Investment Outside Java Has A Wider Impact, Central And Regional Collaborations Need To Be Strengthened

JAKARTA - Economist and Dean of the Faculty of Economics and Business, University of Indonesia, Teguh Dartanto, said investments entering areas outside Java would have an impact on the area and Java.

Meanwhile, investment entering Java will only have an impact on economic growth on the island of Java.

Investasi di luar Jawa akan berdampak terhadap ekosistem dan chain pasok yang terhubung ke daerah-region di Jawa, katanya dalam Flagship Diseminasi Laporan Nusantara serta Peluan Buku Manufactur dan Pariwisata yang dikutip Antara, Jumat 18 November.

He said optimizing the impact of investment on the regional economy also depends on the investment sector, whether capital-intensive or labor-intensive, as well as the readiness of supply chains and connectivity between regions.

"We are already on the right track, but we need to strengthen collaboration with local governments to build supply chains," he added.

As for making economic growth more equitable, he said the distribution of village funds needed to be continued because it had a positive impact, especially in disadvantaged villages.

"After getting village funds, we saw the underdeveloped villages grow faster than the developed and developed villages, which also received village funds. It almost doubled its growth," he said.

He said the calculation was obtained from catching night lights in villages in Indonesia, before and after obtaining village funds that also improve people's welfare.

"Especially again, we see that the villages are lagging behind, in the west, middle, and east. With village funds, the villages left behind in the east grow much higher than the villages left behind in the west," he said.