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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Nationalist in Free Market Era

published @ The Jakarta Post

Indonesian Democratic Party of Struggle (PDI-P) politicians have befuddled us many times. They seem to emphasize nationalism, the need for a people’s economy, but sometimes their policies contradict the ideologies they tout.

During Megawati Soekarnoputri’s 2001-2004 stint, she made many blunders in regard to nationalism. First, she divested the government’s majority share at Indosat, a state-owned company, to foreign firm Singapore Technologies Telemedia (STT). The government not only sold a lucrative company but put national security at risk.

Second, she sold Tangguh natural gas at a cheap price to China via a long-term contract. She fiddled away a big source of big government funding to satisfy national ambition. Third, she sold the Pertamina-made very large crude carriers (VLCC). The vessel was codesigned by Indonesians and it would have given Pertamina an advantage. Recently, Jakarta Governor Joko “Jokowi” Widodo made the same mistake by buying Chinese-made articulated buses instead of those domestically made by PT Inka for the Transjakarta fleet. Those Chinese-made buses were found to be rusty and damaged. Procedurally speaking, what Jokowi’s administration has done is not wrong.

The provision of buses was undertaken through a competitive international tender. The products that fulfill the right specifications and offer them at the cheapest price should be awarded the tender. Unfortunately, Inka’s articulated buses lost to China’s. Inka, however, still provides Transjakarta single buses. Inka also previously lost to a Chinese company in Soekarno-Hatta International Airport’s commuter line tender.

The tender is under investigation but Chinese products are a threat to almost all national products. Jokowi, who is tipped to be Indonesia’s next president, must pay attention to this. National products have to be championed. And the lessons learned from China’s auto industry, which dominates the global auto industry, in relatively short terms must be drawn.

In fact, the Chinese government intervene in the industry through state-owned automakers. It strengthens its domestic automakers; it regulates the transfer of technology from foreign automakers through joint venture; and, ultimately, it develops a Chinese brand.

In contrast, Indonesian leaders abandoned the potential of its state-owned automaker. In 1965, Sukarno uttered the vision of berdikari (stand on our own feet — self reliance). Former president Soeharto forged this policy through establishing strategic industries. Inka is a state-owned company specializing in rolling stock and automotive manufacturing. If we can produce things on our own, why are buying from China?

Indonesian leaders, including Jokowi, seem naive when it comes to free-market implementation. Historically, almost all nations, including the UK, US and Japan, protected their own industries in the early years of industrialization.

Finally, in contrast with the stale economics textbook, the state can regulate the market for its own interests. As market law goes: “market is great as long as you win.”

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Reflecting on General Elections

published @ The Jakarta Post

Democracy is often considered to be the best way to organize a country and achieve prosperity. Western countries always preach this to the developing world. India and Indonesia, as the world’s largest and third-largest democracies, are often cited as the paragons. In contrast, China is deemed to be moving down the wrong path because it abandoned democracy.

However, if we scrutinize further, Western countries implemented democracy in a gradual process. Most importantly, they became fully democratic only after they had developed their economies, governing institutions and educational systems.

A general election (boasting universal suffrage) is the be-all and end-all of true democracy. It is important to note that in their nascent democracies, Western states limited the people who were entitled to cast their ballots; the UK and the US are cases in point.

England was the country that inspired modern democracy. Following the signing of the Magna Charta in 1215, the first parliament was established in 1265 containing two chambers: the House of Lords comprising unelected aristocrats, and the House of Commons, which contained elected members of parliament (MPs). However, the only people allowed to vote were male landowners.

This situation lasted for centuries but by the 19th century, ordinary people began to demand inclusion. In 1819, for instance, amid desperate economic conditions, local people gathered to demonstrate in Manchester.

Fear by the British authorities of potentially revolutionary forces as seen across the Channel in France resulted in the government cracking down on the gathering.

However, this watershed event did trigger reform. In 1832, the Great Reform Act was enacted in order to accommodate the middle-class voice in politics. Still, the working class struggled for enfranchisement. Only after the end of World War I in 1918 was universal suffrage introduced in the UK, which at that time was the world’s superpower.

The United States went through a similar experience. In its early years, there was no universal suffrage in the US. Only white male landowners were allowed to vote. In 1856, the franchise was extended to include all white men. Ridiculously, native Indians were turned down for voting, because they legally didn’t include the citizen.

African-Americans were given the right to vote in 1870, although many were hampered by a poll tax and literacy test. Women were only given the right to vote in 1920.

The long journey to universal suffrage in most advanced countries reminds us of our so-called “Asian values”. Lee Kuan Yew said successful democracy required “an interested and vigilant electorate” and “the ablest, toughest and most dedicated of leaders”.

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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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Ahmad Dhani and Musical Psychology

Published @ The Jakarta Post

Ahmad Dhani is a talented musician-cum-entrepreneur. He cofounded a legendary Indonesian band, Dewa 19. Either with a band or solo, he has composed a lot of memorable songs.

Having turned down borrowing money from a rising female singer he helped promote, he founded Republik Cinta Management (RCM), an artist management company. He envisioned a just and formal contract between a singer and a promoter. Later, he expanded his business to a school of music.

He has become a judge in Indonesia Idol, a reality TV show. He selects the contestants and gives feedback on their performances. His comments are often harsh, to the point, and sometimes contemptuous.

However, I see something different in his comments — high-quality advice based on a psychological theory.

Dhani said our highest ability would always be about one level below our favorite singer. Benjamin Franklin, an American founding father, adopted the same method to master writing skills. After reading an article he admired, he tried to emulate the article with his own words.

The judge also challenged contestants to name 10 international female singers.

If they could name them, they would secure golden tickets (to Jakarta for a further selection phase) without singing any song. It is about immersion — total involvement — in the search to acquire skills.

This method was inspired from language learning. Shinichi Suzuki observed that children can easily learn their mother tongue because they are exposed to that all the time. Later, Suzuki applied this method of immersion (and repetition) to mastering music — called the Suzuki Method.

Dhani suggested a participant learn one English-language song each week. It is about deliberate practice coined by K. Anders Ericsson, an American psychologist.

One aspect of deliberate practice is to practice beyond one’s existing capacity.

Lastly, Dhani commented to a contestant from Medan that she could really sing, but didn’t have the voice of a singer. A voice of singer denotes innate talent. It gives rise to the longstanding debate of nature versus nurture. Some experts believe hard work is the best predictor of success.

Research shows some great musicians or sportspeople have innate talent, but this view doesn’t completely defy the merits of hard work.

Success is the combination of inner talent and hard work.