Regional Investment Performance Index and Regional Investment Potential Index as Regional Competitiveness Index in Indonesia

Author(s)

Sri Yani Kusumastuti , R. Rudi Alhempi ,

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Volume 9 - January 2020 (01)

Abstract

This paper aims to calculate the regional investment index as a regional competitiveness index in Indonesia. The index is the Regional Investment Performance Index (IKID) and the Regional Investment Potential Index (IPID). IKID shows how an are attractive investments are calculated relative to the size of the economy. IPID shows the factors that are expected to affect the attractiveness of a region to attract investors such as product domestic regional brutto, income per capita, inflation, export, import, unemployment rate, regional minimum wage, infant mortality rate, life expectancy, and human development index. The combine of the two indices produces four groups of provinces that are the front-runner, above potential, below potential and underperformers. For 6 years there was a shifting in the grouping of provinces. In 2008, six provinces that were grouped at the front-runner with high IKID and IPID, at the end of the study, there were only two provinces because of the decrease of IKID, e.g. Kep. Riau, Jakarta, and Bali. Some provinces with increasing IKID are shifted from groups’ under-performers to above potential. IKID rising due to the increase of investment into the provinces especially in East Indonesia, such as North Maluku, Papua, and West Papua. Potential fisheries of eastern ocean Indonesia and the moratorium on permits foreign fishing ships attract investors to build facilities and infrastructure of the fisheries sector. Government regulation of the mining company's obligation to build a smelter natural resource is also driven by investment in the mining sector.

Keywords

regional, investment, performance, potential, competitiveness
JEL: R530

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