Economic Integration First, Then Infrastructure Development

Coordinating Minister of Economic Affairs, Hatta Rajasa was disillusioned with the infrastructure progress of Belawan Port. In 2006, the Infrastructure Summit had decided to improve that port, but until now it takes 6 days to load CPO into 20,000 deadweight ton vessel.

This case shows us that the government is not serious to develop this country's economy in terms of actions not words. We have a good plan or will, but have poorly execution. Given the fact that Indonesia is the world's biggest CPO producer and Belawan is the country's largest CPO seaport, the government wastes this competitive advantage.

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Indonesia ranks 75 out of 155 countries in terms of logistics performance index. The logistics cost 25% GDP while other countries such as Thailand 19%, US 10%, respectively. It is clearly an indication that we have high cost of logistics. Reportedly the shipping of 40-foot container from Padang to Jakarta cost USD 600 while form Jakarta to Singapore will cost USD 185. Unsurprisingly, the China's cheap fruit has been ubiquitous in Indonesia and it seems outnumbering the local fruit. The cow breeders in Lampung get a lower price of Californian corn than of Gorontalo.

There is a network problem to connect the component of goods transportation before assembled. It might be because of cumbersome and corrupted bureaucracy, dishonest government officer and poor network idea and plan.

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There 2 key issues concerning with our not-reflected-the-potential development, namely: economic integration and execution. Economic integration means to have economic output produced and delivered efficiently. It results the soaring price of domestic goods and services production. The success of best planning definitely depends on execution.

However before executing infrastructure, the integration issues have to be addressed first. It includes the issue of economic equity mainly the development of outer Java. It is flabbergasting to see many toll roads are being constructed in already-crowded Java Island despite many alternatives of transportation such as railway.

The government should focus on the economic cluster planning from upstream to downstream in continuous and efficient flow to produce cheaper products. After mapping the material or component flow, it should be followed by the best infrastructure.

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