Editorial: Services Sector Will Take Load Off Coal

By webadmin on 10:03 pm Aug 30, 2012
Category Archive

If there was ever a time for the government and the private sector to devote more attention to the country’s services sector, it would be now.

A global slump in commodity prices, especially coal, threatens the jobs and livelihood of hundreds of thousands of workers in Kalimantan and other parts of the country. Hundreds of smaller coal mines are at risk of shutting down due to the sharp drop in prices.

The fallout from the dire situation in the coal sector could ripple through the economy. Already many companies, especially in the consumer sector, have reported slower sales in recent months.

Coal miners in East Kalimantan alone employ almost 6,000 people working in the mines, up from 4,200 last year.

The coal mining industry as a whole, including supporting industries, employs an estimated 300,000 people this year. This means that potentially half of those currently employed in the industry could lose their jobs.

Commodity prices are famously cyclical and indications are that the world could be heading for a downturn in prices after more than a decade of record highs. This will have a massive impact on the Indonesian economy.

Services such as finance, accounting, legal and tourism, however, are more resilient and do not experience the yo-yo effect of the commodities sector. Developing the services sector requires greater investment in education, training and infrastructure. It requires high-speed broadband so communications and data transfer can be faster and more cost efficient.

Indonesia’s rich natural resources have helped to sustain economic growth over recent years. But there is now great uncertainty for this sector so jobs must be created in other field to compensate. Unless we act quickly, our economic growth and social development could be at risk.