Key Takeaways Indonesia Development Forum 2017
The theme of the 2017 Indonesia Development Forum IDF was “Fighting Inequality for Better Growth”. Inequality is identified as one of the biggest threats to the global economy, determined by structural factors as well as policies. Inequality intersects across economic, social and political features, which become mutually reinforcing. Measures to reduce inequality ideally should be part of a wider economic and social policy framework.The main takeaways from the 31 panels and plenaries at the 2017 IDF are:
- Solid growth is a necessary pre-condition to improve social welfare. But there is inevitable unevenness to development, since it does not start everywhere at the same time for everyone.This is not always negative, as imbalances, if managed correctly, can expand opportunities for wealth to be shared. Inequality occurs in all sectors and is multidimensional. Said Professor Ravallion in his keynote speech, “as long as the poor participate in that growth, as long as people catch up, we can be quite happy with the situation”.
- To effectively address the problems of rising inequality, Indonesia needs a better understanding of the range of factors that contribute to inequality. This means looking beyond statistical data to evidence generated through qualitative, multi-disciplinary and multi-sectoral research. Indonesia already has initiatives and practices that have been successful in addressing inequality, particularly at the local level. These need to be documented and shared so that they can be scaled up or replicated elsewhere. However, new and innovative ideas will also be critical for developing approaches to this complex development challenge.
- Reducing inequality will requirereduction of bottlenecks in public administration (such as business licenses and rent-seeking) and creation of employment opportunities, especially for women. The availability of a trained workforce is critical for boosting productivity. Investmentsshould be channelledto priority sectors, whichcan enhance the quality of Indonesia’s human capital.
- Inequality is not just about poverty, it is also about inequality of opportunities. According to Minister Brodjonegoro, “Indonesia needs to share the pie of the economy between big business, small and medium enterprises and micro level businesses”. Indonesia will only be an advanced economy if there are more entrepreneurs, not just in terms of numbers but also in terms of quality. Indonesia needs to increase the number of social entrepreneurs, in order to promote economic empowerment, especially in agriculture and fisheries, because most poor people in Indonesia are farmers or fishermen. The rise of social entrepreneurship and the digital economy can open up more employment opportunities.
- Reducing inequality will not be possible if the country does not ensure that the highest income group pay the tax they are supposed to pay. Speakers agreed that increasing Indonesia’s revenues from taxation will be critical to funding government efforts to promote economic growth, such as infrastructure development and programs to address inequality through social security and cash assistance for low-income communities.
- A ‘one-size-fits-all’ approach is not appropriate for addressing the complex problem of inequality. Development policies need to considerthe local context, including the social and cultural context, and each region’s different needs and characteristics. Local wisdom and best practices need be adopted to reduce regional disparities
- Development policies need to be inclusive, taking into accountthe particular needs of women and other vulnerable groups, so that no one is left behind. Inequality is not only the government’s agenda. It needs participation from outside the government. Government needs the support of and collaboration withcommunities, NGOs, academia and local governments. This approach requires strong coordination and collaboration between central and local governments, between regions, and across ministries, government agencies and various social groups. Evidence-based policy making will accelerate poverty alleviation efforts. And not just in planning: several speaker underlined the importance of learning more about the capability for actually implementing policies.
- One of the challenges to addressing inequality effectively is the availability and accessibility of data. The government has launched a new initiative designed to integrate data from across all ministries and agencies into a unified system. This will help the government to access the information it needs to appropriately plan, implement and evaluate policies to address inequality. It will also enable the wider publicto obtain information about government plans and programs and the impact they are having.
- Many speakers also highlighted the fact that inequality in Indonesia cannot be addressed without attention to the growth of Indonesia’s eastern provinces. Indonesia’s regional and remote areas need to be seen as assets, and not as burdens. Infrastructure development–particularly in eastern Indonesia–will be critical for improving connectivity and stimulating growth. New infrastructure should be appropriate for eachregion’s socio-economic context. The community’s capacity to use infrastructure should also be developed. This includes the capitalisation of cultural assets through tourism and creative industries.