Our competitiveness eroded<\/p>\n
Indonesia's economic competitiveness has steadily been
\nweakening, even in natural resource-based industries where local
\nbusinesses are presumed to enjoy a strong comparative advantage.<\/p>\n
Even in many farm commodities that do not require high
\ntechnology nor large amounts of capital, we are no longer
\ncompetitive. Witness how our supermarkets have increasingly been
\ndominated by fruit from countries whose labor costs are already
\nmuch higher than ours.<\/p>\n
One may immediately point an accusing finger at major
\nindustrialized economies as the United States and several
\nEuropean countries, which have spent hundreds of billions of
\ndollars annually in price support for their farmers to enable
\nthem to dump their surplus produce on emerging markets such as
\nIndonesia's.<\/p>\n
That is true to a certain extent, and insofar as farm produce
\nsuch as corn, cotton and soybeans are concerned, dumping by
\nindustrialized countries could be part of the problem -- one of
\nthe main issues debated by the World Trade Organization in Geneva
\nlast week.<\/p>\n
Yet, one may still find it mind-boggling to comprehend as to
\nwhy our farmers cannot compete with rice, sugar, garlic and fruit
\nfrom suppliers such as Thailand, Taiwan, India and China. Even
\nour shrimp farmers have been complaining about fierce competition
\nfrom China.<\/p>\n
But more worrisome are the short-sighted, ad hoc higher tariff
\nand nontariff barriers used by the government to address the
\nproblem, notwithstanding that our economy is increasingly linked
\nto and benefits from the international market.<\/p>\n
This, however, does not mean that our farmers do not need
\nprotection from unfair competition from foreign suppliers. The
\nissue is the kind of protection and the institutional capability
\nto enforce it.<\/p>\n
The cold, hard reality is that the government simply refuses
\nto admit that market-distortion policies, such as protectionist
\nmeasures, are never effective in a country with such a vast
\ncoastline, a poorly equipped Navy and police force, and a customs
\nservice that is perceived to be notoriously corrupt. Such trade
\nbarriers, instead, create lucrative opportunities for collusive
\ndeals between smugglers and corrupt officials.
\nThe recent instances of textile, rice and sugar smuggling could
\nsimply be the tip of an imports-smuggling iceberg.<\/p>\n
The government should have fully realized why our competitive
\nedge has steadily been declining. Many studies and much research
\nhave identified the problems.<\/p>\n
Indonesia has performed very poorly in all international
\nratings of economic competitiveness and always ranks much below
\nthe other founding members of ASEAN. For example, in the 2004
\nEconomic Freedom of the World report, which was issued by
\nCanada's Fraser Institute last month, Indonesia ranks only 86th
\nof 123 countries measured in terms of good governance, access to
\nsound money, freedom to trade internationally, regulations of
\ncredit, labor and business, legal structures and security of
\nproperty rights.<\/p>\n
Indonesia also ranked very low in both indices of the Global
\nCompetitiveness Report 2003 which was prepared and issued by the
\nGeneva-based World Economic Forum last November. It was rated
\n66th of 102 countries surveyed in the growth competitiveness
\nindex and 58th in the business competitiveness index.<\/p>\n
These indices measure the macroeconomic environment, the
\nquality of public institutions and the use of technology, with
\ndozens of subcomponents. These factors are fundamental to sound
\nbusiness development because sound macroeconomic policies create
\nan enabling environment for the creation of wealth at the
\nmicroeconomic level and boost the ability of companies
\nefficiently to create valuable goods and services.<\/p>\n
The government should take a more strategic view of all the
\nweak aspects of our economy and realign its list of top
\npriorities with a focus on sound business environment to woo new
\ndomestic and foreign investment.<\/p>\n
What we badly need is direct investment and not short-term,
\nportfolio capital that is highly vulnerable to outward flight at
\nthe slightest sign of trouble. It is direct investment that goes
\ninto factories, utilities, equipment and other fixed assets,
\nwhich in turn create jobs. An economy can never be competitive if
\nits business units are not highly productive, but the
\nproductivity of businesses is intertwined with the quality of the
\ninvestment climate.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/our-competitiveness-eroded-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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