The success of development in Indonesia is generally classified into national development and regional development. Both are integral parts that are interrelated. Although regional development is carried out following the actual conditions and needs of the region, it is still within the corridors of the Unitary State of the Republic of Indonesia (NKRI) while still prioritizing harmony, consistency and synergy with National Development policies.
The progress of the economy in many regions is a good signal for the national development target. To achieve this, it takes synergistic collaborative efforts between the central, regional, civil society, and other relevant stakeholders in realizing development goals to fulfil the community’s welfare.
In the spirit of collaboration, on 23-25 November 2020, PWYP Indonesia, in collaboration with the Directorate General of Regional Development of the Ministry of Home Affairs, held a workshop entitled “Understanding the Macro-Economic Indicators of National Development”. This workshop was conducted to increase the knowledge, capacity and quality of individuals in the Sub-Directorate for Energy and Mineral Resources (ESDM) – Ditjen Bina Bangda in facilitating the quality development of regional development planning.
Synchronization of National and Regional Development Targets and Indicators
One of the speakers who attended the workshop was Eka Chandra Buana from Bappenas. Eka Chandra alluded to Indonesia’s big development plans and targets, which will occupy the 5th largest GDP position in the world by 2045, and targets Indonesia to get out of the middle-income trap. Then, the 2020-2024 development targets include economic growth (5.4-6.0%), poverty level (6.5-7.0%), Gini ratio (0.36-0.374%), open unemployment rate (4 , 0-4.6%), human development index (75.54%), and reduction in greenhouse gas emissions (27.3%). That was what he emphasized at the beginning as a big plan at the national level.
He also conveyed that pursuing this target requires equitable economic growth in the regions. The entire region must not be spared, including eastern Indonesia, so that development is centred on Java and Sumatra. Economic transformation is the key to improving the industrial economy. Although he also explained the challenges of economic growth of -5.3% amid a pandemic, Bappenas does not intend to change the RPJMN because it will impact the annual Government Work Plan (RKP) target. Bappenas has chosen to prioritize handling economic and health recovery, and this requires the Ministry of Home Affairs assistance in guarding the regions.
Indicators and Calculations of Macro-economic Development
Furthermore, Wisnu Winardi from the Central Statistics Agency (BPS) discussed, more specifically, the calculation of macro-economic development indicators. Previously, he introduced three statistics in Law No.16 of 1997 on Statistics, namely basic statistics covering Gross Domestic Product (GDP / GRDP), economic growth, inflation, unemployment rate, poverty rate, HDI. Then sectoral statistics: number of health centres, number: fields, doctors, teachers, students, and detailed statistics collected by BPS and ministries/agencies / OPD for micro and particular purposes.
In training, Wisnu focused on discussing the indicators of the Gross Domestic Product / Gross Domestic Product. The two main factors are price and volume. GDP is divided into two, namely GDP at current / nominal prices, which considers the value of goods and services in the current period and GDP at constant/accurate prices (ADHK), which uses calculations for a certain period (base year). Furthermore, current price GDP aims to calculate economic growth, while real GDP is used to make comparisons over time. Also, he emphasized that GDP only records goods and services consumed or economic flows that are transactions in nature, so that GDP cannot record financial assistance.
Said Ali, another representative from BPS, reviewed the macro indicators for the Human Development Index (HDI). The HDI calculation consists of 3 main components, namely health, education and expenditure. According to him, the HDI method used in Indonesia can measure fiscal policy and the performance of regional heads.
In addition to measuring HDI, he also conveyed how to increase HDI based on the measuring component. For example, how to increase life expectancy, which is part of the health component, is to reduce infant mortality and improve the supporting factors, both in terms of the number and distribution of medical personnel, sanitation, immunization, clean water. Likewise, with the educational aspect, what needs to be considered is the ratio of teachers to students, learning facilities, calculating whether the child is ready to attend the next level of education, and other related factors.
Through this training, the participants also found several interesting facts, including the difference in the emphasis on tasks and functions of the institution itself. For example, Bappenas and BPS both hold macroeconomic aspects but have a different function emphasis where Bappenas can project through data taken from BPS, while BPS has the main task of preparing the data to have the authority to carry out projections.
Besides, BPS is only authorized to display macro data, such as the extent to which society is progressing at a particular time. In contrast, microdata, such as by name by the address, which usually aims to collect data on poverty alleviation programs, is the Ministry of Social Affairs domain. If BPS violates this authority, it can be condemned by the international world.
Development Target Indicator Analysis Method
Apart from government agencies, the training also invited civil society representatives, namely Robert Na Endi Jaweng from KPPOD. He introduced several approaches and ideal models of national development, including the intra-state relationship approach, where state and community interaction in the successful development, if it is small done, will lead to centralization. He also mentioned the importance of a bottom-up participatory process to represent the community’s needs. Besides, he also reminded us that the most significant weight lies in economic decentralization so that we should not only dwell on the political and fiscal sectors, ignoring other economic aspects.
Berly Martawardaya, from a well-known economic research institute in Indonesia, namely INDEF, and a lecturer at FEB UI, conveyed that the method of calculating GDP / GDP can be in terms of income and expenditure. Most developed countries use the income method, while developing countries such as Indonesia use calculating expenditure. Then realizing people’s welfare is done by increasing the capital obtained from an investment. Therefore, investment needs to be encouraged and increased in order to increase GDP. According to him, the government needs to prepare facilities and access to industrial areas that make it easier for companies to enter and build businesses.
Berly also said that increasing regional contributions to national development is by improving the quality of education and health in the regions and improving and fulfilling community nutrition, and conducting work skills training. He is optimistic that it can be successful if this is done, for example, in Bantaeng, South Sulawesi and Banyuwangi, East Java. Only in 3-4 years it can attract and increase investment.
Next, two speakers provide simple descriptions of economic symptoms and phenomena that can signal early changes in the economic situation. For example, Berly from INDEF sees a potential curse on natural resources due to leaking of state revenue in the EMR sector, which may occur in Kutai Kartanegara, because there are many large unproductive buildings and poor communities that are easily found while wealth is only centred on a handful of people known as elites.
Then, Wisnu from BPS also conveyed an example of economic symptoms being sluggish in a simple way. By seeing many malls with quiet visitors, relatively few roadside advertisements, then in Bali as a tourism area but quiet with tourists, while in villages it is indicated that the economy is improving when there are many see wood/material on the side of the road. It shows the productivity of the villagers, so if the opposite happens, it shows a decrease in economic activity. It shows the diversity of economic phenomena that can occur in various regions.
This workshop provided sufficient knowledge and insight that were broad and easy to understand as an initial introduction to macro-economic indicators of development. The follow-up in the future is how to reduce macro indicators and connect with problems in the EMR sector which will be our next training plan with the Directorate General of Regional Development of the Ministry of Home Affairs. We must guard against the spirit of developing the country’s economy, including looking for gaps in the improvement of sustainable natural resource management to provide balanced and significant results for the national and regional economies.
** To read a complete explanation of the spokesperson, we have a training report which can be downloaded via the following link: Download Report
Authors: Wicitra & Meliana Lumbantoruan