Asian Games to boost Sumatra economy

Jakarta (ANTARA News) – The selection of Palembang, as a co-host of the 2018 Asian Games, along with Jakarta has pushed up the South Sumatra economy in the past couple of years.

Despite a slump in global commodity prices, the economy of South Sumatra province, which has relied on rubber, palm oil, and coal exports for tens of years, has grown at a faster pace than the national average in the past couple of years.

According to the Central Statistics Agency (BPS), the South Sumatra economy grew 5.03 percent in 2016, slightly higher than the national economic growth of 5.02 percent.

Just in the third quarter of 2017, the South Sumatra economy expanded 5.56 percent, exceeding the national average of 5.06 percent. This means that the provinces economic growth exceeds Bank Indonesias (BI) initial forecast of 5.1 to 5.5 percent.

The main engine of the economic growth in the past couple of years is the fact that South Sumatra and Jakarta will host the 2018 Asian Games.

Indonesia took over the host of the pan Asian multi-sports event from Vietnam, which withdrew in 2014 over financial problems.

In the past two years, development projects in South Sumatra, particularly the provincial capital of Palembang and its surroundings, have been on the rise.

A number of infrastructures have been built simultaneously. The projects include light rail transit (LRT) system, three toll road sections, Musi IV and Musi VI bridges, flyover, and international-class hospital.

The other projects are the expansion of Sultan Mahmud Badaruddin II Airport and the construction and renovation of sports arenas in Jakabaring Sports Center.

The many infrastructure projects, worth almost Rp68 trillion from the state budget, have boosted the real sector amid the peoples declining purchasing power due to a slump in the global commodity prices since 2013.

The projects have had a positive impact not only on the real sector but also on the financial sector.

South Sumatra has been known as a rubber, palm oil, and coal exporter for tens of years to support its economic growth.

Chief of BI Office in South Sumatra, Harry Khairuddin, noted that there is a strong correlation between the export performance and the economic growth.

But since South Sumatra focused on Meeting, Incentive, Convention and Exhibition (MICE) business in 2011, when it hosted the SEA Games, there has been a shift in the engine of its economic growth.

Being the co-host of the 2018 Asian Games also offered a momentum for the development of small and medium enterprises (SMEs), which are expected to become the backbone of the local economy after the Games is concluded.

The growth of micro small and medium enterprises (MSMEs) in South Sumatra has actually been visible since 2011 when the province hosted the 25th SEA Games. The growth was reflected by their turnover, which increased from Rp24.96 trillion in 2011 to Rp25.27 trillion in 2017.

The number of SMEs increased 73.37 percent from 181 to 319, while the number of MSMEs rose from 2,022,868 in 2014 to 2,071,416 in 2015.

This time, the South Sumatra provincial government will involve SMEs, particularly those engaged in culinary, fashion, handicraft, and souvenir industries to help ensure the success of the Asian Games.

South Sumatra Vice Governor Ishak Mekki revealed on Wednesday (Nov 15) that the local government is seeking to improve the SMEs competitive edge by strengthening their institutions and improving their products to serve guests needs during the Games.

To improve the competitive edge of MSMEs, the provincial government has allocated Rp2.69 billion in funds, channeled through the provincial office of cooperatives, small, and medium businesses.

During a coordination meeting on the distribution of smallholder business credits (KUR) and the improvement of MSMEs competitive edge held in Palembang on Nov 19, secretary of the South Sumatra provincial government, Nasrun Umar noted that the fund will be used to support all of the MSMEs programs.

To support the development of MSMEs, the local government will also encourage MSMEs to participate in the Indonesia International Sports Expo 2018 to be held in Jakabaring Sports Center in Palembang from April 5 to 8 next year.

“We will meet with the organizing committee to discuss whether local products, such as foods and clothes, suit the theme of the expo,” Nasrun stated.

The IISE, which is the first of its kind, is expected to attract 25 thousand visitors per day.

“We have targeted to invite 300 foreign and domestic exhibitors to take part in the IISE 2018 to exhibit sports products and supporting instruments,” director of the exhibition, Asril Saikin Satar, remarked on Nov 22.

Asril expressed hope that the sports expo and festival, to be held ahead of the 2018 Asian Games, will become the annual agenda of Palembang city.

“We will also encourage sports, such as 3×3 basket ball, coastal volleyball, fustal, and cheerleading tournaments, in addition to outbond and flyingfox,” Asril pointed out.

By improving the competitive edge of MMSEs, encouraging MICE businesses, and hosting sports tournaments, South Sumatra will not merely rely on the export of farm commodities to boost its economy after the 2018 Asian Games.

Source: ANTARA News