Sunday, 12 October 2014


Over the past 3 years, Indonesia’s macro economy had been constant setback. Economic foundation was gradually degrading with alarming process of vulnerability domestically or internationally.

At home, Indonesia was tormented by deficit in balance of payment and deficit in state at high alarming degree, increasing portion of foreign ownership over Government bonds, worsening Debt Service Ratio and swelling overseas debt [ULN] unprotected by any hedging measure.

Indonesia’s vulnerability at International level was due to economic slowdown in the emerging market especially China and fear of the Fed’s action to run QE in the USA in 2015 which would generate pressure all over the world including Indonesia.

Bank Indonesia and the Government had strived to strengthen national macro economy resiliency by monetary and fiscal mix-policy. This was indicated by signaled of betterment in Indonesia’s macro economy such as deficit in balance of payment which had been minimized, improvement in oil – gas export and eased inflation.

Unfortunately the Government had been concentrating on the demand side only and too little attention on the supply side which was indicated by deficit in oil gas trade balance, and downturn of raw material export.

Hence reformation and structural restoration was needed for the long terms with the objective to lessen economic cost and shorten transport time especially for goods of high added value.

The reformation would bring incentive to the businessworld with high profitability which enabled economic expansion. To develop the supply side, three obstacles must be faced i.e. measly facilities of domestic and international trading and digital connectivity as well as condusive economic trading related to legal protection, and competence disparity of skilled human resources.

The disheartening thing was that many parties had not been able to make economic transformation on the overall to develop skill and capability which increased market confidence. This was due to low institutional capacity in Indonesia.

The institutional capacity included: change of rules, management, organization and best practices of high standard supportive to economic activities effectively and efficiency. They realized that good institutional system could bring assurance and lower economic cost which in turn would strengthen competitiveness and economic growth sustainably.

To maximize development on the supply side and institutional capacity as a whole in Indonesia, upgrading of human competence was needed. The present educational system with amphasis on general knowledge must be revised to give more room to competence training. More vocational schools were needed since the graduates were in high demand in the industry.

For long it was apparent that the policy and regulations in schools were inappropriate since it was not in accordance with the objective condition afield. Besides the policies and regulations were not well implemented afield.

So it was necessary to enhance the discourse to reform tertiary education; it was time to set vocational education from general education to link it more to the Ministry of Research of Technology. This would be one of the new Government’s strategic agenda.

In tandem with Human Resources Quality supported by better human competence to be more competitive.

Combination between institutional and human capital could serve as around foundation in the process of structural transformation acceleration in the process of structural transformation acceleration in Indonesia. The two aspects would combine as sound underlying foundation for stronger competitiveness.

The synergy between strong institutional aspects and human should be in tune with the characteristics of Indonesia’s economy which was the economy of an archipelago state but remember that the geographical characteristics has pitfall of its own.

In developing maritime economy, Indonesia still had to face the challenges of inter insular connectivity which could integrate the country from Sabang on the Western tip to Merouke in the Eastern tip. Inter insular transportation system was an urgent matter.

The discourse to build maritime toll system had become jusrifiable to be executed. Indonesia is the greatest archipelago in the world with enormous potentials but not exploited to the maximum.

The need for raw materials was growing while natural resources on land was limited and hard to tap or develop. In terms of geo-economic position Indonesia is on the crossroad of two continents and two oceans.

Marine resources had high added value potentials which could narrow income disparity and reduce income gap between land and sea.

The marine sector was a nature based economic sector which could reduce import demand and pose as no burden to deficit in current transaction and balance of payment. Inter-insular connectivity, if promoted, could lower economic cost for better competitive edge.

By applying the right technology, comparative advantage might turn into competitive advantage the strengthen food resiliency and national souveignity.

In the case, the Indonesia Economic Development Expansion and Acceleration Plan [MP3EI] was answer to the said logistic connectivity challenges. It was right that President SBY handed over the Masterplan to his Successor Joko Widodo to accomplish it.

The Government’s support was called for through sound fiscal policy with more propotional budgeting to develop marine potential outside Java island. The Maritime Development Acceleration Plan included among others building of ring roads in Java and others islands, building of industry-related airports and seaports especially in fishery centers.

Broadly speaking the thinkable solution to tap maritime potentials was to buils integrated maritime sectors which were unexplored.

The revitalization encompassed increase of sectoral productivity, efficiency and continuity and development of new growth centers especially in the coastal areas, and small outer islands. Implementations so they were demanded to always coordinate vertically or horizontally.

It was indeed not easy to execute the agenda due the next Government. However with support of all parties including the private sector, all for maximum result. (SS)

Business News - September 24, 2014

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