Govt must invest more on education to rekindle economic miracle

The Jakarta Post Jakarta

The Indonesian government must invest more money on education and health care to help regain the high economic growth of the past, the United Nations say.

Indonesia spends less than any other East Asian country on education and health care as a percentage of gross national product and about one third of its children were badly malnourished, said the Indonesian Human Development Report 2001.

The report was jointly prepared by the United Nations Development Program (UNDP), the National Development Planning Agency, and the Central Bureau of Statistics.

The report released last Friday said that greater spending on human development was necessary to boost economic productivity to create social stability.

"Rekindling Indonesia's economic miracle will mean operating on two fronts simultaneously. On the one hand seeking to raise the country to higher levels of productivity. On the other hand achieving the political and social stability in which productive enterprises can develop and grow."

The report said that without a highly skilled workforce, Indonesia would face difficulties in competing in a global economy.

It added that the lack of government attention in boosting the quality of the workforce had caused the country to be unable to fully benefit from the surge in exports due to the weak links between large-scale exporting companies and local small and medium-sized enterprises that might have fed the former with components or intermediate goods.

It pointed out that for electronics and pharmaceuticals, imports accounted for 90 percent of export value.

Other export products with high imported components included footwear (53%), garments (49%), and textiles (34%).

"As a result, Indonesia has consistently imported more manufactured goods than it has exported," the report said.

"Stepping up to higher levels of technology will require a much greater investment in education," it said, adding that Indonesia was investing only around 1.4 percent of gross national product (GNP) on education, compared with a global average of 4.8 percent.

The report also said that boosting health care should be a top priority.

"Currently, around 30 percent of Indonesian children are moderately or severely malnourished," it said.

"Without this kind of attention, the physical and intellectual development of Indonesia's children is being compromised from the outset."

Indonesia was considered as one of the miracle economies of the Asia Pacific region in the mid-1990s with average economic growth of around 7 percent. But the 1997 economic crisis had caused the economy to contract by more than 13 percent in 1998, and forced the government to allocate a large part of its state budget to finance bank restructuring programs and pay foreign debt.

But UNDP said that despite being deep in debt, and burdened with the heavy cost of economic restructuring at a time of political uncertainties and unfavorable external economic development, greater spending on human development was a must.

"Human development cannot be considered independently of economic development -- the two have to go hand in hand," the report said.

"The key, however, is to recognize how all these issues connect, the social, the economic, the political and bring this recognition to the forefront of public consciousness."

For fact box:

Public expenditure on health, education

Public expenditure

___________________

Per capita Education Health

Income, 1998 %GNP 1995-97 %GDP 1996-98 __________________________________________________________________

Average East Asia 3,564 2.9 1.7

China 3,130 2.3 0.7 Indonesia 3,490 1.4 0.6 SKorea 13,590 3.7 2.5 Malaysia 8,140 4.9 1.3 Philippines 3,520 3.4 1.7 Singapore 28,460 3 1.1 Thailand 6,690 4.8 1.7

World average 6,526 4.8 2.5 __________________________________________________________________ Source: UNDP/World Bank