Overview: South Sulawesi’s economy

The strategic importance of South Sulawesi’s economy is bolstered by the size of its population – by far the largest in eastern Indonesia at 8.8 million.

 

When Joko “Jokowi” Widodo became President of Indonesia in 2014, one of his boldest policy moves was to spend big on infrastructure. After decades of under-spending, Indonesia was being left behind with a massive infrastructure gap. In his first five-year national plan (2015-2019), he made accelerating infrastructure investment his priority – a strategy that will continue for his second five-year term.

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South Sulawesi was a big winner in this approach, as it has become a focal point of the President’s infrastructure bonanza in eastern Indonesia. This development will have a transformational impact on the province, which is already among the most influential provinces in the country.

It is the ninth-largest provincial economy in Indonesia, and from the turn of the century to 2019 it has enjoyed average annual rates of economic growth of 6.8 per cent each year. This was slightly lower than average for the island of Sulawesi as a whole, which was 7.2 per cent per year, but well ahead of the national average of 5.2 per cent. Indeed the regional economy of Sulawesi has grown faster than any other big island region of Indonesia this century, reflecting a process of ‘catching up’ after years of laggard development.

At the end of 2019, South Sulawesi’s gross regional product was Rp. 505 trillion (approximately AUD 50 billion), representing 3.1 per cent of the Indonesian economy – compared to 2.3 per cent ten years ago. This reflects its much faster average growth than the country as a whole, whose economy grew by 5.0 per cent in 2019 compared to South Sulawesi’s 6.9 per cent. Its high level of growth is largely due to solid performance in several parts of the services industries: fisheries, food and beverage, and basic minerals refining have been the key areas, in both primary and secondary sectors, to enjoy solid and sustained rates of growth.

In the three years to the end of 2019, levels of investment in South Sulawesi reached AUD 3.38 billion. This included AUD 1.6 billion in realised foreign investment and AUD 1.1 billion in realised domestic investment. Investment is largely in minerals and mining, with the province’s non-metallic mineral industry attracting 25 per cent of foreign and domestic investments. Mining is not far behind with 23 per cent. Electricity, gas and water attracts 16 per cent and food processing 12 per cent.

South Sulawesi’s total exports to the world were valued at US$1.21 billion (AUD 1.85 billion) in 2019. Its major export commodity is nickel – with total exports valued at US$784 million (AUD 1.2 billion) – with the biggest export destination being Japan. South Sulawesi’s imports in 2019 were valued at US$1.15 billion (AU$1.76 billion) with Singapore the biggest contributor.

During the period from 2011 to 2019 there were several key drivers of growth in the economy of South Sulawesi: agriculture, forestry and fisheries; mining; and infrastructure. In 2019 the agriculture, forestry and fisheries sectors accounted for nearly 21.3 per cent of the provincial economy. Rice, coffee, cocoa, beef and seaweed were key commodities contributing to this. The mining and quarrying sector made up 4.6 per cent of the provincial economy, well below the national average of 7.3 percent, whereas the metals and quarrying sub-sector contributed 4.1 percent, considerably higher than in Indonesia overall (2.1 per cent). Infrastructure is a third economic driver, as the central and provincial governments invest in development projects across the province, including an upgrade to Hasanuddin Airport and the construction of the trans-Sulawesi railway line and the Makassar New Port.

(Photo: ITCSI)

Read or download the full overview: ‘South Sulawesi’s economy’

 

Picture of Kevin Evans

Indonesia Director
The Australia-Indonesia Centre

Picture of Marlene Millott

PAIR Program Officer
The Australia-Indonesia Centre