Friday, 8 January 2016


This theme precisely describes the condition of the national economy. There are also who perceive that Indonesia’s economic dynamics were sluggish, because it is managed procedurally and surrounded by layered bureaucratic administrative system on the grounds of business protection and so on. In addition, economic activity in the country is also burdened with cost ranging from official costs that contributed to non-tax revenues (PNBP) as well as an official costs.

Economic activity grew very fertile, including the management of states/regional budget (APBN/APBD). If we look in more detail, what has been happening is the “contest” of various laws which is characterized by the spirit for establishing administrative and technical authority in each sector, taking refuge on behalf of economic development and empowerments.

This fact is not a mirage, but has become a fact of life in the minds of economic life of people every day. The most suitable example is if cattle will be shipped from East/West Nusa Tenggara to Jakarta, is slow to arrive to destination because it is hampered by the bureaucratic system which desire authority. Distribution casts become high because they are burdened with “official/unofficial cost” before the cattle is shipped and after it is departed to port of destination, said industry and trade observer, Fauzi Azis.

On the other hand, if you want to invest it is not easy. Let alone spending the state/regional budged as it bound by various requirement and procedures. Export and import activities are not free from complicated issue when it is facing a long business chain process.

Imagine if economic activities and processes in the field were blocked with a variety of administrative and technical procedures, what happens if goods and services are produce. The price is relatively costly and competitiveness is weak when the goods and services are traded. The of Government is as regulator and public servant, but the regulation made should be to provide leeway and certainly, as operation and economic processes.

Production Process and Output as well Competitiveness

Bureaucratic services as output will also affect the formation of price of food and services product by economic operators, because bureaucratic work output is included in economic process. Economics as an activity and process is a continuous activity to produce output that will meet the needs of consumers. The competitiveness of the resulting output is determined by input factor and its processes.

When economic activity and processes were “fouled” by non-economic factors that influence it, the beginning of un competitiveness is already happening. That is why the national economy is very vulnerable, both macro and micro, or both fundamentally and structurally. This happens because of the low competitiveness of the national economy, while the domestic economy is considered as procedural activities and processes, and full of cost of rents of gratification bribe, and mark-up”, he explained.
The impact of this situation is that the businesses must respond by building a bargaining position by conducting cartel and oligopolistic practices, so that they the characteristics of the activities and processes. Rents have no definite price. The process of rent-seeking occurs from the lowest top level, from the central to the regional government.

Even later it can get to the villages since the availability of Village Act. If does not join the cartel and establish network and distribution oligopolistic, they are unable to pay rents which value can be quite large (billion of Rupiah or millions of US dollars).

Thus, Indonesia’s economy is actually vulnerable, due to low competitiveness. An illustration which is the general nature is production and low productivity. Its current account surplus is nearly marginal, even recently is often in deficit.

The ratio of exports to GDP is only an average of 25% per year. It is necessary to compare it with the average condition in ASEAN which could research 50% at the GDP of each country. Similarly, the contribution of physical investment to GDP on average is only 30% per year. Government spending only accounted for an average of 9% per year. Only houses hold consumption expenditure which contributes an average of 56% per year.

That is why when I meet with entrepreneurs and ISEI some time ago, President Joko Widodo emphasized that Indonesia must escape that Indonesia must escape its dependence on consumption economy to an economy based on production and investment. We agree with this statement. These changes are not instant, but evolutionary. Such changes must be running to improve the structure on the national economy so that the foundation is strong, and not continuously dependent on the outside. (E)

Business New - September 4, 2015

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