Economy grows robustly

Economy grows robustly

The provisional estimate by the Central Bureau of Statistics put the growth of Indonesia's economy in terms of gross domestic product at 7.34 percent last year. That figure far exceeded the most optimistic projections of between 6.5 and seven percent made by most private-sector economists. But, as the bureau explained, its estimate used the 1993 figures as the base year instead of the 1983 figures on which most analysts had made their projections. The bureau acknowledged that its own estimate would have come out at 6.81 percent, or close to the private-sector economists' projections, if it had been based on the 1983 figures.

As the change in the base year resulted in a much higher figure one might suspect that the government statistics agency deliberately fiddled with its data to get an impressive record to announce to the public.

However, such suspicion is totally unwarranted. We do not think the bureau would ever play games with such a key economic indicator. Instead, we are impressed by the great efforts of the agency to maintain its credibility by gathering as objective, accurate, up to date data as possible without any obligation to satisfy anyone.

Indeed, because the economy has been undergoing significant changes in its structure over the last 10 years, 1983 is no longer relevant as the base for calculating the national output account.

The changes in the economic structure have been so rapid and so extensive as a result of the massive economic reform which was started in 1985 that the sectoral shares in the GDP and the sectoral weighted growth have significantly changed as well.

We highly appreciate the efforts by the bureau to steadily improve the reliability and relevance of its statistics. For example, the agency also is now working to change the composition of the commodities used in the consumer price index to get a more reliable measure of inflation.

As foreigners pour billions of dollars into the emerging market countries like Indonesia, the availability of more up to date, reliable economic data has become one of the factors considered in picking the place of investment. Economic statistics which are timely, accurate, comprehensive and objective are crucial for investors wanting to analyze business prospects and risks. Calculated risks are the factor that makes business investment different from gambling.

As the statistics bureau chief, Soegito, explained, the sectoral shares in Indonesia's GDP have changed greatly over the past decade. Between 1983 and 1993, the contribution of the agricultural sector to the GDP declined from 22.9 percent to 17.9 percent and that of the quarrying and mining sector dropped from 20.8 percent to 9.6 percent. There is nothing to be deplored in these changes as they have been expected and are in line with the direction of the well planned economic development. But the contributions of the manufacturing sector grew impressively from 12.7 percent to 22.3 percent, the trading, hotel and restaurant sector from 14.7 percent to 16.8 percent and the banking and financial services from 5.3 percent to 7 percent.

We are nonetheless worried about the agricultural sector, not because of the sharp decline in its contribution to the GDP, but rather due to its very low growth rate, a mere 0.32 percent last year. It is easy to find an excuse in climatic changes which are beyond our control. For example, the decline in the national rice output over the past two years has been blamed mostly on unfavorable weather.

We should not forget that despite its smaller contribution to the GDP, the agricultural sector remains the largest single employer and is the bastion of our food security that is crucial for our social and political stability.

It is deplorable that, amid the overall robust growth of the economy and the increasing attention given to high technology in pursuit of higher value added, the productivity of such a basic sector has not improved much. Why does agro-business, which has always been praised as one of the most potentially promising sectors, remain a laggard? Why have farmers consistently complained about the extreme shortage of high-yielding seeds for food and horticultural crops? Research on high-yielding seeds, we think, is no less important than that done in the high-technology sectors. It is to be hoped that the extremely dissatisfying performance of the agricultural sector will force our agronomists and other research and technology institutes into meaningful retrospection on the priorities of their working programs.