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29 July 2020 (closed)
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Senior economist at the Institute for Development of Economics and Finance (INDEF), Didier Damanhuri, believes that Indonesia’s two presidential candidates - Joko Widodo (popularly known as Jokowi) and Prabowo Subianto - are both similar in economic approach as both men are primarily focused on high gross domestic product (GDP) growth as the measurement for economic development, while, in fact, many countries that only focus on GDP growth show a high degree of economic inequality.
Damanhuri emphasized that high economic growth does not guarantee welfare. "Not only the two presidential candidates or the current government, but also the world is trapped by an overfocus on GDP to achieve maximum economic growth," he said in a seminar, titled ‘Economic Reform or Status Quo?’ in Jakarta on Thursday (26/06).
"If we only focus on economic growth then Indonesia will fail. It will not fail to achieve economic growth, but it will fail to bring welfare and equality to Indonesian. For more than a decade, Indonesia has suffered increased inequality (in terms of income distribution) evidenced by the higher Gini ratio," he said. Between 1999 and 2013, the ratio rose from 0.31 percent to 0.41 percent (a coefficient of zero expresses perfect equality, while one implies perfect inequality). In the last three years (2011-2013), however, the ratio remained stable at 0.41 percent.
Indonesia's Gini Ratio:
Sources: Statistics Indonesia
Presidential candidate Prabowo Subianto stated to target economic growth at a pace of above 10 percent, while Jokowi targets a more realistic growth rate of +7 percent per year. However, few has been stated about how to tackle the problem of inequality in Indonesian society.
As an example of the risk of solely focusing on GDP growth, Damanhuri pointed out that a developed country such as the USA experiences high inequality despite being a superpower. Figures of poverty and homeless people are high in the USA. On the other hand, those countries that not only blindly chase GDP growth but regard GDP as merely one of the macroeconomic indicators, have a more stable economy, such as the case of Sweden. In Sweden, the working class is the world’s most prosperous working class (similar to Japan). Not unimportantly, northern and western Europe provide good social security for its communities. The government of Indonesia introduced its universal health-care program earlier in 2014 (called the Social Security Organizing Body, or abbreviated BPJS) and aims to cover all Indonesians by 2019.