TO BOOST EXPORT AND INVIGORATE INVESTMENT

Realization of economic growth in 2012 last was satisfactorily attained, i.e. 6.23%, below its ideal level et 6.5% as excepted. Somehow it was quite a relief because it was still not below 6%.

Domestic consumption was again the main contributor, sharing about 55'% followed by formation of gross fixed capital (PMTB) of physical invest­ment of around 33%. Next was. contributed by Gov­ernment spending around 9%; not bad, because the percentage was growing.

The disheartening thing was export contribu­tion (24%) which was outnumbered by import (25%) which caused deficit in trade transaction. This was a tragedy because in the previous years the score was surplus. It seemed reasonable that the Government must think hard to jack up growth from the export and investment side.

Lately, the Government again paid greeter at­tention to the global crisis which was beginning to suppress domestic economy. Two facades which were the locus of Government's attention was to jack up investment and export performance. The seriousness was implemented by formation of the National Team for Export Promotion and Investment (PEPI) person­ally commanded by President Susilo Bambang Yudhoyono.

This serious attention was reasonable be­cause according to the Central Board of Statistics the GDP the amount used for buying export component according to the applicable price - was only posited at 24-25%; on the contrary import was higher, i.e. 25.81 % which caused deficit to happen.

Meanwhile expenditure for household consumption was posted at 54.56%, component of Government consumption expenditure 8.89%, and component of gross fixed capital formation or physi­cal investment 33.16%. In 2012 Indonesia’s GDP based on applicable price was posted at Rp.8,241 trillion, whilst an constant price basis (year 2000) was Rp 2,618,1 trillion. For comparison, Indonesia's GDP 201 1 based on applicable price was Rp. 7,427,1 trillion, and based on constant price (year 2000) was Rp 2,462.2 trillion.

Under the circumstances the Government hard formed the national PEPI team by President Susilo Bambang Yudhoyono with the Coordinating Minister of Economy as executive. The Government would also set up a Secretariat to foster teamwork. The special team for export Promotion and investment would be supported by ministerial unit to enhance task execution.

This team, in the coordination meeting would dissect promotion of export and investment, to analyze problem and to recommend strategic steps in relation to export and investment. Export problems in the regions would be detected while the Government would Regional PEPI (PEPIDA).

 Evaluation of the Investment Negative List (DNI) which was in Indonesia would be part of the task to be carried out by PEPI team. This was done to enhance investment climate in Indonesia. Heed of the Coordinating Board of Investment (BKPM), Chatib Basri stated that revision of DNI was necessary to strengthen national competitiveness and create bat­ter investment climate so the target of Rp 300 trillion investment could be met.

Heed of BKPM confirmed that revision of DNI was exercised while protecting national interest, especially for the smell-and-medium business (UKM) so they would be able to compete against foreign busi­nesspeople and investors. The entry of foreigners to Indonesia did not mean that there was no room for Indonesian businesspeople to develop.

The national PEPI teem was expected to spur on export and domestic investment. The point was that an the export side, the biggest problem was readiness of the alternative market which was not sizable enough and therefore unable to cushion deficit in trade balance and to increase export. To solve the problem, the team must be able to solve the problem by seeking alternative markets beyond the traditional export market.

On the other hand, today Investment was showing improvement in tandem with bettered global economy. However, in regard to quality improvement of economic growth, the PEP team must be able to direct investment to productive sectors as the multiplier effect was notably great. The team must be able to bring investment to productive sectors as the multiplier effect was notably great. The team must be able to bring investment into the tradable sector.

In spite of cynical remarks about the national PEPI team lead by President SBY which was regarded as unnecessary although it was substantially important the team must be able to elimininate the doubt. As known there were some circles who feared that PEPI which was meant to jack up export and national investment might trigger frictions at ministerial level. Questions arose: was the formation of PEPI caused by discontent of Ministry's performance so the focus was vague? Moreover toward the General Election, the cabinet tend to be booing compactness.

In order to jack up expert and promote invest­ment, in fact in was enough to foster coordination under the Coordinating Minister of Economy. There were also who rated that the function of PEPI was inefficient and costly. So it should be better to maximize the function of the existing instruments because the ministers were supposed to have fully understood their respective roles.

On the contrary there were those who be­lieved that the PEPI team was the right thing as a measure to invigorate investment and export. The slowdown of economic growth in 2012 wee among others on account of lowered national export. On the other hand investment policy at central level and regional level seamed not to be in synchronous.

About export, the effort to promote was not a simple matter because basically Indonesia's export highly depended on buyer countries especially Euro­pean states and the USA, while economic crisis in those two countries seemed unending. It became indispensable to seek for new export market beside Europe and the USA.

 To promote export it was necessary to uplift production in terms of quality as well as quantity which was also necessary to be supported by sound infra structure such as toll roads to transport export commodities to harbors in the main cities like Jakarta. The traffic jams in Jakarta could hindrance export process. Queue in harbors is among the problems to be cracked.

Meanwhile in 2015 next the ASEAN Community would be underway which means competition in international trading would heighten. Unfortunately Indonesia seemed not too ready for the competition compared to other ASEAN states. About investment, it seemed that this year there was potential slowdown especially in the real sector due to high minimum provincial wages (UMP) and residential minimum wages (UMK).

The notably high UMP in Jakarta, Bogor and Bekasi made investors hesitate to enter, and yet low wages used to be the reason for investors to enter. The policy in the provinces in determining UMK seemed not synchronous with the investment promotion plan. So the Government was expected to reform to make everyone happy in the spirt on Win Win solution.

Not less important was that the presence of PEPI did not have to disregard the role of the existing institutions. Previously there was already the National Export Development Board (BPEN) and the Coordinating Board of Investment (BKPM). If any new team was formed they should coordinate effectively with the existing bodies. In case of failure in making coordination, anxiety of certain circles could be true that the formation of a new team would but cause inefficiency. Hopefully this was not true. 

Business News - February 22,2013