Urbanization Has a Positive Impact on Economic Growth

By : Herry Barus And Aldo Bella Putra | Friday, September 21 2018 - 15:30 IWST

Kepala Bappenas Bambang Brodjonegoro. (Foto: IST)
Kepala Bappenas Bambang Brodjonegoro. (Foto: IST)

INDUSTRY.co.id - Jakarta - Minister of National Development Planning / Head of Bappenas Bambang Brodjonegoro said urbanization could have a positive impact on the economy if managed properly.

"Urbanization has a positive impact on economic growth if we deal with it properly. One of the first is to complete basic services, both basic infrastructure, sanitation, drinking water, housing, and third, we will fix public transportation," Bambang said in Jakarta, Thursday (20 / 9/2018)

In 2045, Indonesia will experience a large population growth where the population is projected to be around 318.9 million people, with 67.1 percent of people living in urban areas.

According to Bambang, this potential must be exploited because poorly managed urbanization can lead to urbanization without growth.

"We do urbanization with the three main activities, then we can benefit more from the existence of urbanization on growth," Bambang said.

In 2045, the population is predicted to increase by 63.4 million people or 24.7 percent compared to 2015. This number is almost twice that of Malaysia's current population and three times that of Australia. In 2045, the workforce was also projected to reach 206 million and the elderly population, aged 60 years and over, to 44.9 million.

Nevertheless, the growth and distribution of the Indonesian population is not balanced. Most of the populations, 59 percent of whom live in Java and 21 percent in Sumatra, make 80 percent of the population live in the western part of Indonesia.

Java Island has become the most densely populated island with more metropolitan areas compared to other islands.

 According to Bambang, it is important for Indonesia to spread growth from Java to other large islands, to balance and reduce inequality between regions. Therefore, a new metropolitan area is planned to be developed outside Java.

The metropolitan area is important for Indonesia where agglomeration of economic activities in urban areas encourages economic growth. In 2015, the contribution of the metropolitan area was more than one third of national GDP.

Rapid urbanization in Indonesia during 1996 to 2016 was indeed followed by economic growth, but not as strong as in China and in other East Asian and Pacific (EAP) countries.

 For every one percent increase in the share of the urban population in China and EAP countries, per capita income grows by 3 percent and 2.7 percent annually. As for Indonesia, growth is only 1.4 percent per year. (Ant)

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