Closing Economic Disparity in The Outermost And Border Regions: Assessing Gaps And Opportunities in The Electricity Sector

Abstraksi

As the largest economic in Southeast Asia, Indonesia has just surpassed one trillion USD of gross domestic product in 2017 marking its first entry to the trillion dollar club with the US, Australia, South Korea, and Japan. However, economic disparity is still a major problem threatening the country’s future prosperity. Spatial inequality between rural and urban areas remains to exist and is mainly driven by unequal access to and unaffordable cost of the public infrastructures such as electricity. The national electrification ratio reached 91,16 % in 2016, among the lowest compared to other ASEAN countries, with most of the regions fallen behind lied in the eastern part of the archipelago. Insufficient distribution of electricity can significantly hamper the economic growth in the lower income areas, hence depressing deeper the inhabitants’ productivity. This paper evaluates the feasibility of existing legislation for Indonesia's electricity sector in its light to reduce economic disparities between-regions and intra-regions in Indonesia. A review of the systematic literature on publications and research reports is used to provide input to the legislation of the electricity sector. The study concludes that there is significant space for continuous improvement of existing regulatory designs or reform of institutional arrangements. It is clear that the lack of coordination between the central government through the technical ministries and the provincial / district / municipal government has deteriorated the effectiveness of the policy. Redefining the national electricity narrative to reflect the greater energy accessibility and affordability is imperative to close the economic disparity.