Sustainability of Economic Resources

Journal of Environmental Treatment Techniques

2020, Volume 8, Issue 1, Pages: 556-559

J. Environ. Treat. Tech.

ISSN: 2309-1185

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

Sustainability of Economic Resources

Harliantara *, Mira L. Bandaso , Petrus P. Roreng , Marina V. Borovitskaya , Rustem

Adamovich Shichiyakh⁵

¹Department of Communication, Universitas Dr Soetomo, Surabaya, Indonesia

Faculty of Economics and Business, Universitas Kristen Indonesia Paulus, Makassar, Indonesia

Togliatti State University, Russia

Kuban State Agrarian University named after I.T. Trubilin, Krasnodar, The Russian Federation

Received: 16/11/2019

Accepted: 02/02/2020

Published: 20/02/2020

Abstract

Indonesia as a country with high biodiversity has great opportunities to develop products from biodiversity. The biodiversity

utilization through bioprospecting activities can meet the needs of raw materials for medicine, clothing, food, spices, animal feed,

resin producers, dyes, and others. In addition, the diversification of primary medicinal plant products into secondary products has

high economic added value. After the reform era in 1998, Indonesia has not been able to continue the socio-economic transformation

that was stalled due to the crisis. Indonesia's average potential economic growth has continued to fall from 6.0 percent in the 1990-

000 period to an average of around 5.0 percent in the 2000-2015 period. This slow-moving structural transformation was also

marked by the contribution of industrial GDP which fell to 19.9 percent. On the other hand, the contribution of primary sector GDP

was 20.9 percent and the contribution of service sector GDP continued to increase to around 59.2 percent in 2018. The increase of

GDP in the service sector shows a transition of growth sources from the primary to tertiary sectors. However, the economic transition

has not been able to encourage higher growth. The service sector which absorbs labor migration from the primary sector is dominated

by the informal services sector with a low growth contribution. The industrial sector, which has the greatest potential to drive growth,

still faces the challenge of rising labor costs that have not been followed by an equal increase in productivity.

Keywords: Natural resources, Digital economy, Entrepreneurship, Transformation, Industrial sector

Introduction¹

ha) in 2017 to around 38.0 percent in 2045. This will have an

impact on raw water scarcity especially on islands that have

very low forest cover such as Java, Bali, and Nusa Tenggara.

The risk of scarcity of raw water is also increasing in other

regions as a result of climate change. The area of scarcity

water is expected to increase from 6.0 percent in 2000 to 9.6

percent in 2045 (5-7).

The availability of natural resources (bahasa: Sumber

Daya Alam (SDA)) which is the main capital of development

is decreasing. SDA is not only a source of raw materials for

domestic industrial needs, but also a source of foreign

exchange. From energy resources, one of the challenges is the

depletion of fossil energy reserves, such as oil, gas, and coal.

The discovery of new oil and gas reserves has not been

significant. In 2017, the reverse replacement ratio (RRR) for

oil and gas was only 55.3 percent. On the other hand, the

utilization of alternative energy sources and efficiency in

energy use needs to be improved (1-4).

Sustainable development also faces the challenges of

degradation and depletion of renewable natural resources

such as forests, water, and biodiversity. Although

deforestation rates have decreased significantly compared to

before 2000, forest cover is expected to continue to decline

from 50.0 percent of Indonesia's total land area (188 million

2 The Management Effectiveness of Economic

Resources

Management of economic resources faces challenges

related to carrying capacity of the environment, availability

of land, limited infrastructure, spatial planning, and the

welfare of farmer-fishermen and communities who depend on

their livelihoods for the use of natural resources. The

management of food and agriculture resources faces the issue

of increasing demand for land and water as a result of

increased economic activity. This condition causes increased

the use of land and water competitiveness, especially among

the agriculture, industry and housing sectors. The important

issue is also the increase of food demand along with an

increase in the population of 1.2 percent. On the other hand,

Corresponding author: Harliantara, Department of

Communication, Universitas Dr Soetomo, Surabaya,

Indonesia. E-mail: harliantara@gmail.com.

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2020, Volume 8, Issue 1, Pages: 556-559

food production is also strongly influenced by seasonal

factors and the availability and reliability of production

infrastructure including irrigation (8-10, 13).

Targeting a Large Domestic Market

Most investments are still targeting a large domestic

market instead of export-oriented. Investment has also shifted

from the secondary sector to the tertiary sector in the past two

years (19).

Indonesia also has not been able to optimally utilize

economic diplomacy to support investment and exports. This

relates to the issue of (1) the lack of integration of economic

diplomacy and coordination policies, (2) the non-optimal

capacity of the implementing apparatus of economic

diplomacy, (3) not harmonious domestic regulations that

hinder the implementation of trade agreement negotiations,

On the energy management and utilization side, the

current condition is still felt to be less efficient. There is a

large gap between primary energy intensity (500 SBM /

billion Rupiah) and final energy (325 SBM / billion Rupiah).

In addition, the use of coal to meet domestic needs has not

been maximized. Coal DMO currently only reaches 23.5

percent of coal production of 548 million tons in 2018. Other

energy management and utilization issues that need to be

addressed are (1) adequate energy supply, especially gas; and

electricity to meet the needs of the real sector; (2) the

inefficiencies of provision of energy infrastructure due to

differences between production locations and energy

utilization; (3) quality and reliability of energy distribution,

especially outside Java; (4) energy utilization has not yet

given the effect of broad economic development; and (5)

inefficient energy consumption. Energy savings in the

industrial, transportation, building and commercial facilities

sectors need to be continuously improved with potential

savings of around 30.0 percent from current energy use (11,

(4) the absence of investment-related arrangements abroad,

and (5) the government synergy, the private sector, and the

public is not yet optimal for promoting effective economic

diplomacy (20-24).

The slow structural transformation is also shown by the

dominance of micro scale businesses in the structure of

national business actors (99.0 percent). This condition shows

the existence of hollow middle which makes the capacity of

the business community to build upstream-downstream

linkages become limited. The efforts to increase the scale of

MSME businesses have not yet shown significant results. The

MSME facilities to start the operation in the context of

increasing efficiency and economies of scale also faces

challenges in the capacity of cooperatives to become modern

and professional businesses (25).

On the other hand, the acceleration of structural

transformation can still be carried out by increasing

entrepreneurial capacity in Indonesia. The entrepreneurship

improvement is shown from the entrepreneurship ratio in

Indonesia which has reached 3.2 percent in 2017. This

condition is supported by an upward trend of

entrepreneurship communities in recent years. The Data from

Global Entrepreneurship Monitor (2017) shows that people's

interest and motivation for entrepreneurship is quite high at

47.74 percent or greater than the global average of 43.43

percent. This trend is in line with the development of the

2).

Slow Structural Transformation

This low productivity problem is related to the low

quality of human resources, where the workforce is still

dominated by elementary school graduates (40.7 percent),

while not all workers with higher education have readiness

and capacity according to the needs of the workforce.

Mismatch of skills, the quality of education gaps between

regions, limited talent to be prepared to train and work are

issues that need to be addressed in increasing productivity

(13-16).

The slow structural transformation in Indonesia is also

related to the low exports. The ratio of Indonesia's export

value / GDP has only reached 19.0 percent, or far below

Thailand (69.0 percent), Vietnam (93.0 percent) and

Singapore (172.0 percent). The superiority of natural

resources in Indonesia have not been widely processed into

high value-added products, as shown by the export of

Indonesian products that are dominated by commodities

digital economy which opens up

opportunities (26-28).

a lot of business

Digital Economy Entrepreneurship

The challenge is the entrepreneurship interest has

(more than 50 percent), mainly processed CPO, base metals,

rubber and food (17).

not been accompanied by sufficient capacity to run a

business. Most entrepreneurs are an example of

business and are not based on an understanding of

business model, market, and innovation. In 2018, the

Government has launched the Making Indonesia 4.0

movement. This movement is in line with the digitalization

era that facilitates the integration of information for the

purpose of increasing productivity, efficiency, and service

quality (29-33).

The future of digital economy use has great potential to

increase economic added value. For example, the use of

Industry 4.0 along the value chain can improve upstream-

downstream efficiency and contribution of aggregate

industrial value added to the economy. However, the

challenges facing in the era of digitalization are also quite

large. The innovation readiness to face the digital revolution

as shown by the Network Readiness Index, Indonesia is

The low export ratio and the dominance of commodity

exports illustrate three issues in the national industrial

structure that need to be addressed in the future. First, the

disharmony between the upstream and downstream sectors

causes vulnerability in the national industrial supply/value

chain so that national industry competitiveness is low.

Secondly, the capacity of innovation in Indonesia is low, as

shown by the export of industrial products with high

technology content from Indonesia which is lower compared

to equivalent countries.

Third, investment quality is low where the proportion of

domestic investment is still lower compared to foreign

investment. Expectations of the transfer of technology and

knowledge from the entry of foreign investment that can

encourage innovation and diversification of export products

have not yet been fully realized (18).

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2020, Volume 8, Issue 1, Pages: 556-559

ranked 73 out of 139 countries, while the equivalent countries

have better preparedness, such as Malaysia (ranked 31),

Turkey (48), China (59), Thailand (62). Indonesia has an

advantage in price, However, Indonesia is left behind in

infrastructure and utilization by the community (34-39).

Implications for socio-economic growth of oil-rich developing

countries. Resources Policy. 2019 Jun 1;61:128-40.

Roca-Puig V. The circular path of social sustainability: An

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human resource management for the adoption of sustainable

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Conclusion

Indonesia's readiness to adopt and explore digital

019 Feb 1;141:109-22.

1. Cao Y, Huang L, Li Y, Jermsittiparsert K, Ahmadi-Nezamabad

H, Nojavan S. Optimal scheduling of electric vehicles aggregator

under market price uncertainty using robust optimization

technique. International Journal of Electrical Power & Energy

Systems. 2020 May 1;117:105628.

12. Yu D, Wang Y, Liu H, Jermsittiparsert K, Razmjooy N. System

identification of PEM fuel cells using an improved Elman neural

network and a new hybrid optimization algorithm. Energy

Reports. 2019 Nov 1;5:1365-74.

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technology that can drive transformation in government,

business models and people's lifestyles is also considered

lacking. This is shown by World Digital Competitiveness

Ranking data for 2017 where Indonesia ranks 59th out of 63

countries. How to adapt, integrate information technology,

and regulatory frameworks are issues that need to be

improved so that Indonesia can take advantage of digital

technology advancements for economic growth and

improving quality of life. Another challenge faced by

Indonesia relating to HR development and business

competition The era of digitalization has an impact on

changing work patterns and has the potential to eliminate

work that is both simple and repetitive. On the other hand,

trading patterns and the online-based services supply and the

use of non-cash payments make many conventional business

models no longer relevant. This condition requires

019 Nov 29;44(59):31204-15.

comprehensive policy and adaptation pattern in utilizing

digital transformation for sustainability and equitable

economic growth and improving the quality of social and

environmental life. In the next five years, the targets to

strengthen economic resistance for quality growth are as

follows: 1) The increase of capacity and quality of economic

resource support as a modality for sustainable economic

development; and 2) The increase of added value,

employment, exports, and economic competitiveness.

5. Jabarullah NH, Jermsittiparsert K, Melnikov PA, Maseleno A,

Hosseinian A, Vessally E. Methods for the direct synthesis of

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Journal of Computational and Theoretical Nanoscience. 2019 Jul

1;16(7):2959-66.

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