Economist Jeffrey Sachs: Indonesia should focus on education, connectivity, R&D

Renowned American economist Jeffrey Sachs suggested that Indonesia invest in three things to help meet its complex sustainable development agenda: education, internet connectivity, and research and development (R&D).

Addressing the first Indonesia Development Forum in Jakarta on 9 August 2017 via video conference, the director of the Earth Institute at Columbia University said he sympathized with the complexity of development challenges facing the Southeast Asian archipelago.

“There is a real balance of challenges,” Sachs said, explaining that Indonesia’s development challenges are spread out across various dimensions.

Indonesia still has a tremendous amount of rural poverty, he said, as well as a high level of stunting. He said children still suffered repeated bouts of disease, often water-borne ones from the lack of safe drinking water and adequate sanitation. Indonesia also faces tremendous education challenges, because its average years of schooling are still quite low.

“For Indonesia to reach full developed economy status, that will require a significant increase in both the quality and quantity of education,” he said.

Indonesia also has significant infrastructure challenges as an archipelagic country, and sustainability challenges that come with continuing high rates of urbanization.

In addition, he said few other countries had Indonesia’s rich biodiversity alongside its direct vulnerability to the impacts of climate change, such as rising sea levels and ocean acidification.

“I sympathize because the sustainable development challenges are highly complex, because there is no simple formula for success,” he said.

“They require tremendous hard work and integrated action for Indonesia to achieve the triple objectives of economic development, social inclusion – including gender equality and narrowing income inequality – and environmental sustainability, which is so crucial for Indonesia.”

Sachs suggested Indonesia focus on a few key points.

“If I had to put my finger on one core investment, I would emphasize education, because the quality of education and increase in years of schooling will be fundamental for the achievement of every other goal,” he said.

In terms of infrastructure investment, he recommended focusing on internet connectivity, which holds significant potential for improving the delivery of many government services, such as civil registration, effective health care, education, and even financial services.

Third, he said Indonesia should increase its investment in research and development, especially through universities. He pointed out that Indonesia’s R&D budget is still extremely low at an estimated half of 1 percent of its national income.

“Indonesia’s future will be based on your capacity to develop new, innovative approaches to ecology, to land management, to service delivery,” he said.

To help pay for these, aside from relying on the private sector and regional initiatives like China’s One Belt One Road initiative, Sachs said Indonesia should strive to increase its tax revenue.

At around 15 percent of the national income, he said Indonesia’s current tax revenue was too low, and that the country should aim for around 20-25 percent of gross national product.

Finally, he said Indonesia should add its voice to the global dialogue on climate change, especially as it is suffering from the increased instability caused by it.

“When you speak, the world will listen,” he said.