DBS Economist: New Government Must Expand Investment Drive And Manufacturing Industry

Illustration. (Photo: Doc. Antara)

JAKARTA - Senior economist of Bank DBSwaste Rao said one of the factors that need attention from the new government after the 2024 General Election (Pemilu) is to expand investment and manufacturing impetus to increase economic growth of the Republic of Indonesia.

"There are three factors that require the attention of the government to come. First, expand investment and manufacturing impetus beyond natural resources," saidLAdik, in Jakarta, quoted from Antara, Thursday, February 15.

Meanwhile, the next two factors that also require the attention of the new government are job creation and increased income on gross domestic product (GDP).

Candidates for the new president and vice president of the Republic of Indonesia will be sworn in in in October 2024. In accordance with KPU Regulation Number 3 of 2022, the recapitulation of national votes for the 2024 General Election is scheduled to take place from February 15 to March 20, 2024.

On February 14, 2024, simultaneous elections were held to elect the President and Vice President of the Republic of Indonesia, members of the Indonesian House of Representatives (DPR), Regional Representative Council (DPD), Provincial House of Representatives (DPRD) and Regency/City DPRD.

divided into domestic and foreign investments have risen to record highs in 2023, led by mining, basic metal, and processing industries, followed by smaller amounts of chemical and real estate industries.

At the same time, the government is also required to balance relations with the United States and China, especially because China's footprint in foreign trade and investment with Indonesia has increased sharply in the last five years.

China became the country that contributed the largest foreign investment to the marine and fisheries sector in Indonesia in the first three quarters of 2023, contributing a quarter of the total foreign investment included in the sector amounting to IDR 1.4 trillion.

Furthermore,mengatakan tingkat demografi Indonesia yang baik dalam hal jumlah penduduk usia kerja yang tinggi, yakni 65-68 persen dari total penduduk dan diperkirakan akan mencapai puncaknya pada 2030, kemungkinan akan menjadikan pemciptakan lapangan kerja sebagai prioritas utama bagi pemerintahan baru.

According to a survey in the third quarter of 2023, creating jobs and reducing unemployment is the second most pressing problem among the public.

The agricultural sector, which is the largest job provider with a share of 28 percent, and accounts for two-thirds of the workforce in the informal sector, needs to make changes in the coming years to increase the standard of living and gross domestic product (GDP) per capita as a whole. The manufacturing sector is weakening and absorbing 13-14 percent of the workforce.

In the short term, to reduce pressure on the purchasing power of vulnerable households, the government has provided several steps to improve welfare including direct cash assistance (BLT) to 18.8 million poor people.

The 2024 State Revenue and Expenditure Budget (APBN) allocated IDR 496 trillion for social protection and IDR 109 trillion to increase food availability, stabilize prices, and strengthen national food reserves.

Furthermore, he said a significant increase in the revenue to GDP ratio, from 9-10 percent of GDP today, would provide space to accommodate more productive spending and address one of the main obstacles in increasing the economy's ranking further.

The government rather than increasing tax rates, he suggests improving tax administration and increasing bases to expand overall levies.

The surge in commodity prices in 2022-2023 helped increase direct and indirect tax revenues such as royalties and import duties, and helped consolidate public finances much faster than budgeted. However, it is expected to slow down in line with the weakening of commodity price cycles as a whole.

Previously, the Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said that the 2024 General Election was a challenge to achieve the 2024 investment target of IDR 1,650 trillion.

The Ministry of Investment/BKPM noted that investment realization throughout 2023 reached IDR 1,418.9 trillion, or exceeded the target set by President Joko Widodo (Jokowi) of IDR 1,400 trillion (101.3 percent) with a total workforce absorption of 1,823,543 people.

In detail, the achievement of investment realization during January-December 2023 grew 17.5 percent on an annual basis (year on year) compared to the 2022 achievement which reached IDR 1,207.2 trillion.