Mon, 11 May 2009
THOSE accustomed to regarding Indonesia as a country lagging far behind Malaysia on almost every score should think again. Recent developments, particularly in this country, suggest in two major areas – economic and political – Indonesia is way ahead of Malaysia.

In its Regional Economic Outlook published last week, the International Monetary Fund (IMF) forecasts among the Asean Five countries, Indonesia is likely to be the star performer this year and next year. Apart from Indonesia, Asean Five countries include Malaysia, the Philippines, Singapore and Thailand.

Indonesia’s economy is expected to grow by 2.5% this year and by a slightly stronger 3.5% next year. It is the only country among the Asean Five expected to expand for two successive years, IMF projections show.

In contrast, Malaysia’s economic prospects are the second poorest among the Asean Five. The Malaysian economy could tumble by -3.5% this year but rebound by 1.3% next year. IMF projections for this year differ markedly from the government’s recent forecast.

Singapore is the worst performer and the only East Asian economy likely to remain in negative territory for two years – contracting by a massive 10% this year and by a negligible 0.1% next year.

As for the other two Asean Five countries this year, Thailand’s economy will shrink by -3% while the Filipino economy will be stagnant. Next year, both will expand by 1%, the IMF forecasts.

According to the IMF, East Asian countries hardest hit by the global financial crisis are very open economies that specialise in manufacturing.

One indicator of openness is the ratio of exports to GDP. Among the Asean Five, Singapore’s export ratio of 185% is the highest, Malaysia’s 94.3% is second and Indonesia’s 26.4% the lowest. Comparable figures for Thailand and the Philippines are 60% and 34.9% respectively.

Indonesia’s economic advantage over Malaysia could extend beyond next year. In its January issue, The Economist magazine says Asia’s export-led growth has reached its limits. To power future growth, Asia must rely on domestic demand, especially consumption, it suggests.

Consumption-driven growth is particularly advantageous for Indonesia. Its sizeable population of 240 million offers domestic manufacturers a tremendous market and massive economies of scale.

One promising area for Indonesia’s consumption-led growth is health care. Research and consulting firm, Frost and Sullivan, notes rich Indonesians spend far more than US$1 billion (RM3.5 billion) annually on health care overseas. This figure underscores the potential gain to Indonesia if the quality of domestic health care improves.

Politically, Malaysia has much to learn from its Muslim neighbour. First, leaders at district and provincial level in Indonesia are elected by voters. For this reason, Indonesian leaders are far more responsive to the needs of their constituents while the threat of being voted out of office has improved significantly the quality of life in some municipalities.

Bringing back elections in towns in this country is something the ruling Barisan Nasional (BN) would do well to implement immediately.

Second, Indonesians enjoy far greater freedom than Malaysians. Recently, some Indonesian activists publicly urged voters not to support Prabowo Subianto and Wiranto as candidates for the July presidential election because of allegations of past human rights abuses.

Even though Prabowo was the former commander of special forces and Wiranto an ex-military chief, these activists weren’t charged with illegal assembly nor were they jailed.

In contrast, Wong Chin Huat, an activist for Bersih, a group advocating cleaner elections, was arrested under the Sedition Act last week for calling on Malaysians to wear black to mourn the death of democracy in Perak and for preaching civil disobedience. He was detained together with five lawyers who tried to provide legal assistance to several supporters who were also arrested. All detainees, including Wong and the five lawyers, were released last Friday.

Third, unlike their Malaysian counterparts, Indonesian legislators appear to enjoy a far higher level of civility. Last Friday, Malaysian newspapers featured on their front pages the unedifying photo of a Speaker being manhandled and forcibly removed from the Perak Legislative Assembly. Although voted out of office by BN state assemblymen, the Speaker refused to vacate his seat.

Additionally, Indonesia’s political outlook could improve markedly. Last month’s Parliamentary elections in Indonesia saw President Susilo Bambang Yudhoyono’s Democratic Party winning 148 seats, the highest number among political parties. The Democratic Party’s victory makes Susilo the front runner in July’s presidential election.

In short, Indonesia’s potent combination of political stability, strong adherence to democratic freedoms and attractive economic prospects is likely to be strongly endorsed by its citizens, business community and foreign investors. If only the same could be said of Malaysia.

Opinions expressed in this article are the personal views of the writer and should not be attributed to any organisation she is connected with. Her email address is schoo@noordinsopiee.com.



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