When talking about investment, profit often becomes the standard. Other than that, investment is interrelated with speculation. It only takes courage to try. What becomes the benchmark for investment is the amount of profit and the level of risk. Although, sometimes the numbers have been determined at the beginning can still shift.
Investment can be channelled to various sectors, such as real and non-real sectors. Investment in the real sector equals to investing in real assets. Where your investment is in the form of the physical product. In contrast, investment in the non-real sector is the in the intangible form that are financial assets, such as financial markets.
Then, how is the growth of real sector investment in our country?
Reported from Bisnis.com, in 2016 there was an investment growth in the financial and telecommunications sector of 13.51%. Where for the real sector, the rate of investment growth is very slight. In the agricultural sector, the growth is by 3.23%.
This situation is caused by a lot of factors. There is still much to be found, one of the issues are regulation and policy. There is no anticipatory action from the Indonesian government to guarantee investor funds. Therefore investors do not get legal certainty. This huge amount of risk affects the number of investment to the real sector become low. As we know, if investment in the real sector can reach a sufficient number – it is enough to reduce the number of unemployed in Indonesia.
A. Fix the Condition of Indonesia Sector Real From Within
Infrastructure issues are contributing towards the development of investment in the real sector. Poor infrastructure will hold back the level of investment in the real sector. Although to improve infrastructure facilities requires a long time and large capital. The government currently has been working to improve the infrastructure in Indonesia, such as the creating highway from Sumatra to Papua, reconstructing and improving airports facilities, also the constructing sea tolls.
In fact, the sea toll which has been operating since 2015 was able to reduce the disparity in prices between regions in Indonesia. Like the price of rice in the Anambas Islands and Fak-fak decrease by 14%. While in Larantuka, NTT rice prices fell by 17%.
Other than that, the increase in living costs also affected the real sector in Indonesia. The rising of living costs can lead to weak purchasing power. As a result, people will reduce their amount of consumption. On the other hand, if the government is able to keep up with raising the minimum wage of its people, perhaps the level of consumption can be pushed back. If market conditions become more competitive, it will be more attractive for investors to invest their capital in the real sector of the country.
B. Is It True That Real Sector Investment has been Defeated by Investment in the Non-real Sector?
In addition to the reasons mentioned above, investing in the real sector also requires a large capital. So it will take a long time to develop and get profit. Whereas when investing in the non-real sector, the development of liquidity tends to be faster. Investors start getting other options to invest in the capital market.
The non-real sector is known for its more concise investment model. It doesn’t require a lot of energy to think about the investment path. However, both of them are at risk.
The real sector has a very important role in economic growth; investment in the real sector can increase domestic production to anticipate dynamic market demand. Reducing the value of imports and which definitely increases domestic income. So as a result, the government does not need to increase the cost of living.
Yet, the non-real sector also has uncertainty because it depends very much on the conditions of economic development in a country. Which the ups and downs are also influenced by the investment level of the real sector. Therefore, investment in the non-real sector should go hand in hand with real sector investment, since the two sectors are interrelated and interdependent.
C. The Decrease of Real Sector Investment in Agriculture
As we know, agriculture has a big impact towards the economic development in Indonesia. Contribute almost half the value of the national economy. Agriculture also significantly contributes to the country’s foreign exchange income through exports.
Indonesia has assets for extensive agricultural land, with over 8 million hectares of paddy fields in 2016. Even during the economic crisis in 1997, only the agricultural sector still experienced growth of 0.22%. Although Indonesia’s economic growth at that time experienced a decline of up to 13.68%.
It turns out that investment growth in agriculture can be influenced by two things, namely the rate of productivity growth and the competitiveness of production globally. The selling and buying prices of agricultural products must be maintained stable to prevent harming one party. Afterwards, the business competition will show active economic activity in agriculture so it will attract the investors.
In addition, investments in agriculture are affected by human resources (farmers), land conditions, and applicable policies and regulations. If regulations related to procedures and permits are made complicated, require a long time, and are expensive – it will decrease the interest to invest in the field.
When it comes to farmers, there need to be a sufficient amount of them. Workers who undergo agricultural business should not lack in numbers and must have adequate skills and knowledge. They need to run a proper agricultural management so an investor can put trust in them. Other than that, farmers also need to be open-minded and able to accept the new knowledge that is useful to maximize their farming business.
The last factor is the condition of the land, how to manage the land well so that it can be utilized sustainably. For instance, it can be done by reducing the use of inorganic pesticides or utilized the land that is the closest possible to the water source in order to maximize the production.
If all of the above factors can be fulfilled properly and able to maintain them consistently – investment in agriculture will continue to grow.
The achievements reached in 2018 are the value of investment in agriculture which gain 60 trillion Rupiah. Reporting from kumparan.com, this amount has exceeded the realization of agricultural investment in the last 5 years. Even in 2017 it only reached 45.9 trillion Rupiah. From that investment, the value is being used to build a sugar factory worth IDR 41.44 trillion, which will be able to hire approximately 500,000 workers.
Direct benefits can be felt when investing in the real sector it gives real impact to national development and economic growth. So, why are you still thinking twice about investing in the real sector of the country?
There are many private parties that can accommodate you who want to invest directly in the real sector in a very simple way. CROWDE is one of them; it’s a peer to peer lending platform for farmers’ capital. So you can directly invest by giving capital to farmers who run agricultural businesses. You can directly choose investment projects in the real sector, ranging from agriculture, livestock, and fisheries.
Using crowd-investment methods, CROWDE will manage your investment funds safely. Because it has been registered and supervised by the Otoritas Jasa Keuangan (OJK), the profit generated reaches up to 15%. Agriculture is considered promising because it supports the food needs of every country. Also acts as a driving force for the economy. So, there’s no need to worry, right?