Selasa, 30 April 2013
Minggu, 28 April 2013
High Cost Economy in Indonesia
Implementation
of the ASEAN - China Free Trade Area (ACFTA) can be regarded as an opportunity
for the domestic industry to expand into China and Southeast Asia markets.
However, this argument is questionable because in reality the competitiveness
of Indonesian domestic industry is still relatively lower when compared with
China and ASEAN member countries another. Based on the analysis of the Ministry
of Industry, the competitiveness of industrial products and manufacturing
Indonesia to ASEAN countries only 15% who have a strong competitive edge and
nearly 60% of the products have weak competitiveness. Another case against
China, the competitiveness of Indonesian products that are strong only 7%,
remaining competitive are 29% and 55% weaker.
So,
what exactly is the cause of the low competitiveness of Indonesia when compared
to China. Mari Elka Pangestu, Minister of Trade, Republic of Indonesia, in an
interview has said that competitiveness or competitiveness is determined by
many factors, including external and internal factors. Own external factors
closely related to competitiveness and comparative advantages of other
countries who became Indonesia's competitors. For example, X products made in
China that have very cheap prices and huge production scale is difficult to
rivaled by Indonesia, making Indonesia the low competitiveness of the product X
when compared with China. In addition to external factors, there are also
internal factors that determine the competitiveness of the product, especially
with regard to domestic factors, including human resources / employment,
investment, production costs, and technology. These internal factors that
require improvement and repair via a comprehensive government policy.
Low
competitiveness of Indonesian products in international trade, which are
influenced by internal factors of the domestic economy can be attributed to the
high cost or high cost economy that still exist in the national economy. There
are several aspects that lead to high cost economy in Indonesia, among other
labor problems, problems of credit interest rate / high borrowing costs,
bureaucracy / politics is not the least costly, and infrastructure issues. Five
aspects will be discussed further to analyze the causes of high cost economy in
Indonesia, which impact on the weak competitiveness of domestic products
compared with products made in China.
Labor Issues
Problems
of labor / labor is one of the causes of high cost economy in Indonesia. This
also led to the competitiveness of Indonesian children's products made it
difficult to compete with similar products made in China. Widjanarko
Tjokroadosumarto, chairman Asosiasi Pengusaha Mainan Indonesia (APMI) revealed
differences in the treatment of the workers there, which led to the high cost
economy. Workers in China earn better facilities than workers in Indonesia.
Despite only receiving a salary of $ 100, labor in China is generally not
necessary to rent housing for local government workers rented bungalow is
available at a cheap price. Another case with workers in Indonesia are 30% of
the salary used for the cost of the contract.
Although
labor costs in Indonesia are relatively lower than other ASEAN countries
(except Vietnam), the cost to lay off workers in Indonesia is very high especially
during the dismissal of employees in large numbers. When the issue of the mass
layoffs of workers in Indonesia are usually massive demonstrations to demand
the severance provision. It is then also contribute to the cause of high cost
economy.
In
addition, the regional minimum wage in urban areas are higher to make the
company a lot of building factories and hiring workers in rural areas are lower
minimum wage. This would then have implications for the rising cost of
transportation and supporting infrastructure expenditure (both of these aspects
will be discussed in the next section).
Bureaucratic problems
Bureaucracy
and political factors believed to be one of the main causes of high cost
economy in Indonesia. Bureaucratic costs, both official and unofficial in some
areas can reach 20% of the cost of production. The high cost of the bureaucracy
will ultimately lead to the price of output produced Indonesia became more
expensive when compared with products made in China. Furthermore, the cost of
high cost economy due to the bureaucratic costs will also make the cost of
Indonesia's exports are higher than its competitors, including China.
Bureaucracy
problem is aggravated by mental corrupt government officials. To ensure the
smooth running of the business and the ease of taking care of licensing,
entrepreneurs often have to give bribes to the officials concerned. Given the
amount of kickbacks was not a little amount so that the total cost to be
incurred to run a business entrepreneur is getting bloated.
Interest Rate Credit Problems
Unlike
the interest rate in China is relatively low in order to support the growth of
their industry, mortgage interest rates are still high in Indonesia. This has
implications for the interest rate on the higher costs of loan that must be
borne by the company to obtain financing.
Furthermore,
interest rates Kredit Usaha Rakyat (KUR), which is the most potent source of
funding for the SME sector in Indonesia is people lending rates second highest
in the world, after Myanmar. Meanwhile, interest rates are ideally designed for
the development of the SME sector should be in the single digits or a maximum
level of 10%. In fact, the current interest rate for micro KUR in Indonesia
over Rp 20 million for loans down by 22%. Meanwhile, retail KUR interest rates
for loans of Rp 20 million to Rp 500 million, amounting to 14%. Meanwhile,
lending rates in China and Thailand ranged only at the level of 4-8%.
Therefore, industrial products China and Thailand have higher competitiveness
than Indonesian products.
Infrastructure problems
Infrastructure
in Indonesia at present is in a bad state and requires special attention. In
the year 1994/1995 damaged roads are still around 109 820 km. However, until
2003, long-damaged roads has reached nearly 170,000 miles. Based on estimates,
the need to improve the roads around Rp 6.5 trillion. Sumatra highway that
length is 2343.5 km and 1172.2 km in length Pantura level of damage to date has
reached 25 percent and 22 percent, and the necessary funds to fix around Rp 5.3
trillion. If these circumstances continue, within the next 10 years of economic
lost 40-50 field will reach trillions of dollars.
Infrastructure
problems in Indonesia is not optimal quality of road infrastructure, as there
are many. lane roads damaged in the economy, limited access of the center - the
central area of production to marketing, as well as to urban outlets and the
existing highway is not optimal support regional development. Declining quality
of existing road infrastructure in economic lines, especially in the East Cross
northern coast of Java and Sumatra, which caused excessive charge and
dimensions, as well as limited maintenance funds. This resulted in vehicle
operating costs and the costs of moving goods become expensive and competitive
levels decreased.
Basically,
the availability of adequate infrastructure is expected to reduce the high cost
economy. Infrastructure (particularly road infrastructure and port
infrastructure) are inadequate in some provinces may hinder the smooth flow of
goods export and transport of goods between regions that require the company to
incur additional costs. If this continues, the competitiveness of domestic
products will also likely further decline.
Conclusion
Urgency
to improve Indonesia's competitiveness in the context of international trade is
pushing the government to begin to eliminate the causes of high cost economy in
Indonesia. As mentioned previously, the aspects causing high cost economy in
Indonesia consists of four main issues which need solutions respectively.
Government's role is vital in this regard, particularly in relation to the
provision of infrastructure and regulation are clearly related to the problem
of labor and MSME lending. Revamping and improvement in terms of service
bureaucracy should also be prioritized. Bank Indonesia as monetary authorities
should also play an active role in ensuring the disbursement of credit to
various sectors of the industry with interest rates not too high in order to
suppress costs of the loan.
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