By: Bagas Adrian Nathaniel
President Joko Widodo’s government has made history in building an Indonesia-centric foundation, with the vision of making development not only concentrated on the island of Java, but evenly distributed throughout the archipelago.
For a decade, President Jokowi has directed various policies aimed at creating a more inclusive and balanced economy. Even though this journey has been full of challenges, real results from Indonesia-centric policies are starting to be seen, both from economic data, infrastructure development and wider investment.
According to data from the Central Statistics Agency (BPS), the structure of the Indonesian economy is experiencing a shift. In the first quarter of 2014, before President Jokowi took office, Java and Sumatra contributed the largest to the national gross domestic product (GDP), with percentages of 58.52 percent and 23.88 percent respectively.
In contrast, contributions from other regions such as Kalimantan, Sulawesi, as well as Bali and Nusa Tenggara are very small. However, towards the end of President Jokowi’s term in office in the first quarter of 2024, although Java’s contribution remains the largest, Sumatra’s contribution percentage decreased to 21.85 percent, while Sulawesi, Bali and the Maluku and Papua regions experienced an increase.
This increase in contributions from regions outside Java is in line with the growth in investment value which also shows a positive trend. Data from the Ministry of Investment/Investment Coordinating Board (BKPM) notes that in the first quarter of 2024, investment outside Java reached IDR 201 trillion, surpassing investment in Java which was worth IDR 200.5 trillion.
This is a sign that areas outside Java are starting to attract the attention of investors, especially Central Sulawesi, which recorded the largest investment in the nickel sector.
Massive infrastructure development over the last decade has been the main driver in this shift in economic structure. President Jokowi, on various occasions, has emphasized the importance of infrastructure for efficient logistics costs and inter-regional connectivity.
He believes that good infrastructure can accelerate new economic growth, create higher competitiveness, and encourage regional potential for growth.
The government has initiated 204 projects and 13 programs in the National Strategic Project (PSN). From 2016 to the second semester of 2023, the Committee for the Acceleration of Priority Infrastructure Provision (KPPIP) recorded the completion of 190 PSNs with a total investment value reaching IDR 1,514 trillion.
Sectors such as roads, dams and railways have been built the most. Despite this, the majority of projects are still concentrated in Java and Sumatra, with 79 projects in Java and 40 in Sumatra, while Sulawesi, Bali, Kalimantan, and Maluku and Papua each get smaller shares.
The Minister of Transportation, Budi Karya Sumadi, stated that transportation infrastructure development should not only focus on economic centers, but also reach remote areas to ensure equal connectivity.
However, challenges such as climate change and pollution must be faced in the development process. Experts, such as the Executive Director of the Center of Reform on Economics (CORE) Mohammad Faisal, say that although infrastructure development outside Java has increased, this has not been matched by equivalent economic growth in the region.
In terms of community welfare, infrastructure development and downstreaming in the mining sector, especially in Sulawesi and Maluku, have the potential to increase investment. These regions have recorded significant economic growth, with North Maluku and Central Sulawesi being prime for investors.
However, despite the large flow of foreign direct investment (FDI), reducing poverty levels in these areas is still not optimal. BPS data shows that even though there has been a reduction in poverty levels nationally, nickel producing regions still face challenges in improving the welfare of the population.
The industrial sector, although showing growth, is still below expectations. According to Faisal, the industrial sector only grows around 4 percent per year, showing symptoms of deindustrialization. Although there are training programs to support local workers, their implementation is not optimal. Many investment projects actually absorb more workers from outside the region, thus creating a gap between investment and improving the quality of human resources.
Therefore, to realize a more sustainable Indonesia-centric ideal, there needs to be a synergy between infrastructure development, investment and increasing human resource capacity. This synergy is expected to improve the quality of life of the community and distribute economic growth more evenly.
The achievements of President Jokowi’s government over the last decade show serious efforts in building an Indonesia-centric foundation. Infrastructure development and the spread of investment outside Java are clear evidence of these efforts. However, for Indonesia-centricity to truly be achieved, more integrated hard work is needed, especially in creating new economic centers outside Java.
The government and stakeholders need to continue to work together to ensure that every infrastructure project and investment not only contributes to economic growth, but also has a positive impact on community welfare.
This moment is an invitation for all of us to look deeper at every existing achievement and challenge. Society, government and the private sector need to collaborate more closely to ensure that the development carried out does not only benefit a few people, but is able to bring benefits to all levels of society. In this way, Indonesia can move forward towards a better and more equal future for all.
)* The author is a Kawiwara Pustaka Contributor