As Indonesian I want to believe that Indonesia will equal China and India in terms of economic success story. However until now I never find out what is the best reason to believe this.
China’s economic way is decided largely by government. The government through many state-owned companies ratchets up the economic engine. Bearing in mind that it has abundant workers and space, the government opens the economic zones and invites foreign direct investment. China becomes workshop of the world and flooding every single country with cheap products.
China’s economic way is decided largely by government. The government through many state-owned companies ratchets up the economic engine. Bearing in mind that it has abundant workers and space, the government opens the economic zones and invites foreign direct investment. China becomes workshop of the world and flooding every single country with cheap products.
So, Chinese government itself seems undertaking the business. Chinese leaders don’t care about democracy, but does care about business. By doing this, China shows us that non democratic country can easily implement economic program. Without uproar of opposition, China becomes the world’s highest growth country, the world’s largest exporters, and the world’s second biggest economy.
In contrast, India takes different path. The government doesn’t function well in business. India succeeds in spurring economic growth after the government relinquishing its grasp. Even after business dynamics has taken place there, democracy still worsens the government policy. Consequently, bad infrastructure and bewildering regulation for business investors is so rampant.
Given so much disadvantages and flaw policy, somehow Indians manage to develop its economy. Since time immemorial, business is ingrained in Indians. So the economic openness leads enterprises sprouted out. Thanks to their immigrants and talented workers, India becomes a leading country of information technology. Banglore becomes Asian Silicon Valley. Its English-speaking workers support call-centers industries.
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China and India have figured out its way that fitting its country’s character. In short, non-democratic China focuses on manufacturing cheap goods and democratic India on information technology services. Those are their economic engines. Infosys, Wipro of India and Huawei, Nexian of China epitomize economic engines.
Truly, Indonesia is different story. We can’t see this ‘economic engine’ in Indonesia!
Yes, the composite index in Jakarta Stock Exchange rises sharply. Yes, Indonesia’s export reached the highest value. But we still see no ground for economic success story.
Composite index hike is very fragile and not connected directly to many people’s prosperity. The fund flows in and out quickly. And it is not the significant indicator for absorbing jobless.
Likewise, Indonesia’s export still largely depends on price fluctuation. If we dissect more, most of export comprises commodity. Crude Palm Oil (CPO) and coal makes up the most contribution of export value.
So, Indonesians should be rational and realistic about the dream of emerging market or economic success story. We may be upbeat seeing economic indicators, but until we see clearly the “economic engine”, we are still not China-to-be or India-to-be.
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1 comment:
Hi Irawan,
I found your posting is really interesting. I think first of all, SBY needs to get the credit for all his efforts in cleaning the country of corruptions and achieving the political stability. 2nd of all, supporting by Sri Mulyani as our Finance Ministry, Indonesia had done a tremendous clean up in the accounting/finance dept (corruption bureaucracy).
I think so far these the assets of our country in managing to its position so far.
Indonesia exports are good assets but I believe one important asset of Indonesia in keeping the economic growth is to keep the peaceful and political stability. I believe that "Unity in Diversity" need to be Indonesia focus in achieving the growth.
Like you said, India has its technology export commodities. China has its trading commodities. I believe Indonesia also has many trading commodities, it might not be as big as China but as long as we maintain and run it properly it can be a very successful tools for our economic growth.
Like an old phrase says if you have a good tool but you don't know how to use it correctly, it will be useless. But if you have a so-so tool and you know how to use it effectively then you can upgrade your tools.
I like your posting, and would like to hear your comments about mine.
Megawati Tjokro.
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