Indonesia warned of emerging competitors

Indonesia warned of emerging competitors

By Rikza Abdullah

KUALA LUMPUR (JP): U.S. economists warned yesterday that
Indonesia may lose out in competition with other
developing nations if it fails to continue reducing its
bureaucracy, monopolies and costs.

"Competition in attracting foreign investments is getting more
intense with the opening of trade and investment in a number of
developing countries," said Jeffery Sachs, the author of Global
Linkages and a professor of international trade at Harvard
University.

Sachs was one of the speakers at a two-day conference, which
ended here yesterday, on "Global Asia: Reengineering for
Competitive Advantage". The meeting was organized by the Hong
Kong-based magazine Far East Economic Review. The other speakers
were Malaysian Deputy Prime Minister Anwar Ibrahim, Edgardo J.
Angara, the senate president of the Philippines, Amnuay Viravan,
the leader of the Nam Thai Party of Thailand, and George Yip, the
author of Total Global Strategy and an adjunct associate
professor in the Anderson Graduate School of Management of the
University of California in Los Angeles.

Sachs told the meeting that Indonesia is a developing country
with one of the fastest economic growths -- of over five percent
per annum -- since the 1970s due to its market-oriented economic
policies.

"The high economic growth, stability in economy and politics,
abundant natural resources and low labor costs have made
Indonesia attractive to foreign investors," he said. "But a
country like India, which has been opening up its economy, may
become more attractive because it has a bigger population and
more people with high intellectual capability."

Restrictions

Sachs suggested that Indonesia reduce restrictions for foreign
investors, gradually reduce the role of state companies, lower
taxation and allow more competition by reducing the number of
monopolies and protectionist measures.

Indonesia should also improve its education systems to
accelerate the development of human resources, which are very
important for its economic development, he said.

George Yip said that Indonesia also should accelerate the
development of its infrastructure, including telecommunications,
electricity, ports, roads and airports, to make it more reliable.

"The Indonesian government also should make its institutions
easier to deal with," he told The Jakarta Post" later.

He commented that Indonesia's bureaucratic procedures are too
heavy.

Yip also suggested that Indonesian companies take measures to
improve their advantages against overseas competitors.

Indonesian companies can improve their capability to outrun
foreign rivals through more exposure to global competition,
learning from business partners from developed countries and
professionalizing managers, he said.

Sachs said that the succession of leadership in Indonesia is
unlikely to affect its competitiveness because the established
system of political leadership succession will guarantee
stability, which has already been preserved for a long period of
time.

Human rights issues, which have been discussed in several
places in the world, are also unlikely to affect the
attractiveness of Indonesia to foreign investors, he added.

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