The Phrow Factor
    Category: Column By : Scott Younger Read : 1015 Date : Wednesday, June 10, 2015 - 02:03:17

    Let me introduce the Phrow Factor—the interdependence of Population, Health, Resources, Opportunity and Wealth to create successful sustainable growth.

    Today Indonesia, with 250 million, has the world’s fourth largest population, albeit unevenly spread with about 84% either in Java or Sumatra—and the population is predominantly urban, at 55%. However, the country still has much space and resources to cater for its population today and the immediate future, assuming current growth patterns are maintained or decline.

    At the beginning of the 1970s the average lifespan was 47 years, access to modern medical care was nonexistent and Indonesia ranked close to the bottom of development indicators. A concerted effort was then made to improve both basic education and health, along with a hugely successful family planning effort. By 2000, the average life expectancy was 70, a remarkable achievement.

    Indonesia is rich in resources. The agro-industry is, however, inefficient. The rising demand for food means agricultural production should modernize, with measures such as mechanization and yield intensification. Change will be hard as traditional methods are entrenched, land holdings are generally small and land tenure a sensitive issue. The hard commodities sector is also impressive but now in flux as the government reforms mining, which is largely in private hands. Indonesia can better use its large coal reserves for power sector expansion to support growth.

    Countries with large populations and land area must provide opportunities to improve livelihoods. Two key pillars to facilitate this are education and infrastructure. In both areas Indonesia has improved significantly from 50 years ago, but much remains to be done. These areas of infrastructure and education must be recognized as the keys to equitable sustainable economic growth.  

    A worldwide problem is the widening wealth gap between the top and bottom of society. To be successful, societies must provide opportunities to create a middle class, either through entrepreneurship or professional careers. Simultaneously, it is important to support the poorest communities. Indonesia should grow at more than 7% to diminish poverty and unemployment. While many nations are vulnerable to global economic volatility, Indonesia’s domestic economy is big enough to grow under its own momentum.  

    So how does Indonesia rate in the Phrow factor?
    Indonesia’s demographics are excellent with much of the population in the prime working ages of 16 to 60. In health, there have been huge improvements but much remains to be done. The country is well-blessed in resources, but can do much more to improve opportunities for wealth creation. The regions have to take more responsibility to provide an environment for growth. The country has done well over the last half century, but there remain issues to overcome to turn Indonesia into a global leader. The challenges are considerable but have to be embraced.