7. The Status and Trend of Indonesian Provinces’ Sustainability: A Genuine Savings Approach

Indonesia is known as one of the countries in the world blessed with abundant natural resources. For this reason, it is imperative to have a sustainable development indicator that shows whether development in Indonesia is on a sustainable path or not. This study aims to assess the pattern of development of the provinces in Indonesia concerning aspects of sustainable development using genuine savings indicators for 2005 and 2016. Genuine savings is the true rate of savings after considering the depletion of natural resources and damage caused by pollution. The findings show that Indonesia’s sustainable development profile improved from 2005 to 2016 periods. This improvement is indicated by the increase in genuine savings value during that period. Almost all the Indonesian provinces contributed to this improvement. Exceptions are for Papua, East Kalimantan, and South Kalimantan. The sustainability of these three provinces is relatively vulnerable as they rank low in terms of the ratio of genuine savings to GRDP. The analysis calls for the need to diversify economic activity not too dependent on the extractive and pollutive sectors as well as increasing productivity so that for each unit of the liquidation of natural assets, we can generate welfare as much as possible.