More Than Just Commitments and Promises

ENNY SRI HARTATI

· 5 minutes read

The General Elections Commission (KPU) held the second presidential candidate debate on Sunday evening with four strategic and fundamental issues as its main topics, namely food security, energy, infrastructure and natural resources and the environment, which are the main keys to the success of development.

The food security is the key to the sovereignty of a nation, especially for countries with a large population such as Indonesia, while energy plays an important role in increasing productivity and economic competitiveness. Infrastructure is also the key to accelerating economic development.

Finally, issues related to natural resources and the environment will determine the sustainability of economic development for Indonesia’s future.

First: food security. This subject is very sexy because it involves the basic needs of the people, both farmers as food producers and the community as consumers. Polemics about the different interests of the two sides often arise, leading to the politicization of food policies.

In principle, affordability and price stability are complementary relations between production and needs. Without consistent policies to improve production management in the upstream sector, it is difficult to increase farmer productivity.

The position of farmers is not only the subject. They also need economic incentives. Rationally, farmers are free to choose superior commodities for optimal productivity and welfare. Thus, the polemics about food imports can also be ended. The government only needs to maintain the accuracy and validation of the production data and the needs of each commodity.

If there is an inter-regional balance sheet for food commodities, the management of food production and distribution will be more efficient. The arrangement of planting periods and inter-regional harvest periods can be coordinated and synergized.

The problems related to an abundant supply and the fall in prices when harvests take place simultaneously will not occur again. The scarcity of production, which triggers a drastic price increase, will not also occur if the farmers are independent. Food imports will no longer be a dilemma.

Second: energy security. Indonesia has a deficit between its energy supply and needs, in particular oil, as Indonesia has been a net oil importer since 2003. At present, the average oil consumption per day is estimated to be 1.6 million barrels, while the production is about 800,000 barrels per day. In fact, if Indonesia does not build gas infrastructure to increase gas distribution, it will also become a net gas importer.

In 2018, the oil and gas trade suffered a deficit of US$12.4 billion. The demand for energy continues to increase along with population growth. The National Development Planning Agency (Bappenas) estimates the demand for oil will reach 2.74 million barrels of oil equivalent per day in 2024. The problem is that Indonesia\'s energy supply is still dominated by fossil fuels, which account for 91.6 percent. Renewable energy accounts for only 8.4 percent. If in the presidential debate, the presidential candidates only raise the issue of B20 and B 90 bio diesel (diesel fuel with 20 percent and 90 percent palm oil content) it will not be enough to anticipate and mitigate the potential energy crisis. It cannot be denied, the community and the business world will demand and choose cheap energy. The government must, therefore, immediately finalize concrete plans and programs in stages to carry out energy diversification.

Investment

Third: infrastructure. The main objective of accelerating infrastructure development is to improve national productivity and competitiveness. In the end, it will push up investment and economic growth. Productivity can be improved if infrastructure is able to support productive activities, especially those with high added value.

However, until now, the acceleration of infrastructure development has not improved Indonesia’s ranking on the Logistics Performance Index. In 2018, Indonesia was ranked 46th , below Malaysia in 41st place, Vietnam in 39th place and Thailand in 32nd place.

Indonesia was also ranked in 36th position of 140 countries in the 2017-2018 Global Competitiveness Index. Indonesia’s ranking in the competitiveness index improved, especially in the market dimension (9) and the macroeconomic environment (26). However, the competitiveness index in infrastructure was still low with road quality (68), port quality (72), and electricity and telecommunications (77).

The limited availability of basic economic infrastructure is still the main obstacle to increasing direct investment in Indonesia. Industrial performance has actually declined. Instead of talking about support for the Industry 4.0, Indonesia is still ranked 80th for technology readiness and 96th for labor market efficiency.

For this reason, the priority of infrastructure development must be to answer the needs of the economy. As Indonesia is an archipelagic country, sea connectivity infrastructure will increase efficiency.

Fourth: resources and the environment. Indonesia has abundant natural resources, but it undoubtedly will run out if its exploitation continues. Environmental damage is also inevitable.

Unfortunately, the exploitation of natural resources still continues to produce commodities. Evidently, around 70 percent of Indonesia\'s exports are still dominated by commodities. Seeing the complexity of the problems in the four fields, promises are not enough. There needs to be concrete and measurable programs to overcome these problems. (ENNY SRI HARTATI, Executive Director of the Institute for Development on Economics and Finance)

Editor:

Economic Analysis Enny Sri Hartati