Maluku and Papua Achieve Record Economic Growth, But Struggle with Low Consumption Rates

Maluku and Papua Achieve Record Economic Growth
Maluku and Papua Achieve Record Economic Growth

Amid the vibrant economic landscape of Indonesia, Maluku and Papua stand out with an impressive economic growth rate of 12.15% in the first quarter of 2024, as reported by the Central Statistics Agency (BPS). This achievement far surpasses the national growth average of 5.11%, yet it brings to light an intriguing paradox: despite the soaring economic figures, the local population’s purchasing power remains weak, reflected in their low consumption levels.

Bank Mandiri’s Head of Industrial and Regional Research, Dendi Ramdani, highlighted this disparity during a recent press conference. “Despite the high economic growth in these areas, the consumption levels remain low, indicating that the growth is not translating into increased prosperity for the local residents,” he stated.

The consumption growth in Maluku and Papua is significantly below the national average, which stands at 4.91% for household consumption in the first quarter of 2024. For instance, North Maluku saw its consumption grow by just 4.12%, even though its gross regional domestic product (GRDP) surged by 11.8%. Similarly, Papua experienced a GRDP growth of 17.49%, but its consumption growth was a mere 4.3%.

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Dendi further explained that the economic growth in these regions is heavily driven by the mining and processing sectors, which do not have a substantial impact on the local economy. “In North Maluku, the mining and processing of nickel are major contributors to growth. In Papua, it’s the mining activities at Freeport. These sectors drive high growth rates, but they don’t significantly improve local economic conditions,” he noted.

This situation has prompted calls for government intervention to ensure that economic growth benefits the local population more directly. “The government needs to address this issue seriously to ensure that rapid economic growth leads to real improvements in local economies and enhances the welfare of the people,” Dendi urged.

Echoing this sentiment, Acting Head of BPS, Amalia Adininggar Widyasanti, also pointed out that the double-digit growth in Maluku and Papua is primarily fueled by mining and quarrying activities.

“Economic growth in these regions is driven by significant contributions from the mining and quarrying sectors,” she said during a press conference in Jakarta.

In contrast to Maluku and Papua, Sulawesi and Kalimantan also showed notable economic growth, albeit at lower rates. Sulawesi’s economy grew by 6.35%, down from 6.99% in the same period last year, driven mainly by Central Sulawesi’s processing, mining, and construction industries. Kalimantan’s growth reached 6.17%, up from 5.82%, with East Kalimantan benefiting from mining, quarrying, construction, and trade activities.

The data highlights a critical issue: the high economic growth in certain sectors does not necessarily translate into broader economic benefits for the local population. This phenomenon underscores the need for more inclusive and diversified economic strategies that can better support local communities and enhance their overall well-being.

As Indonesia continues to develop its economic policies, ensuring that the benefits of growth are more evenly distributed will be essential for fostering long-term prosperity and stability across all regions.