New paradigm needed to face globalization: Economists
New paradigm needed to face globalization: Economists
JAKARTA (JP): Several noted economists have suggested that
Indonesia applies a new paradigm to its economic development to
anticipate changes resulting from globalization.
"We need a new paradigm to face a number of new trends caused
by continuing globalization," economist Mari Pangestu of the
Centre for Strategic and International Studies (CSIS) said
yesterday.
Mari and economists Djisman S. Simandjuntak, Faisal H. Basri,
Miranda Gultom Siregar, Sjahrir, Moh. Arsjad Anwar and Bungaran
Saragih, were speaking at a seminar on "Seeking A New Paradigm in
Indonesian Economic Development", which was organized by CSIS.
The trends, according to Mari, include increasing trade
protectionism in the developed countries.
"The domestic pressures for trade protectionism will increase
in industrialized countries due to the increasingly tougher
competition in the world market," she noted.
While developed countries hope to market more products in
developing countries --particularly those in the highly dynamic
Asia Pacific region, they at the same time see the emerging
economies as their main competitors to their domestic markets,
Mari said.
She said in the future investments will flow only to the
countries with sound and consistent macroeconomic policies.
On fiscal policy, she said the Indonesian government should
not raise taxes to finance its comprehensive social security
system, as their counterparts in many other developed countries
have.
Miranda Gultom, an economist of the Jakarta School of
Economics at the University of Indonesia noted that Indonesia
will face a serious problem in its business institutions,
particularly in the banking sector, when tackling global
competition.
She cited particular weaknesses of the banking sector in human
resources, technology, payment systems, and policy inconsistency
on the part of the Indonesian government.
Djisman Simandjuntak, the director of the Prasetia Mulya
School of Management, criticized Indonesian businessmen who have
been focusing on high growth through short-term strategies.
He saw corporate investment in human resource development as
extremely inadequate.
Agro-business
Bungaran Saragih, an expert at the Bogor Agricultural
Institute, suggested that the government refocus attention to the
agricultural sector, which still employs 50 percent of
Indonesia's workforce.
"If the priority of our development process is to alleviate
poverty without damaging the environment, we should develop more
of our agro-business resources, " Bungaran said.
However, Emil Salim, a former minister for population and
environment, also saw the need for a new paradigm of economic
development but suggested that it remain based on market
mechanisms.
Emil added that the government should apply more monetary
measures, rather than fiscal ones, to check inflation and to
allow for the healthy development of the private sector.
On top of that, the government should further improve the
climate for enhancing the competitiveness of the business sector
through the dismantling of price distortions, managed trading,
vertical and horizontal integrations and monopolistic practices.
He suggested that the government reduce its intervention in
businesses and commit itself to maintaining consistency in its
macroeconomic policy.
But Faisal Basri of the University of Indonesia argued that
Indonesia does not need a new paradigm. "We should instead go
back to basics," he said. (rid13)