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Editorial: To Sustain Growth, We Must Invest in People
February 07, 2012

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The country’s strongest gross domestic growth since 1996 is definitely something to celebrate. Indonesia’s economy grew by 6.5 percent in 2011, higher than the 6.1 percent growth it posted a year earlier.

Rising investment and strong household consumption were the main factors behind the robust growth, which came despite slowing exports. What is really satisfying is that all sectors of the economy did well, reflecting strong underlying fundamentals.

But while we bask in the good news, we must be cognizant of the reality of a slowing global economy. Given the uncertainty that lies ahead, Indonesia in 2012 is unlikely to repeat last year’s performance. What happens in Europe and elsewhere will have ramifications not only for Indonesia but also for all of Asia’s economies.

To maintain our economic success, we must think in a more strategic long-term manner. For the time being, the country can leverage its rich natural resources and cheap labor force. Recent investment has in particular been focused on the mining and plantation industries and this will continue for some time.

The country, however, cannot continue to rely on its natural wealth. It must begin to move up the manufacturing value chain and promote the creative industries. It must attract higher value-added investments that create higher paying jobs if it is to sustain its economic expansion and make sure the good times keep coming.

This is thus an opportune time for the country to upgrade its infrastructure. And not just hard infrastructure — roads, bridges, ports and such — but also soft infrastructure, which means the quality of our human talent. The combination of the two will be crucial if we truly hope to build up our economic capacity and fine-tune the sophistication of our industries to make them more powerful.

The country has a window of roughly 10 years to up its game if it is to compete with the best. The government now has the fiscal strength to invest in hard infrastructure as well as reforming its education system. It must act swiftly to address both of those things.

We can take pride in the economic achievements of the past few years. They have been hard earned. Still, though, it is critical that we push on from here.