Indonesia than OECD – AAP
Here I am writing about the OECD report (see also writing MCB for the same topic). Version of the slightly shorter in the magazine Tempo published Monday, August 4, 2008. Indonesia in Radar OECDArianto A. PatunruIndonesia is the nation that “responsibility” as a joke among development economists. He was “poor”, but not poor enough to be attractive like many countries in Africa. He “began rich”, but not yet rich enough to be interesting as developed countries. That’s the fate of the countries’ central board under “: is not attractive for research. Thankfully joke did not last long. Following the previously published reports, both from the World Bank, IMF, or ADB, the report Economic Assessment of Indonesia in 2008 which launched the Organization for Economic Cooperation and Development (OECD) on July 24, yesterday was yet another fresh negation of the above jokes. Indonesia is a country that is not only interesting but also important, even in the “middle of the board under” – referring to one of the World Bank income categories: lower-middle income. OECD report was not brought something entirely new, indeed. Some contents are the things we already know. That the Indonesian economy has recovered from the 1997-98 economic crisis, even with a slower process than Korea, Thailand, the Philippines, and Malaysia. Investments that improved but still below the other countries in Southeast Asia. That the economy is still heavily dependent on consumption (mainly government spending) and exports. Or that our export growth is sustained more by the rise of commodity prices in the world. But the report is important because it is both a sign that Indonesia may not be longer dinafikan discourse and decisions in the global economy. Indonesia entered into the group “countries with the increased involvement” or enhanced engagement countries that includes Brazil, India, Indonesia, China, and South Africa ( “BRIICS”). Indonesia is the only representative of Southeast Asia, a region called the region of priorities. Many things that make Indonesia an important, but economic potential: a large population, vast country, a strategic geographic position, and so on. OECD report in the form of economic assessment is usually packaged in three parts: one part of the general economic peel with a focus on economic growth performance, and two sections highlight important issues other than growth. For Indonesia, the OECD was right, that the second important issue is the climate of business / investment and the labor market. Lack of conducive investment climate, Indonesia has so many issues regarding the various studies and reports. The government also seems knowledgeable that the investment climate is key to economic development. Issued policies to improve the investment climate. For example Inpres 3 / 2006, Presidential Directive 6 / 2007, and Presidential Instruction No. 5 / 2008. Packages are also policies related to investment climate: infrastructure policy (PMK 38/2006) and financial stability (LCS July 5, 2006). And, of course, Law 25/2007 on Investment. All this is commendable. Unfortunately, these policies are less effective in its implementation. Capacity is less than the bureaucracy at the operational level to be one cause. Also, many packages are tempted to accommodate too many things that it becomes out of focus, so that looks like a laundry list (laundry list). In addition, resistance to policy reforms are still a lot even from within the bureaucracy itself, both horizontal (between departments or between units) or vertical (between central and local). It is often missed is the fact that the policy entrepreneurs and investors are more concerned with certainty rather than a promise or a program to improve the investment climate raises complex but differing interpretations of the implementing level. Even in some cases, they are willing to pay more for higher certainty. For example, the time required to create a new company or the time for completing export or import procedures at the port. Finally, improving the investment climate needs to prioritize the necessary condition for doing business that is the condition of infrastructure and adequate logistics. Basri and Patunru (2008) concluded that the investment plan is often hampered due to poor infrastructure and high logistics costs. In other words, the main problem of the Indonesian economy was in the supply side, not the demand side. The second specific issue discussed by the OECD report is a labor market in Indonesia is very stiff. In the investment climate improvement package Presidential Directive 3 / 2006 revision of the government’s agenda of labor laws, Law 13/2003 with the April 2006 target date. Following a very high resistance from a number of trade unions and also a member of Parliament, the government backed off. In the advanced package, Presidential Directive 6 / 2007, an improvement plan that no longer even appear as one of the agenda. Even the issue of lost labor market altogether. It was not until the Presidential Directive 5 / 2008 issue be re-entered the labor, even with the agenda of the more cautious of creating a conducive industrial relations and the strengthening of training institutions and productivity, with no change in employment law. But without a fundamental improvement in the Law 13/2003, the utilization potential of Indonesian workers will never be optimal. Conversely, laws and regulations that protect workers considered in addition to harming the people who are looking for a job can also harm the workers themselves in the long run. It is to be a significant player on the global level there is a price. Even to just be interesting. Currently the key requirement is the potential for high economic growth, and the business climate more conducive to that (especially in terms of infrastructure, logistics, and legal certainty) and the labor market more flexible.