TO UNDERSCORE THE URGENCY OF INFRASTRUCTURE BUILDING

One of the notable characteristics of progress of a nation was adequate infra-structure which might enable acceleration of economic activities, The USA an European states had excellent infrastructure be­cause they were aware that only by good infrastruc­ture economy could be lift up.

In Asia, let' say Japan, Singapore, China and Hong Kong might represent economic progress because of their sound infra structure. It seemed rea­sonable that economies powers of the world had shift­ed to Asia as the new emerging forces with China as main propeller.

To learn a lesson from the success and ex­perience of other countries, Indonesia should do the same thing. Indonesia is rich in natural resources compared to other countries like Japan, Singapore and Hong Kong. Indonesia treasures abundant natural resources as well as vast human resources. Indonesia is also geographically expansive. The vast expanse demanded great infrastructure development.

Ironically in the posture of APBN State Bud­get, the reference of annual state expenditure and income, the post for infrastructure constituted only not more that 3% of GDP which totaled Rp 7,500 trillion. Compare this to India which was 7% or even China which was 10% of GDP.

So it was homework for the Government, cq the Ministry of Finance to strive to expand budget portion for infrastructure.

Economic players in Indonesia were still bur­dened by poor infra-structure condition. That was not all, one more big obstacle was standing on the way i.e. increased basic electricity tariff of 15% which was to be implemented gradually through 2013. And then there was increased Provincial Minimum Wages (UMP), increase of toll road ticket fare and increase of drinking water price (PDAM) in some regions. Those were Government's policies which were predicted to pose as burden to players of people' economy in 2013.

Beside the above policy, there were still a range of policies which would burden such as the plan to impose 2% sales tax on Small-and-Medium Industry (UKM) holding returns of above Rp 300 mil­lion. Increase of oil (BBM) price was most likely to hap­pen in 2013. Increase of oil price was only applicable on subscribers of electricity of 1,300 watt and up and the Government claimed that the electricity price increase would not burden the small people including Small Business (UMKM).

However the Government was careless and was not aware that there were still players of UMKM who relied production and marketing process on big business in malls which would be affected by TDL electricity price increase. Price increase of electricity in mall for instance, might force them to run efficien­cy in production, resulting in increased rental cost in malls and shopping centers.

The same was with increase of electricity cost which posed as burden to market players would have the implication of lessened turnover of production in big business and had the effect in lowered pro­duction and marketing of UMKM small business. The condition also applied on increased tariff of toll roads by Rp 500 – Rp 2,500 and the plan to increase drink­ing water tariff in some cities like Bandung and Ba­likpapan. Similarly the policy of increasing Minimum Provincial Wages around 40% - 70% would definitely increase salary burden among UMKM Small Business.

The above picture concluded that implemen­tation of all the policies would make the future of businesspeople, especially UMKM gloomy. The prob­lem was made worse with the threat that came from Europe which was still overshadowing world's econ­omy.

Hence predictably growth of the small busi­ness sector in 201 3 would be hard to meet target as set by the Government at 7% to 8%. Even most probably UMKM small business would run out of business due to the heavy burden they had to bear.

For that matter there must be effort to en­lighten burden that small business players might survive. The strategy of UMKM empowerment which was oriented to strengthening of social safety net among UMKM players must be put high on priority list Fostering of partnership among businesspeople and networking of sub-contractors and big enterprises were expected to enlighten burden of UMKM in the process of production, technology and marketing.

The formation of communication for among UMKM must be enhanced so they could share the effort to crack problems which held them back. The strength of this social networking might pose as strong weapon in facing economic problems which were the burden of UMKM. Hence the spirit of social entrepreneurship must be developed as ground for UMKM players in developing business.

Reside the social approach, the Government needed to balance up the policies with infra structure policy supportive to economy. The Government need­ed to alter the subsidy originally allocated for electricity and oil to infra structure development.

The energy subsidy amounting to Rp 300 was mostly allocated for infra-structure, public health, and other public services. Allocated budget for infra-structure in Indonesia was still low infrastructure needed more attention to consider that infrastructure as sustainer of economy was still at minimum.

An example was the case of toll road build­ing. Today China had toll roads of 83,000 km long, while Indonesia only had 70 km long. Furthermore total length of railroads in China was 90,000 km, in Indonesia only 6,000 km long.

Infra structure development for business and strengthening of social networking for UMKM small business was of utmost importance to be prioritized for UMKM development and national development in 2013. The policy was expected to serve as alterna­tive strategy to enlighten business people’s burden, particularly UMKM.

In the future the Government was expected to have the courage to adopt unpopular policy such as increasing price of subsidized oil which means to reduce energy subsidy. Thereby the saved budget could be used for infra-structure building. It should be borne in mind that by January 1, 2015 the Asean Community Market (MEA) would be in effect. Now it became imperative for the Government to build adequate infra structure whereby Indonesia could act as leader among MEA members in the collaboration era.

Business News - January 16,2013