Venturing the Golden Indonesia 2045: Are Electricity and Broadband Development for Five Indonesian Priority Industries Impactful?

Arif Zeinfiki Djunaedi; Kautsar Riza Salman; Heri Supriyanto

doi:10.14414/jebav.v27i2.4513

Authors

Arif Zeinfiki Djunaedi University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia
Kautsar Riza Salman University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia
Heri Supriyanto University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia

DOI:

https://doi.org/10.14414/jebav.v27i2.4513

Keywords:

Electricity, Broadband, Industry, Golden indonesia 2045

Abstract

This study aims to examine the impact of electricity and broadband development on the progress of five priority industries in Indonesia. Initial findings indicate a mismatch between policy expectations and their impacts. This research collected secondary data from 2010 to 2019, using a time series approach and bootstrapping 1000 times to strengthen and cover the weaknesses of the method and the short time span. The results reveal that the electronics sector has the greatest beneficial impact both partially and simultaneously from all external variables. Additionally, four industries, except the automotive sector, show the same impact. This report emphasizes the necessity of synergy between digitalization and electrification, asserting the inseparable integration of policies. The automotive sector has experienced significant growth over the past decade, but it has not been directly impacted by these policies. Conversely, the food industry is affected and has emerged as the largest output producer, while other sectors are considered to have growth potential, indicating the need for alternative infrastructure initiatives. This study is expected to provide insights to all stakeholders regarding the impact of government policies and how to maximize business benefits amid global challenges.

Author Biographies

Arif Zeinfiki Djunaedi, University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia
Arif Zeinfiki serves as an Assistant Professor at the Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya, Indonesia. He holds a Bachelor of Arts in Human Resource Management from Universitas Negeri Surabaya (2011) and a Magister in Economics from Airlangga University. While doing lecture he is also active as a consultant in some business in communication and manufacture sector. Arif’s research interests encompass economy growth, human capital, digitalization, and small medium entreprises
Kautsar Riza Salman, University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia
Kautsar R. Salman still active as an Associate Professor at the Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Surabaya, Indonesia. Graduated his doctoral degree from Airlangga University. While doing lecture he is also active as a consultant in some business in cooperation and profession organisation. Salman’s research primarily focuses on sharia law and accounting.
Heri Supriyanto, University of Hayam Wuruk Perbanas, Surabaya, East Java, Indonesia
Heri Supriyanto serves as an Assistant Professor at the Faculty of Technic and Design, Universitas Hayam Wuruk Perbanas, Surabaya, Indonesia. Finish his master degree from Airlangga University.. While doing lecture he is also active as a consultant in some business in hospitality and technology sector. Heri’s research interests technology

References

Agénor, P. R. (2010). A theory of infrastructure-led development. Journal of Economic Dynamics and Control, 34(5), 932–950. https://doi.org/10.1016/j.jedc.2010.01.009

Ali, S., Zhang, J., Azeem, A., & Mahmood, A. (2020). Impact Of Electricity Consumption On Economic Growth: An Application Of Vector Error Correction Model and Artificial Neural Networks. Journal of Developing Areas, 54(4), 89–104. https://ideas.repec.org/a/jda/journl/vol.54year2020issue4pp89-104.html

Allcott, B. H., Collard-wexler, A., & Connell, S. D. O. (2016). How Do Electricity Shortages Affect Industry? Evidence from India. American Economic Review, 106(3), 587–624. https://doi.org/http://dx.doi.org/10.1257/aer.20140389

APJII. (2022). Profil Internet Indonesia [Indonesian Internet Profile] 2022 (Issue June).

APJII. (2024). Indonesia Internet Exchange. Asosiasi Penyelenggara Jasa Internet Indonesia [Indonesian Internet Service Providers Association]. https://iix.net.id

Arif, U., Javid, M., & Khan, F. N. (2021). Productivity impacts of infrastructure development in Asia. Economic Systems, 45(1), 100851. https://doi.org/10.1016/j.ecosys.2020.100851

Ashima, R., Haleem, A., Javaid, M., & Rab, S. (2022). Understanding the role and capabilities of Internet of Things-enabled Additive Manufacturing through its application areas. Advanced Industrial and Engineering Polymer Research, 5(3), 137–142. https://doi.org/10.1016/j.aiepr.2021.12.001

CNBC Indonesia. (2023, August 10). Ironis! Warga RI Doyan Beli Baju Tapi Industri Tekstil Mati [Ironic! Indonesian Citizens Love to Buy Clothes But the Textile Industry Is Dying]. CNBC. https://www.cnbcindonesia.com/research/20230810123226-128-461812/ironis-warga-ri-doyan-beli-baju-tapi-industri-tekstil-mati

CNBC, & Syahputra, E. (2022, September 21). These are 5 priority sectors for Indonesia to face the Industrial Era 4.0 (Ini 5 Sektor Prioritas Indonesia Hadapi Era Industri 4.0). CNBC Indonesia. https://www.cnbcindonesia.com/tech/20220921141239-37-373884/ini-5-sektor-prioritas-indonesia-hadapi-era-industri-40

Djunaedi, A. Z. (2021). Digitalization Impact on Growth & Human Capital: Indonesia Broadband Plan Case Study. Review of Business, Accounting, & Finance, 1(3), 299–309. https://fortunepublishing.org/index.php/rbaf/article/view/31

Falentina, A. T., & Resosudarmo, B. P. (2019). The impact of blackouts on the performance of micro and small enterprises: Evidence from Indonesia. World Development, 124, 104635. https://doi.org/10.1016/j.worlddev.2019.104635

Frischmannt, B. M. (2005). An economic theory of infrastructure and commons management. Minnesota Law Review, 89(4), 917–1030.

Grainger, C. A., & Zhang, F. (2019). Electricity shortages and manufacturing productivity in Pakistan. Energy Policy, 132(December 2018), 1000–1008. https://doi.org/10.1016/j.enpol.2019.05.040

Gujarati, D. (2015). Econometrics by Example Second Edition (2nd ed.). PALGRAVE.

Haraguchi, N., Martorano, B., & Sanfilippo, M. (2019). What factors drive successful industrialization? Evidence and implications for developing countries. Structural Change and Economic Dynamics, 49, 266–276. https://doi.org/10.1016/j.strueco.2018.11.002

Hu, M., Wang, Y., Xia, B., & Huang, G. (2023). What is the relationship between energy consumption and economic development? New evidence from a rapidly growing economic development region. Environment, Development and Sustainability, 25(4), 3601–3626. https://doi.org/10.1007/s10668-022-02196-8

Huseien, G. F., & Shah, K. W. (2022). A review on 5G technology for smart energy management and smart buildings in Singapore. Energy and AI, 7. https://doi.org/10.1016/j.egyai.2021.100116

Indonesia Central Bureau of Statistics. (2024a). Tabel Dinamis Industri [Industry Dynamic Tables]. Badan Pusat Statistik Indonesia. https://www.bps.go.id/subject/170/industri-mikro-dan-kecil.html

Indonesia Central Bureau of Statistics. (2024b). Tabel Statistik Listrik [Electricity Statistics Table]. Badan Pusat Statistik Indonesia Pusat Statistik. https://www.bps.go.id/id/statistics-table/2/MzE0IzI=/listrik-yang-didistribusikan-kepada-pelanggan--gwh-.html

Indonesia Central Bureau of Statistics. (2024c). Table Komunikasi Dinamis [Communication Dynamic Tables]. Badan Pusat Statistik Indonesia. https://www.archive.bps.go.id/subject/2/komunikasi.html#subjekViewTab3

ITU. (2014). Broadband & Sustainable Development Why Broadband Should be Prioritized in The Post 2015 (Issue January 2014).

ITU. (2019). Economic contribution of broadband, digitization and ICT regulation: Econometric modelling for the Asia Pasific Region. In International Telecommunication Union. https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=Economic+contribution+of+broadband%2C+digitization+and+ICT+regulation%3A+Econometric+modelling+for+Asia-Pacific&btnG=

ITU. (2024). ITU-D ICT Statistics. International Telecommunication Union. https://www.itu.int/itu-d/sites/statistics/

Javaid, M., Abid Haleem, Pratap Singh, R., Rab, S., & Suman, R. (2021). Upgrading the manufacturing sector via applications of Industrial Internet of Things (IIoT). Sensors International, 2(August), 100129. https://doi.org/10.1016/j.sintl.2021.100129

Li, B., Li, L., Li, R., & Yue, Y. (2022). Internet and firms’ exports and imports: Firm level evidence from China. World Economy, August. https://doi.org/10.1111/twec.13310

Liu, Y. (2015). The Bootstrap Estimation In Time Series. https://doi.org/https://doi.org/10.37099/mtu.dc.etdr/40

Liyu, X., & Wan, H. (2020). Long-term Relationship between Electricity Consumption and Economic Growth. 06014, 3–6. https://doi.org/https://doi.org/10.1051/e3sconf/202016506014

Mao, H., Cui, G. H., Hussain, Z., & Shao, L. (2024). Investigating the simultaneous impact of infrastructure and geographical factors on international trade: Evidence from asian economies. Heliyon, 10(1). https://doi.org/10.1016/j.heliyon.2023.e23791

Mawejje, J., & Mawejje, D. N. (2016). Electricity consumption and sectoral output in Uganda : an empirical investigation. Journal of Economic Structures, 2040. https://doi.org/10.1186/s40008-016-0053-8

Ministry of Energy and Mineral Resources. (2022). Siaran Pers Dorong Emisi Nol Bersih, Pemerintah Serius Kembangkan Kendaraan Listrik. Ministry of Energy and Mineral Resources, 454.Pers/04/SJI/2022. https://www.esdm.go.id/id/media-center/arsip-berita/dorong-emisi-nol-bersih-pemerintah-serius-kembangkan-kendaraan-listrik

Ministry of National Development Planning. (2014). Rencana Pita Lebar Indonesia [Indonesia Broadband Plan] 2009-2019. Kementrian Perencanaan Pembangunan Nasional [Ministry of National Development Planning].

Myovella, G., Karacuka, M., & Haucap, J. (2020). Digitalization and economic growth: A comparative analysis of Sub-Saharan Africa and OECD economies. Telecommunications Policy, 44(2), 101856. https://doi.org/10.1016/j.telpol.2019.101856

Ong, H.-B., Wasiuzzaman, S., Chong, L.-L., & Choon, S.-W. (2023). Digitalisation and financial inclusion of lower middle-income ASEAN. Heliyon, 9(2), e13347. https://doi.org/10.1016/j.heliyon.2023.e13347

Pourrahmani, H., Yavarinasab, A., Zahedi, R., Gharehghani, A., Mohammadi, M. H., Bastani, P., & Van herle, J. (2022). The applications of Internet of Things in the automotive industry: A review of the batteries, fuel cells, and engines. Internet of Things (Netherlands), 19(July), 100579. https://doi.org/10.1016/j.iot.2022.100579

Republika. (2023, May 24). Kemenperin: Industri Kimia Berperan Penting dalam Pembangunan Nasional [Ministry of Industry: Chemical Industry Plays an Important Role in National Development]. Republika. https://ekonomi.republika.co.id/berita/rv64ac490/kemenperin-industri-kimia-berperan-penting-dalam-pembangunan-nasional

Rodrik, D. (2016). Premature deindustrialization. Journal of Economic Growth, 21(1), 1–33. https://doi.org/10.1007/s10887-015-9122-3

Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70(1), 65–94. http://www.jstor.org/stable/1884513

Wang, X., Si, C., Gu, J., Liu, G., Liu, W., & Qiu, J. (2021). Electricity ‑ consumption data reveals the economic impact and industry recovery during the pandemic. Scientific Reports, 1–14. https://doi.org/10.1038/s41598-021-98259-3

World Bank. (2024a). World Bank Data. World Bank. https://data.worldbank.org/

World Bank. (2024b). World Integrated Trade Solutions. World Bank. https://wits.worldbank.org

Xu, Z., Das, D. K., Guo, W., & Wei, W. (2021). Does power grid infrastructure stimulate regional economic growth? Energy Policy, 155(September 2020), 112296. https://doi.org/10.1016/j.enpol.2021.112296

Young, A., Selander, L., & Vaast, E. (2019). Information and Organization Digital organizing for social impact: Current insights and future research avenues on collective action, social movements, and digital technologies. Information and Organization, September, 100257. https://doi.org/10.1016/j.infoandorg.2019.100257

Zhang, Z., & Li, B. (2020). Electricity Consumption and Secondary Industry Structure : Case Analysis of Shandong. E3S Web of Conferences, 185(01007). https://doi.org/http://doi.org/10.1051/e3sconf/202018501007