UNS — The economist from Universitas Sebelas Maret (UNS) Surakarta Lukman Hakim, Ph. D, gave three suggestions for the government in accelerating economic recovery in 2021. The recommendations were delivered by Lukman Hakim, Ph. D, when providing material in the 43rd Wedangan Ikatan Keluarga Alumni (IKA) UNS on “Economic Outlook 2021” held through Zoom Cloud Meeting, Saturday evening (6/2/2021).
The first suggestion delivered by Lukman Hakim, Ph. D, is improving the depth of the financial sector (M2/ GDP) in Indonesia, which is still at 40%. He stated that Indonesia’s financial deepening is left far behind among the ASEAN countries.
“We are not improving. In 2011 we were below the Philippines. It is still the same. M2/ GDP is the ratio of money and GDP. Since long ago, Indonesia never increased, only around 40%,” Lukman Hakim, Ph. D. stated.
Lukman Hakim, Ph. D also compared Indonesia’s M2/ GDP with China. He stated that in 1977, Indonesia’s M2/ GDP was 15%, not far off from China with 25%. But now China has recorded M2/ GDP far higher than Indonesia with above 200%. This number shows that when China has 100 in their GDP, they have 200 in their money, which means they have excess cash. “This is why they can have an expansion to many places. While Indonesia experiences a lack of cash, that’s why we need to borrow, and when we need to boost the (economic) growth, we have no money,” he added.
Lukman Hakim, Ph. D second suggestion is the establishment of Indonesia Incorporated. He mentioned that this is an old dream to establish an integrated industry in the agricultural sector to the industrial sector, from the upstream to the downstream, from domestic industry, MSME, to medium and big industry. Lukman Hakim, Ph. D stated that the supply chain factor is the key to achieve this. He gave an example of China Incorporated success, which attracted Japanese industry and companies to move their factories to China.
“Many Japanese companies that operate in China, such as Toyota, refused to return to Japan,” Lukman Hakim, Ph. D. said.
He also reminded the government regarding forward and backward linkages sectoral, which is getting weaker. Lukman Hakim, Ph. D sees that the economic sectors that still hold that ability to maintain Indonesia’s economy are mining and excavation. This condition is a setback because Indonesia’s export went back to the colonial era when the country only exported extractive goods such as coals, golds, and other mining products. Simultaneously, the manufacturing sector does not produce export goods and instead is replaced by imported goods to meet the national needs.
The last suggestion delivered by Lukman Hakim, Ph. D is the importance of building an incentive system for farmers and MSMEs. He stated that a blueprint is needed to prepare the incentive system. Currently, China and Japan have provided highly comprehensive incentives for the agricultural sector and MSMEs. According to him, the future war will be in food and energy, so the government should place the food and energy sector as the priority. Humas UNS
Reporter: Yefta Christopherus AS
Editor: Dwi Hastuti