Infrastructure is an important key to improving West Java economy
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Infarstruktur Kunci Penting Peningkatan Ekonomi Jabar
07 September 2021
Bandung – Infrastructure construction is an important key to improving West Java’s economy in the next few years.
“The government is targeting Indonesia’s economy to grow by six percent until 2022. However, to pursue the achievement, Indonesia’s infrastructure must be boosted,” Head of Bank Indonesia Representative Office of West Java, Herawanto, said during a webinar recently.
The event was held by UNPAD (Padjadjaran University) SOE Centre, Trisakti Transportation and Logsitics Institute (ITL), as well as Bank Indonesia Representative Office of West Java, and it was themed Logistics Infrastructure Support Improvement for the Competitiveness and the Acceleration of West Java’s Economy. The event is supported by PT Penjaminan Infrastruktur Indonesia, Bank BJB, as well as UNPAD’s Management Science doctorate program of the Faculty of Economics and Business.
Besides that, he continued that infrastructure construction must be carried out evenly in all areas so that economic connectivity could be established excellently. Herawanto said that, to pursue the achievement, Indonesia’s infrastructure must be boosted again as it was currently ranked 57th in the world.
An infrastructure construction budget of Rp417 trillion is expected to be distributed to West Java.
“Meanwhile, for West Java, its economy the third largest in Indonesia. West Java’s infrastructure is the key to boosting the national economy. If at least Rp417 trillion of the budget is allocated for West Java, we can contribute by up to 0.45% to the GRDP (gross regional domestic product). Moreover, there will be other multiplier effects that will provide a long-term impact,” he stated.
He said that balanced infrastructure construction was required in the northern and the southern parts of West Java, which meant that development in the southern part of West Java must be accelerated as it had potential in the tourism and the agribusiness sectors. However, the development of the southern part of West Java must be supported by infrastructure, such as distribution centres, ports, and a telecommunications network to develop tourism.
To realise infrastructure construction in West Java, especially in the southern area, Herawanto is recommending several important steps, such as financing that must be boosted by creative financing that uses a financing scheme that utilises local and foreign banks. Then, synergy among stakeholders must be improved by establishing a work unit that will handle various issues on the field, such as land acquisition and other issues.
“Last but not least, tech-based economic management in conservation areas,” he stated.
Meanwhile, UNPAD Business and Economics Faculty Professor, Ina Primiana, said that most logistics route were in the western area, such as toll roads, railways, ports, and other logistics facilities including Tanjung Priok and Soekarno-Hatta Airport.
“Meanwhile, most exports have always came through West Java. For example, in June 2021, it [exports] grew 15%. So, it is important for West Java to have its own port. We must also focus on the eastern part of West Java as it turns out to have complete facilities. Moreover, the processing industry can grow by up to 41%, while transportation and warehousing can only grow by 5%,” she stated.
According to Ina, West Java must be attractive so that investments can come to the east, the north, and the south. So, West Java must construct an integrated logistics infrastructure to suppress costs. This must also be in line with the characteristics of the commodity industry and take advantage of the interest to invest in West Java by maximising regulations that are not changed.
UNPAD SOE Centre Chairperson, Yudi Azis, said that the priority of West Java’s infrastructure construction was to build digital technology-based connectivity infrastructure. This can be carried out by taking several steps, such as through creative financing that diversify financing sources and utilises digital banking. Then, it can also be carried out through hub interconnectivity and logistics digitalisation between the northern and the southern parts of West Java and by maintaining the economic management of technology-based conservation areas by prioritising the development of the agribusiness and the tourism industries.
“As well as synergy among stakeholders [that must be improved] using the pentahelix approach to improve connectivity, regulations, priorities, and debottleneck logistics infrastructure in the national level that are related to West Java or in the regional level,” she said.
