Tuesday, 30 September 2014


The Asean Economic Community [AEC] to be effective on January 1, 2016 should be the focus of attention of the next president. A great task was waiting ahead. A number of national development agenda called for serious attention, among them the AEC 2015 which was just a year ahead. 

Generally speaking there were at least four important points in the execution of MEA 2015. Firstly, Asean as a single market. Secondly, common economic development. Thirdly, equal distribution of economy. Fourthly, strengthening of competitive edge including the importance of building competent workface. AEC was predicated by 10 Asean countries with total population of 600 million people.

Around 43% of Asean people lived in Indonesia. Meaning, AEC would actually place Indonesia as a main market which was vast, either for the traffic of goods or investments. In terms of outflow of goods, are local products ready to compete against products of Thailand, the Philippines, Brunei Darussalam and Malaysia?

It was noteworthy that based on data of 2012 trading between Indonesia and Vietnam posted deficit of USD 157 million, with Thailand USD 721 million, with Singapore deficit USD 707 million, with Malaysia USD 511 million, even with a small country like Brunei Darussalam USD 281 million.

By concept, AEC was extremely vast and it was not easy to decide where to begin the preparation. To committee for AEC preparation set by the Government must find it hard to prepare a draft for anticipating AEC 2015. Under such circumstances it was almost certain that trade deficit with the said countries would swell even bigger.

In fact there was still enough time for Indonesia to make renegotiation on the key issues whereby Indonesia could be benefited. The collaboration platform adopted by the Europe Economy Community [MEE] was not suitable for AEC. The AEC concept must secure decisions made by every member state. It should be sound and firm. Here was the point that Indonesia could play the role.

Illumination about AEC must be exercised by the Government internally in Indonesia not just on how to penetrate the Asean market, but more important was how national businesspeople could resist storming of goods from other countries.

With just 2 month time before installment of the new President, it was indeed not easy to make preparations. Each sector would need consolidation and inter sectoral consolidation. Also it was necessary to safeguard the acceleration process of infrastructure development whereby Indonesia could benefit from the Asean community era, which would trigger competition.

Southeast Asia was preparing to establish an economic community with potential to enhance trading and capital flow, unfortunately the integration it self had the potential to widen discrepancy. The point was that gender wise, women would have less job opportunity than men. Ten Asean member countries would share a common market next year.

The integration would create 14 million additional job opportunities in 2005 where skilled workers would be free to perform. Such was report made by the Asian Development Bank [ADB] and International Labor Organization [ILO].

Economic growth of the region could be jacked up to 7%. Unfortunately Indonesia was most unlikely to be advantaged. By estimate the new job opportunities would encompass only 1.9 million workers or 1.3% of total workers. By estimate, around half of the highly skilled workers would work in Indonesia. While most of the vacancy would be filled by less trained, low educated workers. The gap means less productivity and competitiveness for Indonesia.

Most of the job opportunities would be in the sectors of trading, construction and transportation informal occupations mostly held by male rather than female workers. Shifting of low and middle skilled workers would also be jack up, hence signaling the need for protective measures for local workers.

The Government was aware of the need for better regulation of placement for foreign workers; and Indonesia had to step up quality of goods and services by conducting training and accommodating more workers.

To grab job opportunities, skill was the key factor. Applicants must have the right skill for the right job. Although many job opportunities needed low and medium skill, the sectors that needed high skilled workers would grow fastest.

Indonesia was advantaged in the sectors of construction, trading, and transportation. The question was: how to prepare a labor force that meets the requirement for high skill. As known, Indonesia had the most numerous workworde in Asean.

Population of the young was high in Indonesia, while in countries like Thailand and Singapore aged people would prevail in the statistical data. Indonesia’s domestic market was high, the young people were many, and fresh innovations were plentiful.

Policy making in Indonesia were flexible. Many initiatives had been taken for the medium term. There was political will in the next Government which emphzized priority on efforts to be biased in taking advantage from Asean Economic Community.

For example Indonesia applied the Minimum Wages Policy which was not done by other countries, which means that Indonesia’s position was notably good. Besides Indonesia was Asean’s leader in terms of population. So Indonesia’s role was import as a whole to the region as well as for her own people.

By next year, Indonesia would be having a competitive momentum, particularly in economy and industry when Indonesia would be facing AEC as consequences of regional agreements.Pursuant to that matter, it was important for the Government to identify problems and face challenges of making productive and excellent workers for Asean’s labor market. Spontaneous response came from the KADIN, the Indonesian Chamber of Commerce who had prepared 3 programs in facing AEC 2015 and also supported the Indonesia Economic Development Expansion Program [MP3EI].

Firstly to identify need for skilled workers to support 22 economic activities in 6 economic corridors and to step up competitiveness in 12 prioritized sectors in AEC 2015.

Secondly o facilitate standard of competence and to set up Professional Cerification Agency [LSP] by related industrial associations.

Thirdly to develop KADIN Training Center [KTC] for promoting development of competence based training programs in accordance with industry need by provincial KADIN. Furthermore KADIN made inventory of 12 prioritized sector for AEC 2015 called free flow of skilled labor, health care, tourism. Logistics service, air travel transport, agro-based products, electronics, fisheries, rubber-based products, textile and apparels, automotives, and wood based products.

To embark on competition-packed AEC era, high quality huma n resources must be prepared as there were many labor intensive industry which had storage of competent workers which affected productivity especially in industry applying high-technology.

There were some basic problems faced by Indonesia in facing MEA 2015:
One:  high number of disguised unemployment
Two: low number of newcomer entrepreneurs to speed up expansion of working opportunities.
Three: most of Indonesian workers were uneducated workers so productivity which was why productivity was low.

Four: Growing number of educated workers, due to mismatch between university graduates and need for workforce.
 Five: Inter-sectoral discrepancy of productivity of workers.
Six: the informal sectors prevailed in offering job opportunities, a sector which was not given enough attention by the Government.
Seven: unemployment in Indonesia was the highest among 10 Asean nations including joblessness among skilled workers in facing AEC 2015.
Eight: workers’ demand for minimum wages and fringe benefits in employment.
Nine: the problem of Indonesian migrant workers [TKI] spread out in many countries abroad.
The next Government had to face one of the strategic agenda of AEC 2015 which demanded hard work and to be wise and smart in preparing everything whereby to take maximum benefit when AEC 2015 was applied per January 2016 next. (SS)
Business News - September 5, 2014


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