Govt should gear up development in eastern region<\/p>\n
MANADO, N. Sulawesi (JP): The central government has been
\nchallenged to deliver on its 1990 promise to accelerate the pace
\nof economic development in the country's eastern islands.<\/p>\n
Lucky Sondakh, professor of economics at Sam Ratulangi
\nUniversity, recalled yesterday that President Soeharto had
\nproclaimed the east-go policy in 1990 which the 1993 Broad
\nOutlines of State Policy echo.<\/p>\n
"The problem, though, the political will has yet to be
\nfollowed by political courage and then by political action,"
\nSondakh told a conference of economists.<\/p>\n
He pointed out at the 8th meeting of the Association of
\nIndonesian Economists (ISEI) that North Sulawesi's gross regional
\ndomestic product in 1970 ranked the 11th highest among all
\nprovinces.<\/p>\n
"But in 1994, N. Sulawesi's position declined to the 18th
\nrank."<\/p>\n
He added that the gross regional domestic product outside Java
\nwas, on average, higher than that in Java until 1970. But the
\ncondition has now been reversed.<\/p>\n
Eastern Indonesia covers Sulawesi, Nusa Tenggara, Maluku and
\nIrian Jaya and account for 11 percent of the country's
\npopulation.<\/p>\n
Sondakh blamed the wide gap between the development of the
\neastern regions and Java and Sumatra on what he termed as a
\ndouble developmental squeeze model (policy dualism). He said the
\nagricultural sector had been squeezed in order to develop the
\nmodern (manufacturing) sector over the past 25 years.<\/p>\n
Most of the major agricultural commodities in the eastern
\nprovinces, although heavily regulated, are not protected.
\nIndustrial development in Java, however, has been heavily
\nprotected, he pointed out.<\/p>\n
He quoted the results of a study made in 1985 which concluded
\nthat such major farm crops in Java as maize, soybean, peanut,
\ndairy products, fruit and vegetables were given effective
\nprotection rates between 8.8 to 221 percent.<\/p>\n
But such major commodities as nutmeg, fish, timber, rattan,
\ncoconuts and cloves in the eastern provinces had been left
\nlargely unprotected, he claimed.<\/p>\n
Agroindustry, supposed to be the sector with the highest
\ncomparative advantage in the eastern region, has therefore not
\ndeveloped, he added.<\/p>\n
He said N.Sulawesi, for example, has remained a major supplier
\nof such primary commodities as nutmeg, rattan, tuna, cloves and
\ncoconuts while the value added by processing is enjoyed by
\nindustries in Java or in Singapore and other countries.<\/p>\n
Sondakh said the squeezing policy was made possible by the
\nweak bargaining position of the local administrations vis-a-vis
\nthe central government.<\/p>\n
"That is the consequence of a heavily centralized government
\nsystem which makes the power of the state much more stronger than
\nthat of society," he stressed.<\/p>\n
Transforming<\/p>\n
Sondakh acknowledged that the policy has built up an
\nindustrial base in Java where the manufacturing sector's
\ncontribution to gross domestic product has exceeded 20 percent,
\ncompared to a mere 7 percent in the eastern provinces.<\/p>\n
He added that policy dualism has also spurred the growth and
\ncapital accumulation of industrial firms.<\/p>\n
Sondakh sees the growth and accumulation not as a result of
\nproductivity but as generated by transfer payments from the
\nheavily regulated, yet largely unprotected, agricultural sector
\nto the manufacturing sector.<\/p>\n
He said North Sulawesi and other provinces in the eastern
\nprovinces have been asked to develop agroindustry.<\/p>\n
"But how can agroindustry be developed if the trading of
\nagricultural commodities remains largely inefficient with
\nnumerous distortions caused by regulations?" he asked.<\/p>\n
According to Sondakh, agroindustry also requires what he calls
\nan induced development policy to stimulate research capable of
\ndeveloping culture and processing technology.<\/p>\n
Moreover, he said, a significant increase in the production of
\nagricultural commodities, being price inelastic, tend to worsen
\nfarmers' terms of trade.<\/p>\n
No wonder the bargaining position of the farmers is very weak,
\nhe added.<\/p>\n
Sondakh acknowledged the important role of village
\ncooperatives as a trading institution to develop agribusiness in
\nthe broadest sense.<\/p>\n
"The problem, though, is that most of the existing village
\ncooperatives have not been engaged in the process of generating
\nvalue added. They mostly function as middlemen or even loan
\nsharks," he pointed out.<\/p>\n
The most obvious example, he added, is the role played by
\nvillage cooperatives in the clove trade in North Sulawesi, the
\ncountry's largest producer of the spice.<\/p>\n
"The farmers entrust their fate to their village cooperatives
\nbut these cooperatives instead tend to function merely as an
\ninstrument for surplus appropriation. This institution is merely
\na tool of the capital owner to squeeze," he argued.<\/p>\n
In Sondakh's view, agricultural commodities should be
\nderegulated and its market restructured to empower producers and
\nconsumers.<\/p>\n
"Strange, though, is the fact that while the government has
\nencouraged the establishment of associations by traders and
\nindustrialists, it virtually does nothing to enhance the
\ndevelopment of farmers' associations." (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-should-gear-up-development-in-eastern-region-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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