Encourage Incentives to Boost Regional Competitiveness

Press Release

Encourage Incentives to Boost Regional Competitiveness

Badung, Musi Banyuasin, Tana Tidung Top Sustainable Regional Competitiveness Index

Jakarta - Innovation based on the principles of sustainability has not been a priority in regional development. Encouragement in the form of incentives is needed so that sustainable regional development can move forward in line with the pillars of economic growth, environmental conservation, social inclusion, and good governance.

This was one of the recommendations given by the Regional Autonomy Monitoring Committee (KPPOD), Kinara Indonesia, and the Katadata Insight Center to regions seeking to climb up the Sustainable Regional Competitiveness Index.

"Innovation based on the principles of sustainability must be a regional priority, especially for regions that rely on natural resources as a foundation for their economy now and in the future. For regions with good [conservation efforts] and social inclusion, additional incentives are needed so that they can develop the pillars of economic [growth] and good governance through sustainable innovation," KPPOD Chairman Robert Na Endi Jaweng explained in Jakarta on Nov. 5, 2020.

The regions that made the Sustainable Regional Competitiveness Index were considered to have successfully carried out sustainable development were acknowledged in the 2020 Katadata Regional Summit.

The basic performance indicators for the Sustainable Regional Competitiveness Index are a sustainable environment, a resilient economy, social inclusion, and good governance. The winning regions were selected based on a study conducted by the KPPOD in the first quarter of 2020. The KPPOD listed 356 regions in Indonesia using secondary data for 2018-2019 sourced from Statistics Indonesia (BPS), environmental agencies, the Regional Development Planning Board ( Bappeda), and regional working units (SKPD), among other institutions.

The results of the Sustainable Regional Competitiveness Index are expected to contribute to the country in a number of ways. The central government, for example, is expected to use the index as a reference for policy development, while regional governments plan to improve their regional planning and budgeting policies based on its results.

For entrepreneurs and business associations, the index can be a source of information and reference in their research on investment ecosystems across Indonesia. And finally, civil society groups can use the index to support and strengthen their efforts in advocating for the improvement of regional economic governance in a sustainable manner.

The KPPOD study also shows that Indonesia has an array of supporting factors that can be tapped to further develop sustainable competitiveness in its regions, such as abundant natural resources, high-quality locally made products, adequate infrastructure, social support, and local leadership that supports improved governance.

However, the Sustainable Regional Competitive Index also shows that the average regional competitiveness score in Indonesia is still between 40.59 and 68.30, which indicates a moderate level of competitiveness. According to the index, 164 regions (46.17 percent) still fall below the national average, while only around 3 percent have a high competitiveness score. "This reality shows that great efforts are still needed to encourage regional capacity-building, especially in achieving sustainable regional competitiveness," Endi said.

Another problem that needs attention is the wide disparity in competitiveness between regions located in the western and eastern parts of Indonesia, as indicated by the fact that 71.94 percent of the regions in western Indonesia are considered to be moderately competitive. This disparity is particularly evident in the economic pillar (availability of economic infrastructure, adequate investment ecosystem) and the social inclusion pillar (quality of human resources). Striking a balance between pillars is the key to increasing sustainable regional competitiveness. This balance has become even more important with the impacts of COVID-19 hitting many areas hard.

With regard to the results of the Sustainable Regional Competitiveness Index, Badung regency in Bali tops the list with a score of 68.30, followed by Musi Banyuasin regency in South Sumatra with a score of 64.48, and Tana Tidung regency in North Kalimantan with 63.54.

Badung regency was particularly lauded for its delivery services of various goods, public transparency, and government support, as well as regional regulations that support environmentally friendly development efforts.

Musi Banyuasin regency was commended for its good governance, a highly committed local government, and regional innovations for sustainable practices. Meanwhile, Tana Tidung regency was highlighted for having an accountable budget and a high level of social inclusion.

These three best-rated regencies will receive capacity-building training from Kinara Indonesia.

"Kinara Indonesia appreciates local governments that innovate to apply the principles of sustainability in their efforts to increase regional and national competitiveness," said Kinara Indonesia Director Vivi Laksana.