Summarized by Agnes Samosir
- Infrastructures and incentives must be developed outside Java. Spatial inequality remains issue in Indonesia, as suggested by comparing the West’s and the East’s contributions to GDP in 2012. The island of Java, although only occupies 7 percent of Indonesia’s land area, contributes 57.63 percent to the country’s GDP, whereas Sumatera 23.77 percent. Together, the two-biggest western islands account for 81.4 percent of Indonesia’s GDP. The disparity occurs due to secondary as well as tertiary economic activities that are well concentrated in Java, experts*) argue. On the other hand, other islands only get to perform primary activities from nature-based resources. Data from Central Statistics Agency (BPS) also suggests that the economic map would not shift at least thirty years from now due to Java’s domination, which is well supported by the availability of good infrastructures and human resources. Consequently, Java receives the largest investment flow among other islands. In 2012, from total of USD 22.75 billion, the provinces of West Java and DKI Jakarta alone have invited USD 4.2 billion and 4.1 billion of foreign investments, respectively. Not to mention Banten and East Java whose surge of foreign investments reached USD 2.7 and 2.3 billion. To cope with the inequality, economist Destri Damayanti views that government must build infrastructures and fix incentives in eastern Indonesia. She argues that connectivity is the biggest issue in the East and no private sectors would be willing to invest if there is no incentive. In this regard, government must take its first step by developing infrastructures. With better infrastructures, come better incentives. Furthermore, Indonesia’s chamber of commerce’s (Kadin) deputy chairman Anindya Bakrie view that banking system is an important aspect of economic development and thus, must be expanded so to reach whole Indonesia, including the eastern part. (Source: Investor Daily)
*) Summarized from collective arguments of economist Destri Damayanti, Indonesia’s chamber of commerce deputy chairman Anindya Bakrie, National development planning deputy minister Lukita Dinarsyah Tuwo, and Investment Coordinating Board’s implementation control and investment deputy M. Azhar Lubis.
- Government working plan (RKP) for 2014. The government of Indonesia designs the 2014 working plan to focus on two aspects. The first focus is to strengthen the domestic economy. The idea emerges as opportunity remains large in domestic market and purchasing power is increasing. Second, government focuses on maintaining external balance. The government argues that without improvement in external balance, it is difficult for Indonesia to grow more than 6.5 percent. To improve the external balance, two factors, export and import as well as capital flow from investment, need to be minded, explained the national development planning minister Armida Alisjahbana. (Source: Bisnis Indonesia)
- Indonesia, United States, and the WTO. Following the failure of consultation forum between Indonesia and the US, which ends February 21st, the US will file a suit with World Trade Organization (WTO). When the article is written, there remains some time for consultation. Yet, trade minister Gita Wirjawan is sure that the consultation is unlikely to receive agreement. The suit is against Indonesia’s restrictions on imports of horticultural and animal products, arguing that Indonesia’s moves were designed to protect its domestic industry and thus, were a violation of WTO rules. Wirjawan explains that if the suit goes through WTO’s dispute settlement body and WTO decides the US to win, Indonesia must withdraw the import restriction policy. Considering that imports from US have always been exception to the policy, the trade minister expects the US to understand the main reason underlying Indonesia’s policy that is to encourage domestic production. On a separate note, Indonesia is facing protest on its membership in WTO from farmers association. The association views that WTO policies impair Indonesia and create dependency on imports, notably horticultural products. (Source: Investor Daily, BBC, and Kompas)
- Central government must temporarily halt social assistance fund. Financial regulatory body (BPK) requests central government to halt social assistance and grant distribution. The temporary halt is to ensure accountability of whether assistance and grants are being distributed to people who actually need them. Current practice suggests that grants and assistance are sometimes being misused for incumbents’ campaigns for regional chairs. As local executive authorities, incumbents have privilege to manage the allocation of funds. They often use the opportunity to pay for programs that will attract many votes. There are some examples showing that social assistances are spent for completely unrelated activities, such as band show in Aceh, stickers and posters design in South Sumatera, and exhibition in China as well as work visit to Germany by East Nusa Tenggara local government. To avoid more misallocations, funds will be halted temporarily while waiting for the stipulations to be revised, explained Financial Regulatory Body representative Rizal Djalil. (Source: Kompas)
- House of representatives to pass the bill on mass organizations. Early March this year, House of representatives (DPR) is about to pass the bill on mass organizations. The bill is set to replace the old 1985 Mass Organization Law that is considered already out of date by Home Affairs Minister Gamawan Fauzi. He argues that with the current law, it is difficult to take quick action to respond violent mass organization such as Islamic Defenders Forum (FPI). Yet, the bill invites protests from people who see it as curbing their freedom of association, such as labors and human right activists. Some stipulations and definitions are also considered ambiguous; definition of mass organization, stipulations of establishing an organization, and organizations’ principles are to name a few. In response to this, National Commission on Human Rights (Komnasham) called on the house to request suspension, arguing that the bill’s passage would grant excessive control from authority, which would destroy democracy. (Source: Jakarta Post and Kompas)