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ore than 500 leaders from governments, business, the media, civil society and the academic sector engaged in various sessions to address some of the most pressing issues the world is now dealing with during the World Economic Forum (WEF) on East Asia in Jakarta recently.

With the theme “Responding to the New Globalism”, the forum promoted a new idea of globalism that has moved beyond trade. It is also about political, economic, industrial, environmental and social agendas in the global economy.

The choice of Indonesia as the host country should be understood as a good indication of the significance of Indonesia’s role in the world forum. As a member of the G20 and the chair of ASEAN, Indonesia has demonstrated its regional influence.

The WEF also built up the country’s confidence through its reference to progress in Indonesia’s rank in the Global Competitiveness Index (GCI). The country now ranks 44th among 139 economies.

What can Indonesia, as a WEF host country, learn from the WEF on East Asia?

One important lesson is how Indonesia should deal with the lack of infrastructure. The GCI suggests that infrastructure is among the most obvious shortcomings in Indonesia. Indonesia is dealing with a wide range of issues that lead to low investments in infrastructure development. These issues include monopoly practices in various sectors that may lead to inefficiency, for example the management of ports by the Indonesian Port Corporation, the supply of electricity by state power producer PT PLN and the railway sector by state railway firm PT KAI.

A huge expanse like Indonesia, which covers nearly two million square kilometers and consists of five main islands and about 30 small archipelagoes, with 17,508 islands and a population of over 234 million people, obviously faces a mammoth challenge that the government must settle to ensure equity in infrastructure development.

Inequality in access to infrastructure and public services is not only experienced by rural communities, but also those who live in urban areas. For example, with regard to water services, there are 85 million people living in the service areas of water utilities, but only 35 percent of them are served.

Decentralisation reform put more pressure on infrastructure development in Indonesia. Under the law, all public service delivery functions except for defense, foreign affairs, monetary and fiscal policies, trade affairs and the legal system have been delegated to local governments since the launch of regional autonomy in 1999. Hence, decentralization poses daunting challenges for policy coordination.

A view of India’s experience with infrastructure development presented by Ajit Gulabchand, chairman and managing director of the Hindustan Construction Company, at the WEF on East Asia provided some interesting lessons for Indonesia. He said, “India is a mixed story. There are grand successes, but also utter failures.”

One of the main problems that India is facing is the work allocation between local and central governments. In India, the central and state governments are very strong, while city and other local governments do not have enough authority and autonomy – and they are the ones that implement infrastructure projects.

In a similar vein, Indonesia still has high uncertainty as to which level of government is responsible for the provision of various services despite a number of regulations to clarify the matter. In addition, local governments’ lack of capacity to generate income makes them highly dependent on the central government’s transfers, indicating that decentralization does not necessarily improve equality in access to public services.

An important lesson from Ajit Gulabchand was the success of a national authority body based on a new model of public-private partnerships in India to develop infrastructure. Before the partnership was established, India could only build 11 kilometers of road per year. After it was established, India could build 11 kilometers of road per day!

Dominic Barton, the worldwide managing director of McKinsey & Company and a co-chair of the WEF on East Asia, added to the list of concerns of developing countries regarding the causes of infrastructure bottlenecks.

The list includes regulatory complexity especially in regard to land acquisition, difficulties that governments of developing countries face to determine their priorities given the complexity of problems they’re dealing with and regulatory certainty. He said that there has not been any country that can provide the best example to respond to infrastructure bottleneck issues.

However, Columbia and Chile provide a good example in terms of how governments invite the participation of various stakeholders to plan a collective action working with the private sector to respond to the issues. Again, this highlights the importance of communication with various stakeholders.

It is worth noting that infrastructure alone is not a sufficient condition for economic growth. It is the complementarity between infrastructure development and other factors such as human capital that significantly affects the country’s economic growth.

A 2011 article by Yamuchi et. al published in World Development suggests that education and local road quality are complementary, mutually increasing non-agricultural labor supply and income in remote areas.

Given relatively low investments in infrastructure by the public sector, Indonesia should further its partnerships with foreign investors. Lack of infrastructure in Indonesia obviously provides unique market opportunities for foreign investors especially given that there are no significant barriers to trade and investment in the transport and infrastructure sectors.

At the moment, inputs for the infrastructure sector in Indonesia are dominated by domestic supplies and imports from China.

At times, solving local issues requires a global perspective.