Indonesia must integrate with world to advance<\/p>\n
Hans W. Vriens, Managing Director, PT APCO Indonesia, Jakarta<\/p>\n
Indonesia is one of the seven least globalized countries,
\naccording to a recent survey of 62 states conducted by the
\nrespected American magazine Foreign Policy. Two neighboring
\ncountries -- Singapore and Malaysia -- rank highest among
\ndeveloping countries in the magazine's third annual Globalization
\nIndex.<\/p>\n
A report by the United Nations Conference on Trade and
\nDevelopment (UNCTAD) confirms the trend. It ranks Indonesia's
\nperformance in attracting foreign direct investment at 138 out of
\n140 states, just ahead of Suriname and Yemen; two years ago
\nIndonesia was ranked at 63. In fact, Indonesia is the only
\ncountry in Southeast Asia that, five years after the Asian
\nfinancial crisis started in 1997, is still suffering from
\nnegative flows of foreign direct investment (meaning more
\ninvestment money is leaving than is coming into the country.)<\/p>\n
The fact that Indonesia is deglobalizing seems to be applauded
\nby many Indonesian intellectuals whose articles regularly appear
\non the editorial pages of Indonesian newspapers. Globalization
\nonly works for financial oligarchs, wrote researcher B. Herry-
\nPriyono recently in this newspaper. Another researcher,
\nNurhidayat of the Institute of Global Justice in Jakarta, said
\n\"Free trade won't reduce poverty\".<\/p>\n
We live in confusing times. \"The world economy is undergoing a
\ntransformation that occurs only once every century or two.
\nBuilding on revolutionary technological innovation, the
\nglobalization that started in the 1990s is accelerating and
\ndramatically altering the international division of labor. The
\nmain players are China, India, the East European states and
\nRussia,\" according to Eisuke Sakaibara, an outspoken former
\nJapanese vice minister of finance. The countries he refers to are
\nnot only big but also relatively new players.<\/p>\n
This means more competition for Indonesia. Just look at BP,
\none of the biggest foreign direct investors in Indonesia. Two
\nweeks ago it announced plans to invest more than US$7 billion in
\nRussian oil projects. This is more than double the total expected
\ninvestments in the shrinking oil and gas industry in all of
\nIndonesia this year.<\/p>\n
True, the world economy is changing faster than ever before.
\nIn 1985 companies invested a mere US$50 billion in factories,
\nequipment and offices abroad. By 2000 their foreign direct
\ninvestment came to a staggering $1.3 trillion. During the
\nprevious big wave of globalization between 1820 and 1914, it was
\npeople, not capital, that was on the move. In those days, an
\nestimated 60 million people emigrated from Europe alone with most
\ngoing to the United States, Canada and Argentina.<\/p>\n
Is globalization good or bad news? For many the answer seems
\nto be \"bad.\" The usual complaints suggest that the World Trade
\nOrganization is a world government in waiting, and that large
\ncompanies are now more powerful than governments. There is the
\nperception that these companies destroy the environment and are
\nleading a race to the bottom in labor and environmental
\nstandards. The argument is that developed countries are losing
\njobs and workers in the developing world are being shamelessly
\nexploited. The prevailing mood on the left is anger and despair.<\/p>\n
We do, indeed, live in confusing times. Are these prophets of
\nglobal doomf correct? Can the arguments that globalization will
\nlead to a more prosperous future for all the world's citizens be
\nbelieved? Sorting out the right answers can be complicated, but
\nthere are reasons to believe that the prophets of doom are
\nmisguided. Sony isn't taking over the world. If it was, why can't
\nit convince the Indonesian government to act upon its complaints?<\/p>\n
For those who struggle to understand the meaning and the
\nimpact of the monumental changes in the world economy and the
\nprocess of globalization, they should read: Open World: The Truth
\nAbout Globalization. This lucid and persuasive book is written by
\nPhilippe Legrain, a 28-year-old graduate from the London School
\nof Economics. It is the first intellectually rigorous explanation
\nwritten in plain language about why globalization is mostly to be
\ncelebrated, without denying the problems it raises.<\/p>\n
Legrain's audience is the well-intentioned reader with
\nconcerns about the poor, the environment, and democracy. He takes
\naim at those who blame corporate power and global economic
\nintegration for poverty, environmental degradation and the
\nfrailty of democracy. He convincingly deconstructs arguments of
\ncritics like Naomi Klein who claim that companies run the world,
\nthat their brands are colonizing our minds, and that the shift of
\nfactories from country to country disempowers workers in a race
\nto the bottom.<\/p>\n
Ironically, the opposite is happening. Even the biggest
\ncompanies are desperate to avoid adverse publicity. Just ask Nike
\nor Nokia. Avoiding bad publicity and protecting the value of
\ntheir brands means that improvements in working standards and
\nenvironmental protection is often led by multi-national
\ncompanies.<\/p>\n
More economic integration is the only hope for many of the
\nworld's poorest people. According to a study by the economist
\nJeffrey Sachs, when he was still at Harvard, poor countries that
\nwere open to international trade grew over six times faster in
\nthe 1970s and 1980s than those that shut themselves off from it:
\n4.5 percent a year, versus 0.7 percent.<\/p>\n
We only have to look at Singapore, Malaysia, South Korea,
\nThailand and Hong Kong to understand the benefits of trade and
\ninvestments. Burma, North Korea, and Vietnam represent the anti-
\nglobalizers in Asia, though Vietnam recently seems to have
\nembraced foreign direct investment. These countries, like most
\nstates in Africa, suffer from a deficit, not a surplus, of
\nglobalization.<\/p>\n
Fortunately the Indonesian government seems to be taking steps
\nto emerge from the deglobalizing trap in which the country has
\nfound itself for the last five years. The implementation of the
\nAsean Free Trade Agreement and the proclamation of 2003 as the
\nYear of Investment are proof that Indonesia has chosen a road of
\nfurther economic integration instead of autarky and import
\nsubstitution.<\/p>\n
More integration into the world is the only way for Indonesia
\nto achieve a level of economic growth at which the two million
\npeople who enter the labor market each year will find jobs. Those
\njob seekers will join with other Indonesians in hoping that the
\ngovernment's Year of Investment turns out to be more than a
\nslogan.<\/p>\n
PT APCO Indonesia, a wholly owned subsidiary of APCO
\nWorldwide, a global consulting firm specializing in government
\nrelations and political and economic risk analysis.<\/p>",
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