JAKARTA: Indonesia has seen little to no progress in shifting the focus of development away from Java over the past decade, notwithstanding the promise of President Joko “Jokowi” Widodo (pic) to even out economic activity across the country.
Jokowi, who is stepping down on Oct 20, has pointed to his landmark projects of building downstream industries and moving the government out to a new capital city in Kalimantan as ways to help less developed regions of the country catch up, but the data are disappointing.
Center of Economic and Law Studies (CELIOS) executive director Bhima Yudhistira Adhinegara told The Jakarta Post on Tuesday (Oct 8) that Indonesia was “light years away” from an even development, given the “Java-centric” economy.
“The narrative and development realisation are not in sync,” said Bhima, adding that there was a “paradox” given the public accounts of shifting economic activity away from Java while big-ticket infrastructure projects were still carried out on the island.
To name a few, the island has seen the establishments of the high-speed railway in West Java, the Batang Industrial Estate in Central Java and PT Freeport Indonesia’s copper smelter in East Java.
The latest data on the government’s National Strategic Projects (PSN), which the Office of the Coordinating Economic Minister provided to the Post on Tuesday, reveal that Java wrapped up as many as 74 projects since mid-2016 with a total value of Rp 610.9 trillion (US$38.92 billion).
Sumatra came in second with 36 projects adding up to a far lower value of Rp 348.2 trillion, while other regions have seen fewer than half as many PSN completed as Java, with values much lower.
The only exception is Sulawesi, where finished projects totaled Rp 580.17 trillion, thanks to investment in downstream industry projects to refine the region’s large nickel reserves.
Speaking to the Post in an interview on Sept 30, Coordinating Economic Minister Airlangga Hartarto admitted that such capital-intensive projects only created “massive” employment during the infrastructure building phase, “but after the construction, the [demand for] labour is relatively limited”.
Paramadina University economist Wijayanto Samirin told the Post on Tuesday that some capital-intensive projects “do not create jobs and economic activity for the surrounding [communities]; in the medium-term, [such projects] will instead [be a] burden on them”, as government debt to finance the projects piled up.
Wijayanto said much of the foreign direct investment (FDI) flowing into the archipelago was not of good quality, since it was heavily dominated by unsustainable natural-resource-based investment that would dry up once the resources were exhausted.
“High-quality FDI would rather [go to] peer countries like Malaysia, Thailand, Vietnam and India, all thanks to Indonesia’s business climate, which has been worsening in the past 10 years,” said Wijayanto.
He argued that, rather than development evening out across the country, the “concentration of economic and political power intensified”, and even as the downstream agenda may push up some regions’ GDP, people from Java were the ones enjoying most of the benefits.
A case in point was the nickel industry of South Sulawesi, which had propelled economic growth in the province but only slightly improved employment over the past three years.
“The GDP [reflects] where the economic pie is created, not which people get to enjoy that pie. The real disparity is guaranteed to be higher, given that [a lot of the benefits of] regional natural resources are enjoyed by people who live in Java,” said Wijayanto.
Data from Statistics Indonesia (BPS) show that 57.37 per cent of Indonesia’s GDP came from Java in the first half of 2024, which marks a miniscule change from 57.39 per cent when Jokowi was first sworn into office in 2014.
Sumatra took the second spot with around 22 per cent, while the rest of Indonesia combined accounted for less than 21 per cent.
The figures fluctuated slightly throughout Jokowi’s presidency, but the overall shares remained unchanged. Given the continued disparity between Java and the rest of the country, Wijayanto said Jokowi “has not succeeded” in achieving even development.
Institute for the Development of Economics and Finance (Indef) senior economist Tauhid Ahmad told the Post on Tuesday that Indonesia was still “far away” from actualising even development.
He pointed out that Indonesia’s GDP was chiefly fueled by household spending, which made it only natural for Java to lead by such a degree, given its population of 155 million people, or more than 55 per cent of the country’s total.
Tauhid pointed out that it was a tall order for other regions to catch up with Java’s GDP, since people were reluctant to move to those regions given the inadequate infrastructure, which was an issue the PSN should have addressed. - The Straits Times/ANN
