Indonesia should be proud of having a new generation of middle class
people who were economically strong. A high economic growth of above 6% in the
past 3 years had evidently generated a middle class of high purchasing power.
The World Bank defined middle class as individuals with daily
expenditure of 2 to 20 dollars per day. The rupiah equivalent was Rp20,000 to
Rp200,000 per day; indeed a remarkable amount.
By demography, today there were around 242 million people or 20% of
indonesia’s who belonged to the middle class. A magnetic market that lured
foreign and local producers to come and sell their products. It came as no
surprise that foreign products were storming indoneisa’s prospective market.
So numerous were that imported or smuggled foreign goods which made the
government exhausted to keep them away to protect local producers. Even today
there were already producers who changed profession into traders and the
product they sell were imported products from china which was once their
competitors!
The government must keep watch on the trend which had been going on for
the past 10 years, to keep Indonesia from changing from a producer nation to
trader nation. It’s not that being a trader was bad but it was a matter of
survival of the nation’s economy Indonesia would be northing but a market for
other countries.
Moreover many circles already stated they were not ready to join the
Asean Common market [MEA] by 2016 next. What they feared was that in the MEA
system local producers would end up being spectators of the game as the market
was being flooded by goods from Singapore, Malaysia, the Philippines, Thailand,
Vietnam, Laos, Myanmar, Brunei Darussalam, and Cambodia.
To keep the market from being dominated by foreign producers, the
Indonesian young middle class must have the courage to forge ahead to the
market front as determined entrepreneurs. They should not be contended simply
being consumers just because they were rich.
Many criticisms were addressed to the middle class in Indonesia who tend
to be consumptive. Supposedly the young middle class contributed to the
endeavors of building the nation. The Indonesian middle class was rated as not
contributing to the maximum to nation building. They were perceived as being
consumptive, not productive and yet enormous by number today growing to more
than 50 million people.
The over consumptive behavior of the middle class was indicated by low
possession of national saving which was only 32% of indonesia’s total GDP. This
figure was the lowest in Asian, even in Asia in general. Contribution of the
middle class was already there as indicated by extremely high consumption which
jacked up domestic consumption – somehow it would not last in the long run
because if economy slumped, the middle class would shrink and the consumption
sector would be down pressed.
Therefore the middle class should take the lead in the process of
national economic advancement by contributing more. The government must be wise
enough to encourage the middle class to be resolved entrepreneurs. They had
access to banks, had better education and better information.
One of the handicaps of the middle class to start business was limited
capital. To start a small scale business, they could begin by self financing,
but to step up into middle business they were hindrance by the hard
pre-requirements set by the bank. In this case perhaps the government and bank
regulator could try to find a way out for the middle class whereby they could
start to do business.
As with guarantee, perhaps banks could ease pre-requirements. In case of
self financing, normally banks demanded 30% of business value be burdened on
candidate debtor, so in the future the prerequirements would be made easy. In
case of business legality it should also be considered to make it easy.
If the pre-requirements be made easy but not eliminated, the middle
class would be motivated to do business; small business at the start and to be
developed into middle business years after; and perhaps in two or three decades
some of them might grow into big corporate.
To keep Indonesia from falling into the middle class trap, it was
advisable for the government to aggressively build basic infra structures. The
basic infra structures would stimulate the small business to be business
oriented, they would be motivated to be come entrepreneurs’.
With better infra-structures, the middle class would be more than ready
to embark on business, they did not have to lose time thinking about bad
infra-structure. As known, bad basic infra-structure posed as hindrance and
disincentive to the middle class to start business.
In the future the government needed to open education and training
facilities in entrepreneurship in universities and academy. This was to offer
alternative and opportunity to the middle class to choose a profession in the
future. Entrepreneurship was not built overnight. The right mentality must be built, taught and
developed; it could be by education or autodidact.
By offering convenience for the middle class to choose their career
path, Indonesia would not only be saved from the middle class trap and economic
overheating, but would also strengthen fundamental economy in the long run. It
would be great pity if the role of middle class of middle class in Indonesia
could not be maximized whereby they could contribute to the nation’s economic
development. (SS).
Business News - April 24,2013
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