Supporting 8 Percent Economic Growth, Prof Widyastutik Emphasizes the Strategic Role of the Service Sector
The service sector is considered key to accelerating Indonesia’s economic growth, including in supporting the national economic growth target of up to eight percent.
This was stated by Prof Widyastutik, a Full Professor at the Faculty of Economics and Management (FEM) at IPB University, during her IPB Full Professor Inaugural Lecture on Saturday (5/23) at the IPB Dramaga Campus.
According to the simulation results she presented, increased integration of services into the industrial and agricultural sectors could boost real gross domestic product (GDP) by up to 2,6 percent and increase national exports.
“Indonesia’s service sector has not yet become a leading sector in the global economy. This indicates that the role of the service sector as an input for other sectors remains limited,” she said.
She explained that the service sector needs to be strengthened through a “servicification” approach, which involves integrating services into the production processes of other sectors such as manufacturing, agriculture, and agroindustry. In his view, global economic competitiveness is no longer determined solely by goods production but also by the ability to integrate the service sector.
Prof Widyastutik cited examples of this integration in the modern agricultural sector, ranging from research and development (R&D), laboratory testing, quality certification, smart farming technology, soil sensors, automated irrigation, drone monitoring, logistics services, to digital distribution.
“Within the global value chain, service activities such as branding, design, distribution, marketing, and after-sales service actually generate higher value-added compared to manufacturing,” she explained.
Nationally, the service sector’s contribution to Indonesia’s GDP reached 62,26 percent in 2023. However, this figure remains lower than that of several other Southeast Asian countries, indicating that the sector’s potential has not yet been fully realized.
In her presentation, she also identified several key challenges, such as the dominance of small scale informal businesses, limited capital, and suboptimal access to formal financing.
To address this, Prof Widyastutik proposed six priority agendas: strengthening adaptive regulations through harmonization of rules and simplification of licensing; developing an integrated cross sectoral roadmap; enhancing human resource competitiveness through certification; strengthening service sector businesses and integrating MSMEs into global value chains; improving readiness for international trade agreements; and integrating the service sector into national development planning.
“The hope is that the service sector will no longer be a supporting sector, but will become the main driver of Indonesia’s economic growth,” she said. (Fj) (IAAS/DON)
