A purview of many international studies regarding Indonesia politics and economy is dominated by foreign organzations,
\nconsulting companies and NGOs. Simply too many chefs tend to spoil the soup. The amount of studies and reports on
\nIndonesia is enormously redundant at times, filled with \u201cshoulds, coulds and woulds, and can lead to paralysis by
\nanalysis, not action.<\/p>\n
To consider a few recent major ones: WEF (World Economic Forum Competitiveness Report, [Indonesian section]), World Bank
\n(Indonesia Economic Quarterly and Indonesia Development Policy Review), IMF (Indonesia-Selected Issues), OECD (Economic
\nSurveys-Indonesia 2015 Overview), UNDP (many dealing with Indonesia social and health issues), ILO (Review of Policies
\nfor Youth Employment of Indonesia), The Economist (Investing in Indonesia\u2019s new era), McKinsey (The Archipelago Economy:
\nUnleashing Indonesia\u2019s Potential) .<\/p>\n
Some discuss different things, such as poverty alleviation, energy exports, or agricultural potential, but all mention
\nthe stifling effect of Indonesia\u2019s overwhelming bureaucracy on innovation, foreign investment, decentralization (or
\ncentralization) necessity, wealth disparity and jobs creation. These are entrenched impediments toward building
\nIndonesian economic capacity and development.<\/p>\n
Yet, perhaps a most telling story in all these studies is the lack of any robust sub-national data or sub-national
\ndirection (from the provinces, regencies and villages). That is, Indonesia sub-nationally is actually a dual economy,
\nwhereby that data is not clearly separated from the rest of rich, progressive Jakarta\/Java.<\/p>\n
This is problematic as improving Indonesia at the national level is very well understood, and agreed upon, yet,
\nindividualized provincial, city and town competitiveness may be said to be lacking or at various speeds. For example,
\nBalikpapan, due to its nexus for oil and mining is well ahead of most of Indonesia economically via wealth, yet its road
\nand infrastructure overall are lacking. Conversely, autonomous Aceh is the recipient of vast amounts of \u201caid\u201d and NGO
\nactivity but its development in Indonesia is lacking.<\/p>\n
All the studies do acknowledge that national rules and regulations and a lack of harmonization of them with the national
\ngovernment (i.e. Jakarta) is hindering overall economic and political progress.<\/p>\n
The economy of mega-city Jakarta has a significant distortion effect on all of Indonesia. All wealth flows to Jakarta,
\njobs in Jakarta pay much higher (> 2:1) than anywhere else in Indonesia. Infrastructure is better in Jakarta, on par
\nwith many developed countries even, and quality of life is also higher.<\/p>\n
Economic activity and competitiveness in Jakarta outpaces the second place finisher of East Java (with dynamic and
\nentrepreneurial Surabaya\/Malang), East Kalimantan (a nexus of Indonesia\u2019s oil and mining activity) and West Java
\n(receiving the economic spillover from Jakarta). Any study to form a baseline of most of Indonesia must separate out
\nJakarta, and perhaps also any Java\/Bali results in the aggregate. If this is not done, a skewed picture of Indonesian
\ndevelopment to the upside results.<\/p>\n
This phenomena is not in Indonesia only, Thailand has mega-city Bangkok, South Korea has Seoul, Malaysia, has KL. In
\nshort, Jakarta represents a developed country inside Indonesia. Therefore any \u201cbase-line\u201d and \u201ceconomic dynamic
\nplanning\u201d is difficult due to this dichotomy. However, a true baseline that separates Indonesia in and among its
\nprovinces exclusive of not only Jakarta, but also Java, should be considered. Indonesia then might even be considered
\n\u201cthree-speed\u201d- Jakarta\/Java (and if including Bali) vs. other Indonesian areas.<\/p>\n
Of course all this development and economic opportunity in Greater Jakarta and Java has downsides. It increases pressure
\non road usage and electrification. It contributes to housing bubbles and property prices, making them unaffordable to
\nmost, pushing out urban sprawl and creating longer gridlocks. It increases air and water pollution from cars, increased
\nsewage, and waste disposal. It also increases the physical weight on the land in Jakarta which, by way of some of
\nJakarta now being below sea level, adds to flooding and drainage problems, possibly being exacerbated with building of
\nislands in Jakarta Bay with ongoing land reclamation projects, some licensed in 1985, to increase Jakarta\u2019s size.<\/p>\n
With the above said, spatial sectoring (beyond Jakarta and possibly all Java respectively) in Indonesia requires some
\nattention. Spatial sectoring is increasing the wealth, competitiveness, and living standards in areas that are further
\naskance. Spreading out the wealth and development. It requires policies (and mindset shifts, outside of old thinking) to
\nidentify these areas and business friendly enablers and opportunities that will encourage investment in these areas.<\/p>\n
The main \u201calignment\u201d issues then to get to more effective spatial sectoring are policy issues of harmonization of local
\nand subnational laws with Jakarta, and then implementation of that harmonization.<\/p>\n
However, mere implementation alone does not allow any evaluation. A feedback mechanism must be created to see if these
\npolicies actually did what they were intended to do. If not the policies need to be reviewed and changed to focus on the
\nissues as hand.<\/p>\n
The centerpieces of President Joko Widodo\u2019s ambitious agenda effectively are capacity builiding programs towards
\neconomic development (maritime highway, infrastructure upgrading, and greater electrification). For subnational
\ngovernments to develop this capacity more effectively in Indonesia, three areas need consideration: one-stop services or
\nintegrated business licensing at the Investment Coordinating Board in Jakarta, E-technology to enhance Indonesia\u2019s
\ninformation competitiveness, and finally business incubators must be encouraged regionally in places like Jayapura,
\nManado, and Banjamarsin, dynamic so-called SMART cities.<\/p>\n
Lastly, incubators promote risk taking and create start ups and small businesses, (SMEs) which are the biggest employers
\nand economic drivers in Indonesias informal economy. Incubators promote the cluster concept of economic development. The
\nideal then is to contribute to sustainable regional economic growth and investment programs that will go hand in hand
\nwith political upbraiding.<\/p>\n
Otherwise, these more distant areas risk falling further behind if they are not brought up to speed. Not suprisingly,
\nthere are still old school economists like Boston University professor Gustav Papanek who are encouraging Indonesia to
\ngo the other direction: back to labor intensive manufacturing and low skilled industrialization, an embrace of unskilled
\nlabor.<\/p>\n
We are now in a knowledge economy, and countries are rewarded with their expertise in new ideas and new ways of
\nthinking. Innovation rules the day, not race to the bottom industry in a world saturated with overcapacity of low margin
\nproducts.<\/p>\n
Overcapacity right now is hurting much of developing Asia. The risks of inaction right now for Indonesia are many, a
\nfalling currency affects living standards, youth unemployment affects advancement, slowing exports hurt national GDP,
\nand too much bureacracy (whether centralized or decentralized) stifles innovation.<\/p>\n
The future of Indonesia\u2019s big picture development lies at the subnational level, not just Jakarta or Java. Just writing
\nabout what is happening in Jakarta, or from a Java standpoints does not change things in remote areas.
\n__________________________<\/p>\n
The writer is capability advisor at School of Government and Public Policy, Jakarta.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/many-studies-on-indonesia-do-not-build-capacity", "image": "ngo.jpg" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }