as its macroeconomic context. On Saturday (21/12/2019), the Jakarta-Cikampek elevated toll road from Cawang was closed as the volume of vehicles surged by 80 percent. When it was inaugurated by President Joko “Jokowi” Widodo as recently as Dec. 13, the new toll road was projected to reduce congestion by 30 percent.
In other news, the deputy chairman of the Association of Indonesian Shopping Center Operators, Alphonzus Widjaja, said infrastructure development had increased the number of mall visitors and hotel occupancy in the regions by 50 percent during the Christmas and New Year holidays (Katadata, 20/12/2019).
The infrastructure development is impacting people’s consumer patterns, especially in spending their holidays and shopping. The behavior of our society is easily influenced by momentary phenomena. Behavior is temporary, while infrastructure development has long-term effects. That\'s where the dilemma comes from.
Infrastructure development everywhere is part of the (political) commitment of the government. In the face of the Great Depression of the 1930s in the United States, President Franklin D. Roosevelt designed the "New Deal". One of the program’s elements was to build massive infrastructure in remote areas. The goal was to stimulate the economy by reducing unemployment in the short term, encouraging industrial activity in the medium term and rescuing the economy in the long run.
President Jokowi, in his administration’s first term (2014-2019), pushed infrastructure development as a flagship program. In the 2014 state budget, the infrastructure budget reached Rp 154.7 trillion (US$11.05 billion) and in 2015, it rose by 65.5 percent to Rp 256.1 trillion. By fiscal year 2019, the infrastructure budget further increased to Rp 415 trillion, and it is set at Rp 419.2 trillion for 2020. What is the impact on national competitiveness?
In the 2015 Global Competitiveness Report, Indonesia was ranked 37th of 140 countries. In infrastructure, it was ranked in 81st. Deficient infrastructure is the third-biggest problem after corruption and bureaucratic inefficiency. Within infrastructure, the worst problems are electricity supply issues (ranked 86th), poor port infrastructure (82nd) and bad roads (80th).
Meanwhile, in the 2019 Global Competitiveness Report, Indonesia was ranked 45th of 141 countries. Even though the country\'s overall ranking dropped, its infrastructure ranking rose to 72nd. The report finds that, even though the quality of roads is quite high (60th), road connectivity is still poor (109th).
There are a few things worth noting. First, improving infrastructure does not necessarily increase national competitiveness. There are many aspects to consider in addition to infrastructure.
Second, with road construction, the government must pay attention to aspects of connectivity. So far, infrastructure development has not been integrated. Many bottlenecks blunt the attempt to solve connectivity issues through infrastructure development. Congestion on the Jakarta-Cikampek elevated toll road is partly due to congestion at exits of the road that have not yet been developed in an integrated way.
Bottleneck issues mar not only physical connectivity but also the bigger strategic picture. One of the weaknesses of our infrastructure development is that it is not integrated with aspects of spatial planning, both related to urban spatial planning and the development of industrial zones and economic centers.
Michael Porter once wrote an article in Harvard Business Review (1998) entitled "Clusters and the New Economics of Competition". In essence, building a competitive industry must reflect in the geographical arrangement that enables the integration of business processes, starting from the supply of raw materials and processing to the logistics system and the final consumer.
In Indonesia, cluster strategies have begun to be applied in developing tourist destinations. There are 10 tourist destinations prioritized by the government as the so-called New Balis. Of these, Lake Toba, Borobudur temple, Mandalika, Labuan Bajo and Manado-Bitung-Likupang are considered high priority. The government has set aside Rp 6.4 trillion to build infrastructure in the five destinations.
Learning from the experience of infrastructure development at the micro level, it is very important to prioritize the principle of cluster-based connectivity. First, the physical infrastructure built does not only concern one region but is connected to the main logistical centers, so that it is connected to national, even global networks. Second, industrial clusters must cover all aspects in a comprehensive way, starting from the main business and auxiliary businesses to suppliers of raw materials and the bureaucratic apparatus.
Without unity, infrastructure development will only create bottlenecks. Moreover, the behavior of our society is still easily impacted by momentary factors. As soon as the Jakarta Cikampek elevated toll road was opened, people rushed to try it.
John Maynard Keynes once said, "The long term is a misleading indicator in the formulation of current policies, because in the long run we are all dead." Even though infrastructure development has a long-term impact, policymaking must pay attention to the current situation. So it is not entirely true that infrastructure will only have an impact in the future.
A PRASETYANTOKO, Lecturer, Atma Jaya Catholic University of Indonesia, Jakarta