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Jakarta Post

Competitiveness index dominated by Java, Bali

  • Satria Sambijantoro

    The Jakarta Post

Jakarta   /   Wed, June 26, 2013   /  08:30 am
Competitiveness index dominated by Java, Bali

Resource-rich East Kalimantan, Riau and Riau Islands are among Indonesia'€™s most competitive and investor-friendly provinces, thanks to their rapid progress in infrastructure building and improvements in institutional bureaucracy, a report says.

However, the three provinces were the only ones outside of the seven provinces of Java and Bali, to secure a place in the top-10 ranking in the Competitiveness Index report jointly prepared by the National University of Singapore (NUS) and the Indonesian Employers'€™ Association (Apindo).

The report measures the competitiveness of all 33 Indonesian provinces based on four variables: macroeconomic stability, institutional planning, business and labor environment, and infrastructure building.

The competitiveness score for East Kalimantan (third in the ranking) surpassed those of densely populated West Java and Central Java, while Riau Islands (eighth) stood one level above major tourist destination Bali.

Meanwhile, Riau was placed 10th in the ranking in which the country'€™s capital, Jakarta, stood atop.

Apindo chairman Sofjan Wanandi said that the report'€™s release was timely as regional leaders now had a bigger role to play in the economy since they had gained a degree of independence from the central government under the Regional Autonomy Law.

'€œIn this regional autonomy era, the [best] way to build an economy is by paying heed to development at the regional level,'€ he said in his keynote speech during the report'€™s release on Tuesday.

Economic development at the regional level was now the backbone of Indonesia'€™s economy, Sofjan continued.

He urged local leaders to implement bureaucratic reforms to improve the investment climate in their respective provinces so that Indonesia could maintain robust investment growth going forward.

'€œThe fiscal strength of regional governments is limited, as 50 to 60 percent of their regional budgets [APBD] have to go on bureaucratic costs. This is why luring more investment is necessary, as regional leaders now need we businessmen more than we need them,'€ Sofjan said.

Investment has been touted as the major driver of growth in Indonesia this year, with the archipelago recording historically high investment of Rp 313 trillion (US$31.6 billion) last year.

Reforms in bureaucracy and the investment climate by regional heads has led to some provinces standing out among foreign investors.

Data from the Investment Coordinating Board shows that, in the first quarter of this year, the top five investment destinations were East Java (attracting Rp 9 trillion in investments), East Kalimantan (Rp 4.8 trillion), South Kalimantan (Rp 3.4 trillion), North Sumatra (Rp 2 trillion) and Jakarta (Rp 1.9 trillion).

With a bulk of investment still being concentrated in provinces in Java and Bali, the government has vowed that Indonesia will aim for more balanced development planning in terms of infrastructure projects.

'€œThe area of Java is now already heavily overloaded and its support level [for economic growth] has reached critical level. If we don'€™t disburse development to other areas, it will be a disaster for our future,'€ said Purba Robert M. Sianipar, an assistant deputy minister at the Coordinating Economic Ministry.

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