ASEAN's Technology Race

published @ The Jakarta Post

It was Aug. 10, 1995. An Indonesian-made turboprop aircraft, the B-250, touched down after completing its maiden flight. The nation was overwhelmed with a proud and can-do spirit. The N-250 was the next stage of Indonesia’s aviation technology progression, followed by the CN-235 that was developed in a joint venture with Spain’s Casa. The N-250 was the result of planned technology development.

Back then, without democracy, the Indonesian president developed the nation assisted by able ministers who were free from political interest. Indonesia was ready for the takeoff stage of development. Unfortunately, a financial crisis emerged. The rupiah plummeted, prices skyrocketed and the International Monetary Fund (IMF) intervened.

Guided by the IMF, the course of economic development changed. It is said there were two schools of thought to develop Indonesia’s economy. Simply put, “Habibienomics” emphasized value-added technology and “Widjojonomics” largely concerned itself with macroeconomics. The latter prevailed and high tech industries were no longer funded. The Engineers stepped aside, the economists lead the way. The IMF had driven the last nail into Indonesia’s high technology coffin.

Indonesia has halted its technological progress. Worse, in the democratic era, the president must please political alliances rather than take risks and finance new technologies. Long-term goals only reach as far as the next election.

In the meantime, our ASEAN neighbors flex their muscles. During 2005-10, the number of full-time equivalent researchers per million people was 6,173 in Singapore, 365 in Malaysia, 316 in Thailand, 90 in Indonesia and 78 in Philippines. Research and development expenditure as a percentage of gross domestic product (GDP) was 2.43 in Singapore, 0.63 in Malaysia, 0.21 in Thailand, 0.11 in Philippines and 0.08 in Indonesia. Patent applications filed by residents were 1,076 in Malaysia, 1,056 in Singapore, 927 in Thailand, 541 in Indonesia, and 186 in Philippines. These indicators support the reality.

Singapore is a success story as it has shifted its economy to manufacturing and then to being knowledge-based. After Asia’s financial crisis in the late 1990s, Singapore began its Technopreneurship Investment Fund (TIF) to lure the world’s leading venture capitalists to fund domestic knowledge-based start-ups.

Malaysia is attempting to transform itself into a developed nation. Malaysia’s government also founded Agensi Inovasi Malaysia, an investment company to fund start-ups. Vietnam, the new kid on the block, is also seriously addressing new kinds of economic development.

In terms of technology (or anything else), during President Susilo Bambang Yudhoyono’s 2004-2014 stint, there has been nothing to be proud of. Despite “good” macroeconomic indicators, there’s no longer an ambitious dream to achieve something great. Strategic industries are almost abandoned. Scientists stand idle and some go abroad to quench their technological passion.

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Capitalism without Religions

published @ The Jakarta Post

The article entitled “Religions and Capitalism” by Satrio Wahono (The Jakarta Post, Jan. 30) has linked the success (or failure) of capitalism with religion. Economic crisis happens because the very system abandons religion. Here are some notes on this proposition.

First, capitalism has no founders and was developed without any blueprint. And there is also no spirit of religion involved. The seed of capitalism was rooted in business activities in Italy, the bastion of Catholicism, long before the birth of the Protestant movement.

The next milestones were when the English and the Dutch established the first joint-stock companies: the East India Company in 1600 and Dutch India Company in 1602. Furthermore, the stocks could be sold and bought on the first stock exchange established in 1611 in Amsterdam. Europe entered an age of enlightenment which was based on reasoning. Science and technology, trade and factories were thriving.

Second, to link religion with the rise of capitalism is too exaggerated. Protestantism definitely shook up Christendom. For the first time, the authority of Pope and his priest were openly opposed. This breakthrough arguably freed people’s potential from the shackles of divine authority. However, if Protestantism guarantees advanced development, why is Protestant-majority Papua New Guinea still poor?

Islamic law arguably hampered capitalism. In The Long Divergence: How Islamic Law Held Back the Middle East, Timur Kuran, a Turkish American scholar, argues that laws of inheritance discourage the accumulation of wealth, as the Islamic law of commercial partnership limited its sustainability and Islamic legal proceedings hampered a paper economy which is critical to establishing large scale enterprises such as joint-stock companies.

This explains why the Ottoman Turks, a former Islamic superpower, declined sharply amid the rise of capitalist Western countries. Moreover, the resurrection of China was definitely nothing to do with Confucianism. Rather, the pragmatist Deng Xiaoping emancipated all the pent-up Chinese productive forces. His policy was merely practical, neglecting the color of the cats as long as they caught mice.

Third, capitalism has befriended economic crises since its infancy. The first economic crisis transpired in 1636-1637 caused by the reckless stock trade of tulip bulbs. Since then, one crisis after another buffeted capitalism including the great depression and formidable challenge of communism. But, capitalism gets by.

Unfortunately, its success inherently brings unintended consequences. For example, the advanced technology results in globalization and a knowledge-based economy. This kills jobs and widens inequality. Globalization shifts the low-skilled jobs from advanced economies to the Third World. This causes the unemployment in some advanced countries to be stubbornly high.

To sum up, capitalism is linked with more earthly, rather than heavenly, ideas. Without the burden of divinity or heresy, capitalism has always managed find creative ways to sort out all of its problems. And the crisis surrounding capitalism strengthens rather than weakens the system. This creative destruction culls the good/adaptable businesses from the bad/inadaptable ones.

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May 1 and A Knowledge-based Economy

Published on 5/5/2012 @ The Jakarta Post http://www.thejakartapost.com/news/2012/05/05/letter-may-1-and-a-knowledge-based-economy.html

In future the May Day celebration, which commemorates the struggle for labor rights, will likely perish. Or at least, the day will be observed differently.


The day will be abandoned, not only because many of those rights have been fulfilled, but given the fact that at the end of the day the amount of blue-collar workers will sharply reduce. The sunset of the industrial economy and the dawn of the knowledge-based economy (KBE) has radically changed the way of production as well as the need for products. And in the process, the economy needs fewer workers and spells doom for lower-skilled workers.