Digital Economic Challenges and Economic Growth in Environmental Revolution 4.0

Journal of Environmental Treatment Techniques

2020, Volume 8, Issue 1, Pages: 546-550

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal web link: http://www.jett.dormaj.com

Digital Economic Challenges and Economic

Growth in Environmental Revolution 4.0

Suwarni *, Elvir Munirovich Akhmetshin , Hilary Izuchukwu Okagbue , E. Laxmi Lydia , K.

Shankar⁵

Departement of Management, Universitas Dehasen Bengkulu, Bengkulu, Indonesia

Kazan Federal University, Elabuga Institute of KFU, Elabuga, The Russian Federation

Covenant University, Ota, Nigeria

Professor, Vignan’s Institute of Information Technology(A), Department of Computer Science and Engineering, Visakhapatnam, Andhra Pradesh,

India

Department of Computer Applications, Alagappa University, India

Received: 23/10/2019

Accepted: 11/08/2020

Published: 20/02/2020

Abstract

Nowadays, the world has transformed as an environmental revolution 4.0 eras. The revolution provides challenges and

opportunities for future environmental development. In addition, digitalization, automation, and the use of artificial intelligence in

economic activities will increase productivity and efficiency in modern production which also provides convenience and comfort for

environmental issues. Digital technology also helps the development process in various fields including environmental improvments,

ike global warming, acid rain, air pollution, urban sprawl, waste disposal, ozone layer depletion, water pollution, climate change and

many more affect every human, animal and nation on this planet. In addition, the growth of various environmental activities and

online-based buying and selling has not been accompanied by efforts to optimize state revenue and supervise tax compliance on these

transactions. This is very important part, because digital transactions are cross country and it’s an aid for environmental changes.

Keywords: Economic growth, Economic challenges, Industrial revolution

Introduction¹

the implementation of the RPJMN (2015-2018), which is

higher than the developing countries average at 4.5 percent

per year. This achievement was supported by a variety of

structural reform policies, including the policy to improve the

investment climate, industrial competitiveness, logistics

efficiency, export stimulus, tourism promotion and

strengthening people's purchasing power (7-10, 12).

The products of the data society are anything but difficult

to see, with a cellphone in each pocket, a PC in each

rucksack, and enormous change innovation frameworks in

back workplaces all over. In any case, less perceptible is

simply the data. 50 years after PCs entered standard society,

the information has started to amass to the point where

something new and exceptional is occurring. Not exclusively

is the data is becoming quicker. The difference in scale has

prompted a difference in state. The quantitative change has

prompted subjective one. The sciences The 2015-2019

Medium-Term Development Plan (RPJMN) implementation

faced various challenges of global economic problems, such

as the Greek debt crisis, Brexit, US policy uncertainty, for

instance, trade protectionism and monetary policy

normalization, China's economic rebalancing process, and the

end of the commodity boom era. This has led to the slow

recovery of world economic and trade growth after the 2008

global financial crisis (1-6).

The relatively high economic growth was driven by

various sectors' growth. The processing industry grows an

average of 4.3 percent per year. Furthermore, the agricultural

industry grows an average of 3.7 percent per year, such as by

improving the agricultural infrastructure to encourage the

productivity. Meanwhile, the service industry is able to

become the engine of economic growth, including the

information and communication services industry and the

transportation and warehousing industry which grew

respectively by 8.8 and 7.4 percent per year. From the

expenditure, the investment grows on average of 5.6 percent

per year and becomes a major encouragement of economic

growth. The supporting investment growth is mainly

supported by improving the investment climate, infrastructure

development, and investment services. Furthermore,

household consumption is able to grow an average of 5.0

percent per year. In addition, government consumption grew

by an average of 3.0 percent per year amid the downward

However, the domestic economy continued to grow at an

average of 5.0 percent per year during the first four years of

Corresponding author: Suwarni, Departement of

Management, Universitas Dehasen Bengkulu, Bengkulu,

Indonesia. E-mail: suwarni.h13@gmail.com.

546

Journal of Environmental Treatment Techniques

2020, Volume 8, Issue 1, Pages: 546-550

pressure on the state revenues. Meanwhile, both exports and

imports of real goods and services grew at an average of 2.9

percent per year (11, 13-16).

inhibiting bureaucracy; (2) the system and the amount of tax

revenue have not been sufficient enough; (3) infrastructure

quality is still low especially connectivity and energy; (4) low

quality of human resources and labor productivity; (5) low

financial sector intermediation and shallow financial markets;

Global Uncertainty

In the future, the risk of uncertainty will still color the the

(6) ineffective innovation system; (7) the poor of upstream-

downstream linkages. The undeveloped processing industry

has an impact on Indonesia's international trade performance.

Currently, Indonesia's exports are still dominated by

commodity exports with foreign transportation services,

which has no differences from 40 years ago. The ratio of

exports to GDP had declined continuesly from 41.0 percent

in 2000 to 21 percent in 2018. As a result, Indonesia still has

a current account deficit at 3 percent of GDP, while several

peer countries have recorded a surplus. In the midst of tight

global financial conditions, the increase of current account

deficit is an obstacle for the acceleration of faster economic

growth (31-34, 36).

world economic growth. The economic growth and world

trade are estimated to be stagnan with a slowing trend, in

which each is projected at 3.6 and 3.8 percent per year, for

the 2020-2024. The price of Indonesia's main international

export commodities is also expected to decline, including

coal and palm oil, along with the shifting of world demand to

other products. Other uncertainties that need to be anticipated

include the trade war, the economic slowdown in China, and

the pressure of normalizing monetary policy that moves from

the US to the European region (17-20).

The macroeconomic stability must be maintained which

is reflected as the controlled inflation and exchange rate,

increased foreign exchange reserves and the current account

which has the safe limits. During 2015-2018, the inflation

reached an average of 3.3 percent per year, or within the

target range. Meanwhile, in the exchange rate control and the

current account deficit processing, the condition of

Indonesia's payments balance is still relatively strong as

reflected in the increase of Indonesia's foreign exchange

reserves from USD111.9 billion in 2014 to USD120.7 billion

on December 2018 (21-24).

At the fiscal side, policies will continue to be directed at

supporting growth and maintaining economic stability, while

constantly pays attention to the medium-term fiscal

sustainability. This is reflected in the debt ratio which is

lower than 30 percent of GDP and the budget deficit and

primary balance that continues to shrink and lead to

positiveness in 2018. Through a strong and stable economic

performance, the welfare of the community has increased.

The expansion of the domestic economy is estimated to

create more than 9 million additional jobs in 2015-2018. The

unemployment rate fell to 5.34 percent in 2018 which was

Economic growth is expected to increase by an average

of 5.4 to 6.03 percent per year and GDP per capita growth of

.0 +/- 1 percent, which is driven by the productivity,

sustainable investment, improvements in the labor market,

and the quality of human resource improvement. By this

target of economic growth, the GNI per capita (Atlas

Method) is expected to increase to USD5,780 - 6,160 per

capita by 2024. Beside in maintaining the economic growth,

price stability has to be a priority. The inflation rate is

targeted at 3.0 ± 1 percent throughout 2020 - 2024. This

macro condition has an impact on improving the

development quality. The poverty and unemployment rate are

expected to decrease to 6.5 - 7.0 percent and 4.0 - 4.6 percent

in 2024. The level of the gini ratio decreases to 0.370 - 0.374

in 2024, while the HDI is expected to increase to 75.54 in

024, which indicates an improvement in the quality of

human resources. To achieve the quality economic growth in

the next five years, improving structural transformation is one

of the main keys. The improvement in structural

transformation was mainly driven by the revitalization of the

manufacturing industry, while encouraging the development

of other sectors through the modernization of agriculture,

downstream mining, sustainable infrastructure development,

and transformation of the service sector (35, 37).

.94 percent in 2014. Besides, GDP per capita continued to

increase from USD3,531 in 2014 to USD3,927 in 2018,

which is equal to GNI per capita1 . (Atlas Method) USD

,820, it is on the threshold of high-middle income countries.

The poverty rate was reduced to one digit (9.82 percent in

018) which was encouraged by the effectiveness of poverty

alleviation programs. The Gini ratio had decreased from

.414 in 2014 to 0.389 in 2018, which reveals the reduction

Strengthening Domestic Demand and

Diversification of Exports and External

Stability

of income inequality. Another development target is the

Human Development Index (HDI) which had increased from

In domestic demand, public consumption (household and

LNPRT) is expected to grow by an average of 5.16 - 5.29

percent per year. The increase of public consumption is

driven by an increase in community income along with the

creation of bigger and better jobs, price stability, and better

targeted government social assistance. Government

consumption will grow an average of 4.13 - 4.23 percent per

year supported by an increase in government spending, both

central and transfers to the regions, along with an increase in

state revenues, especially tax revenues (38-40).

8.9 in 2014 to 71.39 in 2018 (25-30).

The Stagnan Economic Growth

After the 1998 economic crisis, Indonesia's average

economic growth was only around 5.3 percent per year, even

in the last four years, Indonesia's economic growth tends to

stagnate around 5.0 percent. This level of economic growth is

difficult for Indonesia to upgrade to a high-income country or

catch up with per-capita income of peer countries. The

stagnant economic growth is mainly caused by the low level

of productivity as the structural transformation does not go

on. The inhibiting factors are: (1) overlapping regulations and

The economic expansion of 2020-2024 will be mainly

driven by investment increasing (gross fixed capital

formation) which grows 6.88 - 8.11 percent per year. To

achieve this target, private investment (foreign and domestic)

547

Journal of Environmental Treatment Techniques

2020, Volume 8, Issue 1, Pages: 546-550

will be encouraged through deregulation of investment

procedures, synchronization and harmonization of licensing

regulations, including increasing Indonesia's EoDB from rank

maintain a downward trend of low and stable inflation in the

medium term. In the period 2020-2024, inflation control

policies are directed to: (i) Increasing productivity, especially

after harvest and increase Government Food Reserves (CPP);

(ii) Reducing average inflation and volatilitying in 10

strategic food commodities; (iii) Reducing price disparities

between regions with national average prices, and reducing

inter-time price disparities; (iv) anchoring inflation

expectations within the stated target; and (iv) improving the

quality of statistics. During 2020-2024, the exchange rate was

stable at its fundamental level to maintain export

competitiveness. This can be achieved through the

implementation of pre-emptive and ahead the curve monetary

policies by the central bank and policy synergies which

aimed to implement structural reforms in improving the

competitiveness of the domestic economy (51-52).

3 in 2018 to 40 in 2024. Increasing the investment is also

driven by an increase of government investment, including

BUMN, especially for infrastructure. This is indicated by an

increase of infrastructure stock to 50.0 percent of GDP and

capital expenditure to 2.3 - 2.8 percent in 2024. Increasing

the investment will be aimed at increasing productivity,

which will encourage investment efficiency increase (41).

Overall, exports of goods and services grew an average of

.21 - 7.67 percent per year. The exports of goods increase in

020-2024 will be supported by the revitalization of the

processing industry that encourages diversification of non-

commodity export products, and reduces dependence on

imports. The increase will also be driven by exports of

services increase, particularly travel services, through the

development of the tourism sector, while imports of goods

and services grew by an average of 6.42 - 7.42 percent a year

driven by increased domestic demand, especially investment.

The improved performance of international trade will

encourage the strengthening of external stability, which is

characterized by an improvement in the current account

deficit to 2.0 - 1.3 percent of GDP and an increase in foreign

exchange reserves to USD161.1 - 184.8 billion in 2024 (42-

Conclusion

Economic growth in each region is expected to go hand

in hand with national economic growth. Policies in each

region are expected to be aligned with policies at the national

level, while still taking into account the advantages and

unique problems with the characteristics of each region. In

the next five years, economic growth will not only focus on

Java and Sumatra. The areas outside of Java and Sumatra are

estimated to have become the center of new economic

growth. To achieve the target of an average economic growth

of 5.4 - 6.0 percent per year, an investment of Rp. 36,595.6 -

6).

Maintaining

Fiscal

and

Inflation

7,447.6 trillion is needed during 2020-2024. Overall the

need total, the government and SOEs will contribute 11.6 -

3.8 percent and 7.6 - 7.9 percent respectively, while the rest

Sustainability

The government is committed to maintain a healthy state

budget while continuing to provide stimulus to the economy.

The country's income is targeted to increase to an average of

will be met by the public or private sector. To finance

investment needs in 2020 - 2024, efforts are needed to deepen

financial markets, especially non-banking, increase access to

financial services (financial inclusion), and optimize

financing alternatives. In addition, The aspect of economic

development in the future is the environmental aspect.

Climate change and the low environmental support could

cause a negative impact on achieving economic growth

targets. Therefore future development must be directed to

maintain a balance between economic growth, reduction

targets, emission intensities, the capacity of natural resources

support, and the current and future capacity of the

environment.

3.7 - 14.8 percent of GDP per year, with the taxation ratio

reaching an average of 11.7 - 12.7 percent of GDP per year.

This was achieved through continuous improvement both in

terms of administration and policy. From the administration

side, the tax administration system will continue to be

updated to improve the tax database and increase compliance.

From the policy side, the government will continue to explore

the potential for revenue, including potential originating from

cross-border digital service activities and extensification of

excisable goods. Meanwhile, this policy is also balanced with

the role of policy taxation as an instrument of investment

through the provision of fiscal incentives that support the

activity of creating economic addition value (manufacturing,

tourism, creative and digital economy) (47, 48).

Acknowledgments

The reported study was funded by RFBR, project number

19-29-07037

The stimulus of other economies is also carried out by

sharpening state spending. Total state spending will average

5.8 - 16.8 percent of GDP per year, with central government

spending averaging 9.9 - 10.3 percent of GDP per year and

TKDD of 6.0 - 6.5 percent GDP. The deficit will be kept

below the legal allowable limit of (2.2) - (2.0) percent of

GDP per year with a primary balance close to zero, at an

average (0.3) - (0, 2) percent of GDP per year. With this

composition, the debt ratio will be maintained below 30

percent of GDP (49, 50).

A low and stable inflation rate is expected to maintain

purchasing power and encourage public consumption so that

it can support the acceleration of quality economic growth.

The Government and Bank Indonesia are committed to

Ethical issue

Authors are aware of, and comply with, best practice in

publication ethics specifically with regard to authorship

(avoidance of guest authorship), dual submission,

manipulation of figures, competing interests and compliance

with policies on research ethics. Authors adhere to

publication requirements that submitted work is original and

has not been published elsewhere in any language.

Competing interests

548

Journal of Environmental Treatment Techniques

2020, Volume 8, Issue 1, Pages: 546-550

The authors declare that there is no conflict of interest

that would prejudice the impartiality of this scientific work.

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