Bridging Indonesia 's Infrastructure Funding Gap Essay

Indonesia is a rich country with its resources. Not only oil and gas, but Indonesia also had been a producer of mining and agricultural products such as rubber, tin, tea, coffee, spices and timber. In 2002, timber is one of the key export for “non-migas” (non oil and gas) commodities to provide foreign trades.

1.The Jakarta Post states: “Good infrastructure is like a magnet for investors, both foreign and domestic. No doubt, as a result of the lack of infrastructure in disadvantaged areas, investors tend to prefer to invest in urban areas that already have adequate infrastructure.”

Although infrastructure is one of the major components to a thriving economy, you must also take into consideration technology and the productivity of the people. If technology is not improving, it’s harder to improve the quality of goods and services provided. If a person in the work field is not productive in their work or undereducated in their work, the quality of the goods and services they are creating will not benefit the buyer and therefore goods and services will not be purchased. Therefore, technology and human productivity go hand in hand with infrastructure

In Figure 2 it is evident that Indonesia’s cost of living, as reflected by the CPI, has been significantly deteriorating over the last 8 years. Although research argues that CPI may not be an effective indicator of the cost of living for a developing country such as Indonesia (East Asia, 2015). In contrast measuring the percentage of a household budget that goes to food is could be a good indicator. Since 2000, the percentage of household budget spent on food has declined, meaning higher expenditure on discretionary goods and services. This indicates that Indonesia’s urban regions are getting richer faster than the impression expressed with the CPI (East Asia, 2015). This is also reflected in figure 1, as the significant increase of mobile phone subscriptions is a good proxy of increased living standards as a mobile phone is a discretionary living cost. This is a result of the Indonesian growth rate earning a higher level of surplus income to spend on more luxury items.

Indonesia is now the 15th largest economy on the planet with a global output of just under 1.5% but is expected to rise in the coming years. Manufacturing is the largest single component of Indonesia’s economy with its main exports including crude petroleum and natural gas as well as rubber, coffee, cocoa and palm oil while Australia mostly benefits from exporting mineral fuels, gems, precious metals and meat. Indonesia received $187.3 billion USD from exports in 2012 ranking it 27th in profit from global exports but Australia placed 22nd and profited a total of $257.9 billion USD from its exports leaving Indonesia in the dust. Although Indonesia has showed significant growth recently their quality of life is still worse than Australia’s due to a lower Gross Domestic Product or GDP. GDP is the total value of goods produced and services provided within a country in the duration of a year and determines the strength of a countries currency.

The paper by (Bird, 2013) first sets out the theory of expenditure assignment with respect to decentralizing infrastructure expenditure, and then considers how practice around the developing world appears to differ from what that theory appears to suggest. The paper suggests several ways in which theory and practice might be brought closer together. distinguish four categories in terms of the functions served by such investment: (1) Redistribution (housing, recreation, social protection), (2) Public Goods (defense, environment, order and safety, general public services), (3) Hospitals and Schools (health and education), and what they call simply (4) Infrastructure, that is traditional public works projects, of which transportation

Development of transport infrastructure is a very expensive process. When the Canadian government, in the 1870s, promised to build a railway from Nova Scotia to British Columbia, it took more than two years just to find a company which agreed to do it. This is what happens today when the country needs to grow the

According to AAFC (Agriculture and Agri-Food Canada, 2010) due to its extensive natural resources and geographical location, in the way of several of the world’s most important trading routes, Indonesia represents the Southeast Asia’s largest economy. On a global perspective, Indonesia is the fourth most populated country and has the largest Muslim population, besides being the world’s largest archipelago, with around 17,000 islands. The country’s GDP (Gross Domestic Product) is also showing considerable and stable growth throughout the years and unemployment rates dropped considerably (AAFC, 2011).

Since oil price and devex are two of the most crucial factors affecting NPV and GT, thus both factors will be used to explain Indonesia’s fiscal flexibility and neutrality in more detail.

Economic system is a system of beliefs (concerning work, property and wealth), activities (extractions, production and distribution), organizations(business firms, labour unions), and relationships(ownership, management) that provide the goods and services consumed by the members of a society.(Cullen 2011, p.81) The economic system is unique in that Indonesia has a market-based economy in which the government plays a significant role. There are 141 state-owned enterprises, and the government administers prices on several basic goods, including fuel, rice, and electricity. Growth rebounded in 2010 to 6.1% and is forecast to have reached 6.2%-6.5% in 2011. Poverty and unemployment have also declined despite the global financial crisis, with the poverty rate falling to 12,5% (March 2011) from 13.3% a year earlier and the unemployment rate falling to 6.6% (February 2011) from 6.8% a year earlier. In December 2011, Fitch Ratings upgraded Indonesia’s sovereign debt rating to investment grade. . There are many potential infrastructure projects in multiple sectors including hydroelectric and solar power, palm oil, new roads including toll motorways, mining, expansion of broadband internet, and

Indonesia is the sixteenth largest economy, the largest economy in the South-east Asian economic region with the world's fourth largest population (263 million in 2017). It is an emerging economy that has increased its international integration, trade liberalisation and diverted from policies of import substitution towards export-led development. Indonesia is a member of the Group of 20 (G20) major economies and has been an active founding member of the World Trade Organisation (WTO). The impact of globalisation has benefited Indonesia as quality of life indicators and economic developments have improved but it also presents the challenge of improving regulations, building more competitive industries, increasing investment into education and infrastructure to remain competitive. Consequently, Indonesia has introduced numerous strategies to promote economic growth and development.

Indonesia complained of their lack of autonomy In regions such as Maluku or other areas of Eastern Indonesia, “a low capacity for generating local revenue restricted the ability to adapt projects and development to local conditions” (Bertrand, 198).). The scanty amounts of funds were unable to support the poor and other problems. Bertrand states, “Faced with the New Order regime introduced mild reforms that were designed to address some technical issues while avoiding political decentralization” (Bertrand, 198). In 1995 the Minister of Home Affairs selected 26 districts were used to evaluate the measures designed to increase autonomy. They noticed an increase in Indonesia budget, but they still failed to support the poor, which resulted in

Since 1965, the president of Indonesia continued to provide continuity and stability. However, in order to define an effective and complex growth plan, a company wishing to be successful needed the president’s support to succeed in the plan.

Planned infrastructure in itself enhances growth of the economy in terms of productivity of labour and also places the economy on the pedestal for growth to a developed state. The strategic location and management of space with respect to the structures (physical) in the economy when planned will lead to workers- for instance, being able to put in more labour-hours of work. The effects are very easy to observe in the services sector where lateness of personnel

In terms acceleration of economic growth is based on the measurement of GDP, MALAYSIA HAS recorded a growth of 5.1% last year. Although it is lower than 7.2% in 2010, but it was so roaring in the context of a difficult global economic environment and uncertainty. In contrast, global economic growth has dropped from 5.2% in 2010 to 3.8% in 2011 while the economy of the developed countries like USA, Germany, UK, France and Japan also recorded weak growth of respectively 1.5%, 2.7%, 1.1 %, 1.7% and -0.5% in the same year; far lower than Malaysia's achievements. Following a satisfactory GDP growth was assisted by the Federal government revenue increased by RM13.2 billion in 2011 through increased collection of IRB estimate of RM109.7 billion compared with RM96.5 billion the government has managed to reduce its fiscal deficit to 5.0% compared projection of 5.4%. This means that the GOVERNMENT has successfully steered the nation's economy as well as the control and management of public funds wisely in the past 3 years in a row when managed to bring down the fiscal deficit from 7.0% in 2009 to 5.6% (2010) and 5.0% in the past year in a expanding economy.