REPUBLIKA.CO.ID, JAKARTA -- Increasing productivity is one of the efforts the government can make to maintain and increase Indonesia's economic growth and stability, an economist has said.
"Actually, Indonesia has strong industrial productivity, but it should increase its competitiveness to support the country's more stable economy," Derek Carnegie, economist of the Organization for Economic Cooperation and Development (OECD), said here on Thursday.
Derek said the increase could be observed from Indonesia's manufacturing sector, which at present was relatively better than those of other countries grouped in the BRICS (Brazil, Russia, India, China and South Africa0.
Besides, Indonesia could also achieve a sustainable economic growth through improvement in the national education system by encouraging the involvement of local governments in providing supporting infrastructures.
"Indonesia could expand education access for the people through improvement of government police and adoption of an efficient conditional cash transfer program," he said.
Indonesia also needs to reinforce its natural disaster management scheme, particularly the system which is related to floods, and to reform its pension system which a present is one of the pillars in its social insurance system.
"The pension system must be reinforced because at present Indonesia has not yet applied an adequate social insurance system which provides income for the majority of Indonesian people retiring from services," he said.
Derek added that besides the challenges mentioned above, the Indonesian government should also improve its business climate by simplifying business procedures to boost investment which so far has become the biggest contributor to the country's economic growth.
The OECD has predicted that Indonesia's economic growth will be the highest one in Southeast Asian countries in the 2014-2018 periods with an average growth of 6.0 percent followed by the Philippines 5.8 percent, Malaysia 5.1 percent and Thailand 4.9 percent.
Besides, Singapore's economic growth will also reach 3.3 percent in the same period while Cambodia, Laos, Vietnam and Myanmar will grow fast in mid-term.
In the meantime, for this year, the National Economic Committee (KEN) predicted the Indonesian economy would grow 5.7 percent falling short of the target of 6.3 percent set earlier.
KEN chairman Chairul Tanjung told a seminar this week the country's economy has slowed down in the past several quarters.
In the third quarter of this year the country's economy grew only 5.6 percent, Chairul said.
"What happens in 2013 is worse than the worst scenario we made in the economic outlook 2013. It turns out that it is difficult to predict what is to come even for only a year," he said.
He said imports have grown faster than exports because of the relatively strong growth of the country's economy amid the global slump.
"As a result Indonesia suffered a trade deficit followed with current account deficit," he said.
He said Bank Indonesia's policy of raising the benchmark interest rate (BI rate) had both advantages and disadvantages.
While it could control inflation and current account deficit, the policy would cause an economic slowdown, he said.
"It seems investors begin to postpone plan to invest waiting until the condition offering good opportunity," he said.
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