Calm Down Please

I don't like to see the recurring hatred of Indonesians towards Malaysians. I fully understand Malaysia is not a good boy. Several times it offends us as the last incident of detaining the Indonesian government officers who caught the Malaysian fishermen breaching Indonesian territory. And their response is always that the conflict is a trivial matter and the anger emerged only represents a few Indonesians.

However, the Indonesian protesters have done too much and disproportionate. Hurling faces to the Malaysian embassy, threatening the Malaysian travelers in Indonesia is primitive and childish actions.

Indonesians should realize that 2 million migrant workers creating incomes from Malaysia. Thanks to their prosperity so that Malaysians are absorbed in more added value jobs, whereas the lower jobs go to Indonesian jobless.

* * *

Indonesia has to stop exacerbating this conflict. It is not only useless but wasting our energy to develop our country as well.

Even the lawmakers have lost their common sense by stating the military option addresing this "sibling rivalry". It is nonsense. We are not ready to wage war both technically and economically reasoning. Can our old and out-of-date plane go to war despite they often crashed without being shot by any enemy's bullet? Do we have budget to the military campaign whereas we need that money to develop our infrastructure, school, and people's heath?

Absolutely unexpected war between Malaysia and Indonesia will make suffer of both countries, particularly of Indonesian people. Without war, Indonesian people have been bombed by mismanaged-3 kg-LPG-canister explosion, now they want us to have other bombs from Malaysian army. What a miserable life will be!

* * *

Frankly speaking, are we, Indonesians, jealous with Malaysians so we hate them so much?

Their income per capita is 3 times more than us (The World Factbook, GDP per capita Indonesia: USD 4.000, Malaysia: 14.900). The tourists come to Malaysia is 3 times more than to Indonesia (Wikipedia, World Tourism Rankings: Malaysia 23.6 million visitors in 2009, Indonesian Ministry of Tourism: 6.4 million visitors in 2009) . Petronas outdoes Pertamina in all business measurements (Forbes: in 2008 Petronas' asset: USD 125 million, Pertamina USD 25 million; Petronas: Twin Tower, Formula One Racing sponsor, Pertamina: ???). Although Indonesia is the world's biggest CPO producers, but Malaysia has more benefit from the CPO downstream products than us. Now Malaysia focuses on escaping middle income trap, while Indonesia still grapples with corruption, bad infrastructure and poverty. Malaysia is ready for bright future with new strategy of New Economic Model (NEM) replacing New Economic Policy (NEP) to achieve status of developed country through innovation, while Indonesia development direction will rely on who take the helm in every presidential election.

Indonesia should prioritize its economic development first. Indonesia should catch up the Malaysia's economic progress. Indonesia should compete Malaysia in terms of economy the way Koreans try to revenge humiliation of Japan in the past.

* * * *

Iran’s Useless Show Off

Does a country have dignity by developing sophisticated weapons?

In recent days the world is poured by a spate of news on Iran's newly launched military equipment. On Friday (20/8/2010) the Iranian military had successfully test-fired surface-to-surface missile dubbed Qiam. On Saturday (21/8/2010) Iran began with to put fuel rods into the Russian-built nuclear reactor. On Sunday (22/8/2010), Iranian President Mahmoud Ahmadinejad unveiled a 1000 km-range bomber drone dubbed Karrar. On Monday (23/8/2010), again, Iran opened the production line of high speed assault boats dubbed Seraj (Lamp) and Zolfaghar (Imam Ali's sword). See, in four consecutive days Iran tried to mesmerize the world with its cutting-edge technology.

It is inarguable that Iran has got its deterrent factor. Iran is not as easy as Iraq and Afghanistan to conquer. Its archenemy – US and Israel – will think twice to wage a war against Iran. But whatever Iran show off, do not ever think that US and Israel cannot match or outdone Iran in making lethal weapon.

For the time being Iran will be safe. But what next can they do with the isolation of the US superpower? Do they have to insist not to have dialogue or play down their attitude to win the US' heart or at least US will let them play in the broader role in the world. I think Iranian leaders should think this in better perspective. Iran should learn other country's approach amid the hegemony of American-defined world.

China is the best paragon. The Chinese utterly do not bow to the Americans, but they are not deemed as an enemy by Americans. Thanks to Deng Xiaoping's vision, China embraces the western system of capitalism. China has put itself the world's economy network. The Chinese can export their production to anywhere in the world freely and the most important they can easily invite foreign company to invest, make production, and transfer their latest technology. And now China is the key player in world's economy and if China is attacked by any country then it will affect to the whole world.

The Iranians might ask, by doing this, do the Chinese have dignity facing the Americans?

Certainly the Chinese do have dignity in terms of cutting-edge weapon race. In 2007, China had successfully tested it anti-satellite missile. Previously, in 1996 it tested the first underground nuclear weapon. These are more than enough to tell the world that China is a very strong country. Imagine if the United States attacked and China would answer by shooting the America's satellite so that it can render their jet fighters' maximum capacity, guided missiles or any equipments relied on satellite useless.

Many of us, particularly if you are Moslem, dislike the arrogant Uncle Sam. However, any leaders should prioritize their people's prosperity. And for that purpose, there is no other better way except making friend with Uncle Sam. This is the Chinese recipe to address the arrogant Uncle Sam: embrace what prevails in the world system, do your best to bring the best to your country, not to make angry the temporary winner Uncle Sam, after connecting with the whole world for better and worse, sometimes you can show off you strength without any sanction at all.

SBY’s Third Term

Does SBY deserve for third term of presidential stint? Absolutely, he does not. Why? He has no breakthrough to develop Indonesia. Is SBY a bad president? Absolutely, he is not. To certain extent he is a good one. I believe he has integrity and passion to do good for the people. And in my opinion SBY does not pursue self interest from his presidency.

I criticize SBY the way Lebanese criticized UNIFIL, United Nation's peacekeeping troops in Lebanon. The critics of Lebanese societies against UNIFIL are that UNIFIL is perfectly function when there is no war. However, as conflicts appeared, UNIFIL is just bystanders. UNIFIL including Indonesian troops reportedly fled from a skirmish between Lebanese and Israeli forces.

Is it fair to compare SBY's inaction with UNIFIL's escape?

Let see the evil's backlash against KPK. Antasari got 18 years imprisonment as the trial had never truly proved him guilty. Surprisingly, the judges shrugged off the evidence that Nasrudin (the victim) and Sigit (allegedly murder's associate) taped Antasari prior to the killing of Nasrudin. I wonder why they needed to tape Antasari, the then KPK chief. Of course the laymen will ask what the record is for. Certainly some people had asked both of them to do this, but who are they? Why did the judges not ask further about this strange evidence? Two men taped the same person would have had strong intention such as conspiracy to topple the good-performance Antasari.

Moreover, the others KPK leaders, Bibit Samad Rianto and Chandra Hamzah have also been accused of bribery without any direct evidence. Even both the Police Chief and Attorney General had lied before the lawmakers on evidence. What a messy rule of law!

What do SBY do about this blatant crime? Nothing, just like UNIFIL. He only said it was the legal area that he had no intention and rights to interfere. That is definitely wrong attitude. Do nothing means to let somebody take charge to do anything as he wants. Not intervention means to let corruptors orchestrated the KPK' demise. The true reason is our president does not want to take risk in his second term by not doing anything that may backlash his presidency. He wants to play safe. By doing this, SBY will function perfectly – just like UNIFIL – when Indonesia is a law-established country like western country where the law is enacted in a true manner.

In economy SBY until now has neither legacy that we can remember. He does nothing in terms of economic breakthrough. He does everything like business as usual when we need groundbreaking program. We cannot boast of our product selling all across the world. We hardly boast our juggernauts because they are still too little. We have no showcases of our prosperous economic zones to invite more foreign direct investment. In a nutshell, there is no achievement at all in economy.

These are 2 points Indonesia needs the most, namely: (i) rule of law which everything is predictable, where the good guys prevails, where the law is abided by all citizens (ii) economy to answer what kind of industry we should develop and where should the specific industry thrive. SBY has no extra courage to enact the law and has no strategy or implementation to make achievement in economy.

SBY has a historic chance to do better so we will remember him as national hero who had done much to us. I hope he would realize that legacy which means quality of leadership is more important rather than the second or the third term.

Poverty Eradication

The government is very serious to eliminate poverty of Indonesia's people. I have been working for that program led by Vice President Secretariat and I conclude the program will not be very effective. The program did not address the real problem of poverty: low income!

People create incomes from working in the factories, selling goods and services such as merchants or doctors, entertaining people in TV show, etc. And the beginning of those things is the work of entrepreneur, private sectors. These entities are the true incomes creators. Low incomes appear from low added value products. And people with low incomes or no fixed incomes are poor people. That is poverty.

What is the government has to do?

Most of our people work as farmers. Do the farmers have more incomes than the worker in the factories? I guess they don't. Indonesia's farmer's productivity is low due to too much farmers for less irrigated farming. So the government should have focused on building more factories. Do we have resources to do this? I guess we don't. We have less spirited people of entrepreneurship. So the government should invite Foreign Direct Investment and develop more special economic zones. This strategy is very effective and very fast to make country prosper. We have many paragons such as China.

Until now I have seen no keen policy to enhance our industry sectors. And the industry contribution to Gross Domestic Product is declining. Indonesia lags behind the next rising star country, Vietnam, in terms of Foreign Direct Investment. The government seems pay no attention to promote special economic zones.
This is the upstream of the poverty problem that the government should have addressed since 30 years ago. And now president SBY's pro poor program is to do face-lift in the downstream.

Mr. President, Special Economic Zones will answer the poverty problem effectively.

Freedom

I love Indonesia very much. It is my beloved country. But until the nation's 65^th anniversary I never have a positive proud of Indonesia. It seems I love Indonesia just because I was born here and I have less choice to choose the citizenship.

As a nation we still fail to give meaning on freedom. Our leaders seem have ideas how to manage this country by our own after the independence dream came true. Since the beginning of independence, we underwent a kind of civil war and power struggle. The government cannot work because it was disturbed by other politicians who were chasing the helm. Bung Karno could not manage this mess and even Bung Karno himself created his own mess by being the lifetime Indonesian president.

Then Pak Harto came as a nation savior against communists. After taking office he managed to make stability in this country. It is his merit that this country for 30 years concentrated on economic development rather than politics. Yes, we had much progress during Pak Harto's stint. We should praise him for promoting the best Indonesian scholars to plan and execute the development. Thanks to oil natural source and its high price, Pak Harto had abundant funds to finance the development. However, natural resources-based development was susceptible to price change. And at last the moment of truth came. The development was out of steam as the oil price tumbled. It turned out the economic development was baseless and easily swept by speculators. At last Pak Harto himself was ousted by his own people.

In the wake of financial crisis, Indonesia embraced democracy. And the state orientation went back to Bung Karno era, politics before economy. As a result we see more politics drama rather than economic development. Rampant corruptions, messy and powerless government, indifferent leaders, rising sectarian groups are parts of country's picture after 65 year independence.

Whatever happens this is our country and we have no choice, except to fix it at our own disposal.

Malaysia’s Middle Income Trap and Us

The difference between Indonesia and Malaysia is the main issue arouse nowadays. Indonesia is still grappling with poverty, while Malaysia is talking about middle income trap. Indonesia is still facing the developing country’s basic problem, while Malaysia is aiming to join the elite group of developed countries.

To some extent, certainly Indonesia and Malaysia have similar initial condition to build their country in the wake of their independence from Western imperialism. On the onset both countries rely on the trade of abundant commodities to develop their countries. Both countries also invited foreign direct investment luring the investor with economic zones, tax holiday and low-waged workers. In 1990s the result was less different, both countries were dubbed as Asian miracles. It was 1998 financial crisis, revealed the real strength of both countries. Malaysia could get through the crisis in grace. Led by then Prime Minister Mahathir Mohammad, Malaysia turned down IMF’s aid and advice. Indonesia plunged into deep crisis, first economic crisis and then followed by political crisis toppling President Soeharto. Since then Malaysia development slowed down but still gaining its stature, unfortunately Indonesia never comes back as Asian miracle country.

At present Malaysia’s income per capita is 3 times more than Indonesia’s. Malaysia is categorized as middle income country and for them it is time to talk about the next step.

Previously Malaysian strategy was to produce low added value goods. It worked and raised Malaysian living standard, and developed Petronas twin tower and Multimedia Super Corridor. But it does not work now. Logically speaking, only high price products can bring the workers high wages. High price products are only created by sustainable innovation. And innovation is a strange thing that cannot exist just because you want it to exist. Even in America the innovation spirit of Sillicon Valley cannot be easily cloned to other parts of America. Innovation is a mixed ingredient such as education, property rights, and crazy investor. It needs also people who has abundant creativity and love to take risks.

Malaysia has identified their situation and what they want to achieve. They realize they are caught in middle income trap and why it happened. They promulgate New Economic Model (NEM) to spur economic growth and reach developed nation in 2020 through innovation.

I am very sad about Indonesia situation. We are wasting time on law enforcement, basic economic policy direction, regional elections calamity, high chilly price, poor infrastructure, etc. In consequence Malaysians appear with the new stage of development and Indonesians still come out with proposal of poverty eradication after 65 year freedom.

Indonesian Rupiah Redenomination

The former Indonesian president, Megawati asked: "if we implement redenomination of thousand, how much will the value of Rp. 100 be? That was not a smart question from the ex-president. It is easy to explain: Rp. 100 equals 100 x 100 cent = 10.000 cents. Then the redenomination value of Rp. 100 – in case of redenomination by decreasing 3 zeroes – will be 10 cents.

The newly elected Central Bank governor, Darmin Nasution, has announced the long term plan of Central Bank to adjust the currency by deleting the thousand of current value. For instance Rp. 1000 will be Rp. 1. The goal is just to simplify the figures and redenomination will not have any effect to its value. On paper there will be no troubles at all about currency redenomination. In today's transaction we hardly see goods or services pricing at less than Rp. 500, let alone Rp. 100 as stated by Megawati.

Some experts say redenomination will make the transaction simpler and make the ATM machines have less burdensome. Certainly, it is not true. Both transactions and ATM machines' burden will be the same. In the new denomination, there will not be the notes of Rp. 100.000. Imagine, who will bring Rp. 100.000.000 in their pockets? Instead, the ATM machines will serve Rp. 50 replacing Rp. 50.000 and Rp. 100 replacing Rp. 100.000.

It is inflation that creating the weaker value of currency. And years after years, the figures will be bigger. In 1970's, the rich people is dubbed as a millionaire. And now if you have millions rupiah, you are not deemed as a rich people.

Redenomination is not a new policy. For the last 85 years, there are 50 countries implemented the redenomination of its currency. German was the first country to do this in 1923 in the wake of hyperinflation. The German's government deleted 12 zeroes of its value. Turkey adjusted its lira in 2005 by dumping 6 zeroes. Compared to Indonesia's plan cutting 3 zeroes, the central bank will cut less zeroes than Turkey and German.

So, as an idea, Indonesian rupiah redenomination is not wrong at all. And I think we should accept this idea, because too many figures in currency mean nothing. Pak Darmin, please go ahead and forget about Ibu Megawati's comment. Frankly speaking, Ibu Megawati is the one who is very afraid about redenomination, because her name will be Kilowati.

Indonesia’s Debt

I have seen a lot of debt-based project all across Indonesia. Thanks to abundance natural resources, Indonesia wean on debt of foreign funding agency to develop. The debt itself is neutral. It can add the capital to get more return. But if the debt is mismanaged then it is what I see on Indonesia’s debt: squandering money.

For sure, the debt has likely an impact to the economy. It was just because that money is poured directly into the economy activities. Once the debt was disbursed, the demand of goods and services would increase and more jobs would be created. But unfortunately, the debt-caused economic growth has nothing to do with the goal of the project.

And sometimes the government has no vision on the project goal and the holistic grasp on the connections between projects and its priority. For instance community-based water supply and sanitation project was wrong in terms of priority. Everything starts from prosperity, and others will follow. It is just to make people rich first and naturally they can afford to buy water supply from private company and adequate sanitation equipment. Doing the reverse will result in endless circle, the poverty lead to the worse water supply and sanitation and the government’s aid – not the water supply and sanitation facilities from the debt – will be sustainable. Consider, the debt was earmarked for supporting private sector to build industry and the income of poor people raised, and then invite the private investor to provide water supply.

Peter Drucker said:” developing nations don't need government-to-government aid or grandiose World Bank projects but, instead, partnerships with private enterprises in industrial nations.” I absolutely agree with this Guru of Management Gurus. The right usage of debt is to support business by developing industrial zones, constructing the best roads, bridges, ports and airports, providing the easiest and friendly regulation, and last but not least, training officers to serve the investors all across the world. It is investors creating money for our people. Unless we find oil reserves as much as in Saudi Arabia, then it is the only way to enhance public incomes.

Indonesia’s DOSCapital

What is happening in today's Indonesian politics is a confirmation to the DOSCapital theory from Thomas Friedman's Lexus and Olive Tree. The theory explains the must-existed tools in a country to succeed in globalization. Those are hardware covering free market system, democratic elections, etc. and software including rules of law, government officer's capacity, etc. Only if a country has both, the age of globalization will benefit its people. When the tools are lopsided then the globalization turns the democracy to be the kleptocracy (analogy: the state-of- the-art computer without software) or the system will collapse (analogy: the old computer with the state-of-the-art software).

Indonesia has all instruments of democratic system. The leaders are regularly elected by the most-advanced system. The balancing institution is working so well so that the executives cannot run the government well. We have all law enforcement powerful bodies such as Corruption Eradication Commission (KPK), Financial Transaction Reports and Analysis Center (PPATK), Constitutional Court (MK). But it seems useless. Elections do not reflect meritocracy. The singers, entertainers, comedians turned to lawmakers. Law enforcement is still dull. The corruptors' fightback is at alarming rate. The chief of KPK has been put into jail. The others are accused by fake evidence of bribery. In short we have the hardware of democracy but we have no software to implement it.

And after 12 years, we realize that democracy turns out to be just another system. Democracy is only a tool, just a tool that cannot ensure the result unless you fulfill the conditions. Our system and "the man behind the gun" are so weak that the free market system implementation does not favor the result. The corruption is still rampant. The economy is still sluggish. In terms of people's prosperity, Pak Harto was doing better than all his successors.

Back to Thomas Friedman. In developed western countries, the system encourages people to do their best and give them reward by what they produce. The people who win the races are Bill Gates, Andy Groove, Steve Jobs who create wealth and high quality jobs by using their own talents not by special license from government, or bribing the officials. In DOSCapital 6.0 (the highest of system ranking), meritocracy prevails, the advanced high added value goods and services thrives.

In the new comers of democracy, the first thing emerging is politics, while economy activities subject to politics. Instead of supporting economy, politics becomes the vehicle for economic victory. If you want to be rich don't try hard like Bill Gates just become politicians. In contrast with the stabilized democracy make the politics shrinks and economy grows.

So we see that the Indonesia's local government does not encourage business by imposing heavy tax and levies. The lawmakers does not concern with efforts to support and create business. They are occupied by trivial matters such as aspiration funds and now aspiration funds for housing. Both of them do not understand that their main task is to support businesses that create job for the people. The more added value business thrives the more prosperity comes. That has happened in the developed countries and we have to follow that path because there is no other choice.