Cari English The Tangled Thread of High Cost Economics in Indonesia TEKS › English›The Tangled Thread of High.. Iklan The Tangled Thread of High Cost Economics in Indonesia Investment as a solid engine of economic growth has not been able to boost the economy out of the 5 percent trap Audio Berita This article has been translated using AI. See Original Please note that this article was automatically translated using Microsoft Azure AI, Open AI, and Google Translation AI. We cannot ensure that the entire content is translated accurately. If you spot any errors or inconsistencies, contact us at hotline@kompas.id and we'll make every effort to address them TEKS The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Benang Kusut Ekonomi Biaya Tinggi di Indonesia Illustration - Construction of the Kartasura-Klaten toll road section in Ngabeyan Village This 22.3-kilometer section of the Kartasura-Klaten route is part of the 96.57-kilometer Solo-Yogyakarta-Adisutjipto International Airport toll road KOMPAS — Various structural reform measures and massive infrastructure development carried out by the government in the last nine years have not been able to increase economic growth which is still stagnant at around 5 percent which are rooted in corrupt practices and high logistics costs Indonesia's economy has been stagnant at around 5 percent The average economic growth during the first period of Joko Widodo-Jusuf Kalla's administration (2014-2019) was 5.03 percent the average economic growth in the second period of Jokowi-Ma'ruf Amin's administration was 5.18 percent Based on the latest data from the Central Statistics Agency (BPS) Indonesia's economy grew 5.05 percent on an annual basis (year on year) decreasing from economic growth in 2022 which was 5.31 percent the economy was able to grow high due to the increase in world commodity prices (commodity boom) Also read: Indonesia's Economic Path Increasingly Steep Towards a Developed Country According to senior economist Raden Pardede, Monday (12/2/2024), in the last few years investment which should be a motor for solid economic growth has not been able to boost the Indonesian economy until it gets out of the trap 5 percent Even though the actual investment value has increased almost four times in the last decade from Rp 398.6 trillion (in 2013) to Rp 1,418.9 trillion (in 2023) economic growth is still "stagnant" at around 5 percent each year A worker is seen amidst steel constructions at a manufacturing factory construction project in Sayung District The North Coast region of Java in Central Java has seemingly grown into an industrial area due to the easy access it provides for investors The development of this industrial area is also supported by roads and ports for goods and services Law Number 11 of 2020 concerning Job Creation or omnibus law with its efforts to cut bureaucracy and regulations should be able to overcome various obstacles in investing and create a more efficient business climate the law has not been able to overcome the various investment obstacles "The Omnibus Law on Job Creation should have been able to trim various inefficiencies but its implementation is still problematic This is a homework that needs to be addressed by the next government," said Raden when contacted." Currently, investment in Indonesia is still considered inefficient, as can be seen from Indonesia's incremental capital to output ratio (ICOR) indicator which is still relatively high according to records from the Coordinating Ministry for Economic Affairs That results in a high-cost economy that becomes an obstacle to investing rampant corruption and extortion also make investment costs in Indonesia remain high ICOR can be a parameter to measure the level of investment efficiency in a country. The higher the ICOR value, the more inefficient a country is for investment. In fact, investment should be a more solid economic driver compared to household consumption which is currently still the main supporter of the Indonesian economy several advanced countries currently have an ICOR under 3 percent neighboring countries in Southeast Asia have a lower ICOR than Indonesia attracting huge investment in terms of value investors will be more interested in making quality investments," said Raden who is also a member of the economic affairs assistance team for the Coordinating Ministry of Economic Affairs Dean of the Faculty of Economics and Business at the University of Indonesia (FEB UI) Teguh Dartanto stated that various factors to high levels of illegal levies (pungli) in both central and regional bureaucracies have contributed to the high cost of investment and hindered economic growth infrastructure development has started to have an impact on reducing logistics costs infrastructure development does take time (lag time) to have an impact on the economy infrastructure development is still not of sufficient quality and on target to encourage higher economic growth Also read: Economy Grows Below Potential, Industrialization Remaps there must be a comprehensive policy between the central government and the regional government while the regions build infrastructure that can connect those large projects with smaller infrastructure so that it can link the local economy with the national and international market," said Teguh rampant corruption and extortion also mean that investment costs in Indonesia are still high Indonesia's Corruption Perception Index (IPK) was recorded to have fallen from a score of 40 (out of 100) and ranking of 85 in the world in 2019 to 34 in 2023 and dropping to 115th in the world Traffic congestion on Jenderal Sudirman protocol road The consumption of the public and government spending at the end of the year is a driving factor for Indonesia's economic growth in the fourth quarter of 2023 which is predicted to grow at around 5 percent If examined in more detail regarding the indicators that make up the IPK there has been a decrease in scores on the economic and investment indicators in the last five years data from the PRS International Country Risk Guide by the PRS Group has declined by 3 points (from 35 to 32) compared to 2022 and dropped by 26 points (from 58 to 32) compared to 2019 The International Country Risk Guide analyzes the correlation between financial corruption and the political system patron-client relationships between politicians and businessmen Another indicator of the economic and investment side such as Global Insight Country Risk Ratings by IHS Markit Economics has stagnated from 2019 to 2023 (score 47) Global Insight Country Risk analyzes the risk of bribery and other corrupt practices that business people must face when investing in a country Our economic growth should no longer rely solely on the accumulation of capital but on the development of superior human resources and inclusive economic Teguh emphasizes that a country's economic development in the early phase typically relies on the accumulation of physical capital economic development is based on the improvement of human resources it depends on the development of human resources and the establishment of inclusive institutions Addressing corruption and improving the Corruption Eradication Commission (KPK) is a form of effort to build inclusive institutions "Indonesia should already be in phases two and three This means that our economic growth should no longer be based solely on capital accumulation but on the development of superior human resources and inclusive economic The future reforms and structural transformations of the economy need to be closely monitored," said Teguh Minister of Economic Coordination Airlangga Hartarto stated that Indonesia's economic growth in 2023 slowed to 5.05 percent annually compared to the previous year's 5.31 percent Indonesia's economic growth rate is higher than neighboring countries such as Singapore (1.2 percent) and Malaysia (3.1 percent) Coordinator Minister for the Economy Airlangga Hartarto said that the government is still working to lower the ICOR level for greater efficiency the stagnant economic growth at 5 percent is reasonable Indonesia is still working to develop infrastructure to facilitate logistics in order to reduce logistics costs and increase investment efficiency in Indonesia He realizes that Indonesia's ICOR is still high compared to other countries ICOR must be reduced from 7.6 to at least 4 percent our economic growth should be able to increase to 6-7 percent we can boost growth through improvements in ICOR," said Airlangga Also read: The Double Burden of Industrialization in RI