Indonesia and Progress

Urban-City Development: Balancing Modernity and Heritage

2012-01-24T13:27:00.005+08:00

Colosse in Rome (a city with rich history)

Singapore's Marina Bay Development

Happy Lunar New Year.

I intend to focus more on urban-city development in future blog posts. This is prompted by my ongoing observations on how cities in Asia Pacific have evolved in the past decade and own interest on urban development in other parts of the world such as Europe. Take Singapore for example. My family and I arrived in Singapore in October 2000. Much has changed since then. The Marina Bay area is completely different now. Until around 2002, few friends and I were still able to play flag football in an area what is now occupied by Marina Bay Sands Resorts. On my recent visit to Hong Kong (early January 2012), I saw very rapid development around Hong Kong's waterfront area. In comparison, during my recent trip to southern part of Europe, I could see great efforts to preserve old architecture and landscape as integral parts of the city such as Rome, Milan, and Firenze in Italy.

Urban-city development is critical given the constant migration of population from rural to urban areas. Stay tune for more sharing/insights on the subject.

What is Ahead for 2012?

2011-12-31T18:42:00.002+08:00

Firenze from the top

The Colosse, Rome

Firenze's river bank

This will be the last blog entry for the year of 2011. 2011 has been a very interesting year across different continents. We should be monitoring what will happen to Eurozone countries especially Italy, Spain, Portugal and Greece as they implement dramatic reform measures to deal with the high debt burden. My family had the opportunity to travel to Italy and Spain in December 2011. It was a great trip in which each one of us learned a great deal about each country. I am very much impressed with Europe's efforts to preserve its great history, culture and architectural excellence. I am also impressed the way Eurozone countries connect among each other via rail, air, and land transports. During a great dinner with a good friend from my university days in the US who is working and living in Madrid, Spain, I learned a lot about Eurozone history and challenges ahead. He said that Europe must change. Having worked in Indonesia during the financial crisis between 1997 and 2000, I suspect the road for recovery for Europe would take a long time. I sincerely hope that policymakers don't focus too much on spending cuts. There needs to be efforts to stimulate domestic growth in order to mitigate the impact of the deep financial crisis that we are seeing in Eurozone countries.

So what is ahead for 2012? I am not a fortune teller nor trained in forecast. 2012 will be an exciting year in around the world. I anticipate much greater interactions and engagements between policymakers, industry, and consumers. Highly centralized policymaking will need to be more responsive to industry and consumers' feedback, demand, critics and contribution. Happy New Year 2012 and I will touch base in the new year!

Indonesia's Agenda & International Community

2011-11-15T12:54:00.001+08:00

I recently chatted with a good friend who's involved in a regional trade association about Indonesia's role in ASEAN, G20 and APEC fora. I believe the Indonesian delegation to these international forums can and should be more strategic to push the country's agenda, which will benefit the delegation's domestic and international stakeholders. Take for example the agenda related to sustainable and balanced growth. Indonesia can push this agenda for several reasons. First, Indonesia has a large domestic market with natural resources, which require sustainable and balanced policy prescriptions. Such policy prescriptions (e.g. to ensure sustainable use of natural resources and create easier access for movement of goods and services internally as well as externally, etc) will bring positive impacts to the people of Indonesia and Indonesia's trading partners. Second, Indonesia (hopefully) continues to learn from 1997/98 Asian financial crisis, which underscores the need for ongoing reform to improve business climate and diversify its economic base. Several countries in the Eurozone will have to go through several years of painful adjustment as the result of over-leveraging and excessive borrowing.

The other agenda that the Indonesian delegation can promote and coordinate involves food and energy security. Indonesia is the largest market in Southeast Asia. When it comes to energy, Indonesia still needs to improve and optimize its energy source mix. In terms of food security, to what extent has Indonesia optimized food production efficiency level that can meet the demands of its 230 million+ population in a sustainable manner?

To promote an agenda in an international forum effectively, the delegation will need to ensure one voice and one message. There needs to be a proper planning ahead of these meetings. What do we want to accomplish? How will our agenda be relevant and beneficial to the Indonesian people? Then there needs to be an outreach to other members in the fora to build common support, which will give further credibility to your own agenda.

On 12 September 2011, Alpha Southeast Asia asked me to share my thoughts on building Indonesia's reputation in international markets during the publication's 5th Annual Best Financial Insitutions Award luncheon in Jakarta. Below is excerpts from my luncheon speech, which calls for integrated and strategic efforts to tell Indonesia's story to the international community.

"Thank you Dalton for your kind introduction.

Thank you to Siddiq and his team at Alpha Southeast Asia for extending the invitation to me to be part of this important event for the leaders in the banking and financial institution industry in Indonesia.

Distinguished guests, ladies and gentlemen,

When Siddiq asked me to share my observations about how banks and corporate in Indonesia treat investor relations and public relations in a space of 5 to 7 minutes, I thought this would be very difficult given the changes that have taken place in Indonesia that have affected the banking and corporate space. Having said that, we are now operating in a digital age where you will need to tell your story in less than 140 characters or less than 7 minutes over YouTube.

Usually Financial Institutions don’t spend too much time in investing in PR related works. There is a misperception that PR is related to events and corporate programs that will involve exhibitions or other marketing gimmicks.

Today, I wish to share with you why managing communication in within financial institutions have become increasingly important. I want to simplify PR works that relate to corporate reputation as F C I.

1. The first is “F” that stands for being focused. As we are increasingly faced with 24/7 information overload, there is a need for more focused listening. Today we are seeing changes in the way we send and receive information. Thanks to the growth of internet and rapid adoption of social media, every day we have to deal with thousands of small voices and constituents. Consumers drive perception of companies and banks. The challenge for all of us in this room is how do we dissect and analyse these thousands of small voices and data that we need to incorporate in our business, investor relations and public relations strategy?

2. “C” stands for connecting the dots. It is important for all of us to be able to connect the dots, locally and globally. Again thanks to the rapid adoption of social media channels and digital platforms such as blogs, an organization or individual’s reputation is now global. The downside to that is bad news travel fast. What happens at the global or regional level may have implications to Indonesia in less than 4 hours. The challenge for all of us in this room is how to understand the dynamics of these communities that are all connected, and how they can work together as an ecosystem.

3. “I” stands for Investment. My third observation is that there is a need to invest in aligning internal and external communications capability in an organization. It is imperative and critical to have strategic communications encompassing investor and public relations programs that are implemented by capable and well-equipped talent and resources to support the organization’s business objectives.

Today Indonesia is very much on the radar screen of the international community. And yet, there is still uneven level of knowledge on Indonesia and its potential among the international investment community. I remember when I travelled with the Indonesian delegation to the United States after the G20 Leaders Summit in 2009. This was the time when the US faced major economic setbacks post-2008 global financial crisis. People that the delegation from Indonesia talked to in the US were largely surprised to hear that the Indonesian economy could grow by 4.5% when other major economies either suffered contraction or experienced significant slowdown.

Another example is from a major Asian telecommunication company which had a controversial divestment program. Some of you would remember the name of this company. The result of the divestment program, which was administered in a transparent and fair manner, was not well received by many domestic stakeholders. On the day of the shareholders meeting in Jakarta, the building was surrounded by thousands of protesters that demanded the cancelation of the divestment program. Senior officials from the successful bidder were concerned with the demonstration. I said to them that they should not be concerned as the demonstrators were communicating with their friends using the service either text message or voice call of the company that they just invested in. And thus I said that you as the new strategic investor already saw the return on your investment. These two examples show that there is the need to tell Indonesia’s story, its progress, and transformation to the international community by all of us who are present in this room today.

I congratulate this year’s winners of the fifth best Financial Institutions Awards 2011 in Indonesia and wish you all the best.

Thank you very much."

Credibility Gap

2011-11-12T10:53:00.001+08:00

The recent scandal that hit Olympus, a major listed firm in Japan, highlights another example of credibility gap in corporate affairs practice. Despite being a listed company in the third largest economy in the world that gets audited by reputable accounting firms, the crisis faced by Olympus gets into the core aspects of trust, governance and credibility. The recovery process for a credibility crisis will take time. Words and apology won't be sufficient. Concrete changes will need to take place. Whilst time constraint places more pressure in any crisis situation, a company will have a better outcome if it gets to the bottom of the issue, fixes the issue thoroughly (that will take time), and communicates the progress in a consistent and strategic manner. It will not be easy to resist the pressure to fix the crisis 'fast' so that the company can 'get on with its affairs', but there are many examples of corporate crises that lead to the demise of the institutions when those companies could not minimize and eliminate the credibility gap to external and internal stakeholders.

Credibility gap also applies to governments in many situations such as natural disaster management, policy change that affect ordinary citizens (e.g. subsidy removal, etc), austerity measures (as the case in a number of countries in the Eurozone at the moment), implementation of infrastructure projects, etc. There are instances where elected politicians focus more on rhetoric vis-a-vis concrete action. Credibility gap widens when it is apparent that public institutions in charge of the initiatives may not be able to execute such initiatives after all. Instead of dealing with the failure to deliver on promised initiatives, a set of new initiatives will be announced. Action speaks much more than words. Committed individuals (who make up institutions) who follow through with their promises to deliver concrete results will definitely help to minimize and eliminate credibility gap that we increasingly witness at the corporate and government levels in the region.

Is Growth Possible despite Public Debt?

2011-10-14T13:42:00.001+08:00

As finance ministers and central bank chiefs from G20 nations (including Indonesia) meet in France, Eurozone debt crisis will dominate the meeting agenda. At the same time, policymakers should also discuss the road to achieve growth despite the concern related to high public debt in several European countries. I have prepared the attached graphic/slide that shows the current public debt to GDP ratio among several Asian and European countries. Indonesia, South Korea and Thailand suffered the most from the 1997/98 financial crisis. The road to recovery has been challenging in each of these Asian economies. However, domestic economies in Indonesia, South Korea and Thailand have expanded and consequently, their public debt ratios have also declined. Small businesses play an important role in the expansion of the domestic economy. It is therefore critical to reduce the costs of businesses as part of the reform or recovery initiatives. It is important to address the public debt, but it is more critical to ensure the economy can grow through coordinated and concerted public and private partnership and investment. Or as the analysts and politicians in the US refer as the "bipartisan" approach...

Trends in Financial Communications in Asia Pacific

2011-09-27T17:04:00.002+08:00

I recently presented on trends in financial communications in a conference titled Modern CorpComm hosted by Marcus Evans in Singapore on September 26th, 2011.

I think Asia Pacific will increasingly play a bigger role in shaping trends in capital raising and trade and investment flows. Will Indonesian companies take part in shaping such trends? I certainly hope so.

Selamat Idul Fitri 1432H

2011-08-30T20:02:00.000+08:00

Selamat Idul Fitri 1432H dan maaf lahir dan bathin bagi rekan-rekan di Indonesia dan seluruh dunia yang merayakannya. Wishing Happy Eid to all friends in Indonesia and other parts of the world who celebrate this special occassion.

Connecting ASEAN Small & Medium Enterprises

2011-08-14T22:12:00.000+08:00

The recently concluded 43rd ASEAN Economic Ministers Meeting in Manado, North Sulawesi talked a lot about small and medium enterprises (SME) in the context of ASEAN Economic Community vision for 2015. I recall the time when I had the privilege to be part of the Asia Foundation's economic reform team between 1998 and 2000, whereby the Foundation did a lot of works in the area of policy reform and networking initiatives for SME and microenterprises in Indonesia. Given the high level of percentage of SME and microenterprises in Southeast Asia, there is always the question on the most appropriate representation for SME and microenterprises to be involved in policy discussion. Do you have to soley work with the chamber of commerce or trade association such as an entrepreneur association? In the area of consultation, you will need to broaden the reach beyond formal or government-recognized organizations. You may need to look into different industry areas e.g. automotive, food and beverage, retail, etc. And one way to create an efficient networking platform is via digital channel such as a business portal. Think about Alibaba.com. Thus, investment in infrastructure to improve access to internet throughout Indonesia should be a priority.

Indonesia's Diverse Growth Centers

2011-08-13T10:56:00.001+08:00

Sam Ratulangi International Airport, Manado, North Sulawesi/Indonesia

I am back in Manado, North Sulawesi to be part of a major gathering of ASEAN Economic Ministers from August 9th to 13th, 2011. The last time I was in Manado was in 2006. I am pleased to see the rapid development of Manado as the city expands its BT MICE offering. In 2006, the most well-known hotel was a 3-star hotel. Now, there are at least four 4-star hotels and a hotel/convention centre. The growth in many parts of Indonesia underscore the strong domestic base of the Indonesian economy. It is very important that Indonesia continues to strengthen its foundations for sustainable growth around the nation including Manado/North Sulawesi. Investment in infrastructure, lower transaction costs (including removal of illegal levies or pungutan liar), and investment in human capital are necessary and imperative.

Calculated Risk Taking or Decisiveness in a Crisis Situation

2011-07-23T17:49:00.001+08:00

For many days prior to the recently completed EU Summit, many parties have urged EU leaders to take a bold action to deal with the economic crisis in Greece. EU leaders then announced US$250 billion rescue package for Greece, which will be co-financed by the private investors who have lent to Greece. The announcement was bold given the certainty that rating agencies would downgrade Greece's bonds further. Whether the bold measure would restore confidence to EU, that is still unseen. The leaders delivered on dramatic measures to deal with the debt crisis in Greece, which has already threatened other EU markets namely Spain and Portugal.

Let's move over to the other side of the Atlantic, the United States of America. The White House and US Congress failed to agree on the framework for deficit reduction as part of the agreement to raise the debt ceiling. Despite stakes on the failure to reach an agreement on US debt ceiling, policymakers in the US disagreed on the way to address deficit. Many of us who follow international economic affairs witness the arguments from both sides. US rating agencies such as Moody's and S&P have warned of potential downgrade of Triple A ratings of US Treasury notes.

I won't comment on the framework of the deficit reduction or debt restructuring as the case with Greece and possibly other EU markets. This article focuses on the challenges faced by policymakers when confronted by difficult public policy situations that can affect the country and possibly other nations. What should be the approach by the elected leaders? Should they take calculated risk or be decisive with their policy prescription (and deal with the consequence later)? And equally important, how should you build support for your policy decision? When do you need to build such support knowing that many parties may oppose to your plan? And if you don't get the desired results, what do you do?

I remember the 1998 financial crisis that hit Indonesia hard. High interest rates (near 70% at one point), huge depreciation of the currency, high unemployment, social riot and political crisis caused major contraction in the economy. Transformation was taking place and you still feel the effect of such transformation today - more than 13 years after May 1998. Indonesia has since rebounded. Was the rebound due to decisive actions during the time of crisis? I don't think that was the case. The rebound was primarily due to Indonesian people's resilience and desire to move forward. I believe Greece will move forward when the policymakers can rally the public to support the way forward. I also hope US policymakers will agree on the way forward for its deficit reduction.

Communicating Budget Deficit

2011-07-11T23:44:00.001+08:00

For the past three and four weeks, I have read numerous articles about budget deficit in the United States. As I am writing this blog, US President Barack Obama is holding a news conference to provide an update on the negotiation regarding US debt ceiling, which touches on the issue of budget deficit. Whilst I am very much interested on the subject of public financing as part of public policy discourse, I wish to just focus on the communication side of budget deficit. Budget deficit is not an easy subject for many of us. To many of us, we wish to see a functioning government that delivers services in an efficient, affordable, and transparent manner. Statistic figures such as Indonesia's budget deficit to GDP at 2.1% in 2011, etc may not mean much to the public. However, when subjects such as subsidy removal, government spending, and tax increase are raised, then we get immediate reaction - supportive or against the topic. Key components in communicating about budget deficit have to be rationale, impact and benefit of such policy action to address budget deficit. The communication needs to be followed through by real actions. For example, when a government calls for more revenue increase from taxes, it is imperative to show how taxes are being used to the benefit of the public at large. Are government services more efficient, affordable, easier to access and transparent? Communication of a policy initiative is ineffective when it is not accompanied by real and concrete steps that support the message or claim.

Focus on Asia

2011-06-05T10:42:00.000+08:00

There has been a lot of reports, surveys or seminars in the past 12 months that focus on Asia Pacific countries and their role in the global economy. Examples of these reports, surveys or seminars that provide outlook of the roles of Asian economies include but not limited to The World Bank, BBC Survey on Entrepreneurship, Asian Development Bank (though it is very much its mandate to talk about Asia...), IMF, etc. At the same time, Asia faces critical challenges when it comes to income gap, food security, infrastructure development, environmental sustainability, and natural disaster management. Let's look at Indonesia, the largest economy in Southeast Asia and the only member of G20 from Southeast Asia region. Whilst the economy has expanded at 4.5% and 6.1% in 2009 and 2010, respectively, it also needs to invest significantly in the areas of physical infrastructure, education, public health, and poverty alleviation. To many external audiences, Indonesia does not automatically register compared to China and India. I remember the time that I was involved in the privatization of Bank Mandiri, Indonesia's largest bank between 2001 and 2003. Indonesia was very much off the radar screen of the international investment community following the significant transformation and restructuring post 1997/98 financial crisis. The privatization was successful that it also opened the door for follow-up privatization and initial public offering of other state-owned companies such as Bank Rakyat Indonesia (BRI) or PGN (state-owned gas distribution company). Creating demand when the odds were against you (i.e. Indonesian companies at the time) was a major challenge at the time, but at the end global investors started to see the comprehensive picture of Indonesia, its opportunity and reform undertaken in the banking sector. [Disclosure: I worked on the Bank Mandiri's privatization as part of its global communications and stakeholder relations mandate].

With the increased level of global community's focus on Asia, there is also Asia's responsibility to take part in providing solutions to challenges the region faces and eventually, to global agenda. Certainly the immediate focus will be on the domestic agenda in each country. At the same time, I think there are areas where Asia as a region can contribute to address few interconnected issues such as food security, natural disaster management, and environmental sustainability. Indonesia should also play a role in this discussion given the topics' relevance to our domestic agenda.

Long-Term and Not Easy Policy Solutions to Boost Investment Climate

2011-04-23T10:48:00.001+08:00

There has been a lot of talks about improving investment climate in Indonesia, including offering tax holiday for foreign and domestic investors. I argue that tax holiday is a short-term solution to attract direct investment, which is not sustainable. If tax holiday is the magic solution to improve investment climate, existing investors in Indonesia e.g. Unilever, Nestle, etc will not decide to invest for factory expansion in the past 12-18 months. I think lowering the costs of doing business in Indonesia will add much value to improve investment climate in Indonesia. This is of course in addition to improvement in the country's infrastructure be it in road, airport, telecommunications, etc. What does lower cost of doing business involve? It involves streamline business permits for new and existing businesses. It requires a shift of paradigm among the government agencies that businesses can "exploited." It means a shift of paradigm that it is better to tax at the production level instead of at the output level (i.e. don't place too many levies or taxes in the beginning of the production process). And ultimately, it means the need to streamline Indonesia's bureaucracy. Unless we tackle the core issues of transaction costs and infrastructure, Indonesia will not be able to optimize its growth potential no matter how many infrastructure summits take place. These are not easy options, but options that we need to consider and pursue if we want to earn our place among top 10 economies in the world.

Source: Indonesia Finance Today (English edition), 11 April 2011

Stability vs Universal Rights

2011-03-26T20:44:00.002+08:00

Calls for change and reform continue to intensify throughout the Middle East, which now includes Syria. Decades of ruling by royal families or the same leader or president (e.g. Tunisia, Egypt, Yemen, Libya) do not guarantee long-term stability. Indonesia went through a dramatic transformation in May 1998 after street protests drove 32-year regime out as the economy deteriorated from "crony capitalism", high unemployment and lack of competition. More than 12 years after 1998, Indonesia is relatively stable with a growing domestic economy. At the same time, our journey in the past 12 years has seen its challenges, setbacks and progress. Access to public health remains low. Access to good medical practitioners is very limited. Law enforcements are not applied in uniform and consistent manner. Religious freedom and harmony is constantly challenged by vocal hardliners. On the other hand, there has been much progress on the economic front. Indonesia is the 16th largest economy in the world, which is expected to grow more than 6% in 2011. International airports in Jakarta and Denpasar (Bali) are operating over capacity given the flows of international passengers into the country. Indonesian people's ability to create as much a stable environment as possible in a democratic environment is an achievement already. However, I would say that there must be commitment to ensure universal rights for access to education, basic & affordable health care, in addition to freedom to embrace your religious beliefs without fear of intimidation by state or non-state actors, as well as freedom to voice your views via multiple channels. Such commitment and investment for those universal rights will reinforce the stability in the political, economic and social environment in Indonesia.

I disagree with the point that there must be a strong person to lead Indonesia as the case with the New Order. Events in the Middle East suggest that no matter how strong a national leader is, citizens will demand accountability, transparency, freedom of expression, and equal economic and social opportunity. I would argue for more effective leadership at the national level that can rally the country to pursue common goals.

We are indeed seeing transitions in many parts of the world. I am sure there will be many lessons that we, in Asia Pacific and Indonesia, can learn from the events that are currently taking place in the Middle East and Europe (with the economic challenges facing some of the countries).

Yemen Citizens Are Protesting in Large
Photo courtesy of www.pomed.org

Egypt Current Development & Indonesia in 1998

2011-02-03T14:13:00.001+08:00

As I am writing this blog, Egypy is experiencing a major turning point on its nation's journey with public protests demanding reform and the resignation of President Mubarak who has ruled Egypt for more than 30 years. The development in Egypy follows a turning point occurring in Tunisia after public demonstration drove former President Ben Ali who had ruled the country for more than two decades. Many analysts in Indonesia, myself included, can't help not to link the event in Egypt and Indonesia's transformation journey that began in 1998. Whilst there are parallels between events in Indonesia and Egypt, there are also differences. Some parallels include the paternalistic nature of the political system, lack of freedom of the press, economic crisis (Indonesia was one of the few Asian countries that suffered a lot from the 1997 Asian financial crisis and now Egypt is faced with rising food prices, high unemployment, etc), to name a few. And there are also differences. One example is on the role of civil society. Civil society organizations in Indonesia at the time were already active. It is not clear to what extent if Egypt's civil society organizations are active despite the pressure exerted on them by the state in the past three decades. Another example is on the role of the ruling party. In 1998, the ruling Golkar Party drew its support of the late former President Soeharto. After weeks of students' occupation of the national parliament building, Harmoko who was the Speaker of the Parliament and at the same time, chairman of the Golkar Party, announced that President Soeharto had to resign. It is not clear what the ruling party in Egypt would do soon.

Courtesy of Associated Press

The late former President Soeharto resigned; former Vice President BJ Habibie assumed Presidency in May 2008 (courtesy of CN.com)

Differences aside, one thing is certain that the transformation would take time. Frankly, Indonesia is still dealing with its own transformation - that is more than 12 years after 1998. Egypt will need to decide its own path moving forward. It will not be easy.

Improving National Tourism

2010-12-31T11:37:00.000+08:00

Snow in the Tropic? Really? Yet it draws daily crowds

As I wonder around Singapore during this year's Christmas season, I can't help to wonder if Indonesia ever gets its act together on its national tourism program. Indonesia has so much to offer, and yet its national/in-bound tourism program remains way behind of its neighbors in Southeast Asia (don't even compare it with Japan, Korea, etc) (Disclosure: my current company, Burson-Marsteller supports Singapore Tourism Board or STB).

I think national & in-bound tourism campaign for Indonesia should be handed to the private sector with clear key performance targets and incentives. The board, let's call it Indonesia Tourism Promotion Board or ITPB for now, should be able to hire professionals to run the program. We have got to go beyond the diversity campaign. Over the past several years, Indonesia has struggled to get more than 6 million visitors into the country. And Indonesia is supposed to be the biggest economy in Southeast Asia. What are the issues or barriers that standing in the way of Indonesia's in-bound tourism potential? ITPB can still report to the Minister of Tourism and Culture, but the President will need to draw clear KPI from the Ministry. Indonesia needs bolder measures to revamp its in-bound tourism campaign.

With that, I wish readers of this blog happy new year. Stay tune for more content and a revamped design in 2011. Peace on earth....

Protecting Indonesian Migrant Workers and Investing in Education

2010-11-21T20:53:00.001+08:00

Indonesian observers have read numerous articles on abuses endured by Indonesian maids working in Saudi Arabia and Malaysia. The government of Indonesia was quick to condemn these abuses. Whilst such condemnations are needed, there are two key questions that policymakers will need to consider when it comes to protecting Indonesian migrant workers. First, what kind of protection measures can the government of Indonesia put in place for the migrant workers knowing well that recipient countries have their own standards or regulations for migrant workers. Second, should not policymakers think about medium- or long-term measures that will protect our migrant workers by investing in education and training at home? And the key for protection of migrant workers starts from Indonesia and investment in education is an important component of that.

In March 2006, I helped a domestic helper to renew her passport in the Indonesian Embassy in Singapore. To my surprise, I was told that the cost to renew a passport for domestic helper in Singapore would be S$350 for two-year extension. This was compared to S$85 fee imposed on professionals or students living in Singapore who wanted to renew their passport for a period of five years. I did write a note to the counselor at the Indonesian Embassy in Singapore to ask for explanation for such a major discrepancy. I never received an answer. I thought the renewal fee for a passport for domestic helpers in Indonesia at the time was unfair. For those who have lived in Singapore or Hong Kong know that Indonesian domestic helpers don't get full salary in their first 6 or 8 months in the job as employment agents have to deduct for workers' debt repayment. And many of the Indonesian domestic helpers have to save money so that they can remit funds back home. So S$350 was quite burdensome for many domestic helpers. To cut the story short, the cost is now less than S$50 for a five-year passport, which is similar to the cost for professionals and students. The point of this story is to underscore the need for policies that reduce the burden of domestic helpers or our fellow citizens who are looking to work overseas. We can't put additional burden on the domestic helpers or migrant workers.

Another point that the government should look into is the role and governance of employment agencies in Indonesia. Is there a standardization or accreditation process for employment agencies in Indonesia? Is there a minimum criteria for sending migrant workers? What kind of monitoring tools does Indonesia's Ministry of Labor and Transmigration use to evaluate the performance of employment agencies in Indonesia? Should the monitoring involve an independent third party? The role of the state is to protect its citizens wherever he/she is in trouble, especially to our fellow citizens who can't afford legal support abroad. Look at what the former US President Jimmy Carter did for a US citizen who was detained in North Korea for tresspasing.

This brings to the point of the need to invest in education especially in rural areas in Indonesia. Public investment in education is not only about building schools. It involves investment in teachers, books, curriculum, school equipment, etc. The medium- and long-term solutions lie in expanding economic opportunities in Indonesia especially in rural areas.

Evaluating Development Assistance

2010-10-24T10:58:00.000+08:00

Last week I had the chance to catch up with my old buddy from graduate school who has been working for one of the international development agencies. One of the topics of the discussion was on international development assistance program, in particular the effectiveness of such program. International development agencies have few tools or leverage to ensure the delivery of development assistance programs. In my previous work in development assistance, I learned that it was imperative and critical to ensure local buy-in of the programs. In order to ensure local buy-in of the development assistance programs, we need to establish, sustain and expand the relationship or engagement with intended stakeholders of the program. And more importanly, the program needs to answer the question, "What is in it for me that I should support your program?" It is a basic question, yet it is often overlooked. Most, if not all international development agencies have their own indicators to measure and evaluate the effectiveness of their own programs.

I came across this report published by Center for Global Development and Global Economy and Development at Brookings titled "Quality of Official Development Assistance Assessment." The report measures various development assistance programs based on four dimensions:
(1) Maximizing efficiency
(2) Fostering institutions
(3) Reducing the burden on recipients
(4) Transparency and learning.

There are two countries in Asia Pacific that are active with official development assistance: Australia and Korea. Australia's official development assistance program is ranked high when it comes to transparency and learning, whilst Korea is ranked the lowest. It is probably understandable given Korea's recent involvement in official development assistance program.

The report offers interesting insights. Certainly from my own experience, the four dimensions above make a lot of sense. I would also add one more dimension called "Quality of Stakeholder Engagement." This dimension can also help to determine the sustainability and long-term impact of the development assistance program.

In the case for Indonesia, the country needs to invest in crucial areas of hard (e.g. infrastructure development - port, road, telecommunications, airport) and soft infrastructure (e.g. access to education, public health, access to market opportunities for small business owners, etc). There are roles for official development assistance, whilst the country also needs to invest its public funds at the same time. More importantly, engaging local stakeholders needs to be planned and implemented consistently in order to generate local buy-in for such investment.

Courtesy of ADB.org

Jakarta's port (courtesy of Ministry of Foreign Affairs, Japan)

Protecting Minority Groups in Indonesia

2010-09-12T14:02:00.001+08:00

An incident involving a couple of members of a church in Bekasi West Java today underscores the need for firmer and consistent policy to protect all citizens in Indonesia regardless their religious, social, ethnic, and cultural background. Indonesia has its five principles known as "Pancasila" that serve as the foundation of the nation and its ideology. They are as follows:

1. Believe in the one and only God
2. Just and civilized humanity
3. The unity of Indonesia
4. Democracy led by the wisdom of deliberations among representative
5. Social justice for the whole of the people of Indonesia

The various incidents involving minority or marginalized citizens in Indonesia mean that there is inconsistency with Indonesia's principle numbers 2 and 5. Indonesia's founding fathers had the vision for a modern, just and civilized Indonesia that is inclusive despite the diversity of its citizens. Such vision needs to be further reinforced and expanded. It is not the job of the elected politicians but all people in Indonesia.

Update 17 September 2010: I am encouraged with the support for religious freedom as exemplified in the event in Jakarta on 16 September 2010.

Selamat Idul Fitri

2010-09-08T23:05:00.001+08:00

Kami mengucapkan Selamat Idul Fitri bagi rekan-rekan yang merayakannya. Mohon maaf lahir dan bathin.

The Power of A Language

2010-08-22T21:28:00.001+08:00

I came across an opinion editorial by Karim Raslan published by The Star, one of the leading media publications in Malaysia titled "Indonesia's language of unity." I agree that the founding generation of Indonesia had a vision when they convened Indonesia's youth to declare the Youth Oath or Sumpah Pemuda on 28 September 1928. One of the three oaths was to use Bahasa Indonesia as the unifying language of the people to fight for independence.

I think Bahasa Indonesia can acquire more vocabularies in order to cope with the changing political, social and economic environments in the country and as Indonesia is increasingly interlinked with the global community, which relies on English as an intermediary language. And it is also critical for the future generation of Indonesians to be able to speak and write fluent Bahasa Indonesia in addition to other foreign languages of their choice. Language is not merely a symbol of a country. Language allows us to learn about a country's culture, social well-being, politics and economy. Language also bridges the people of Indonesia who have different race, religion, and ethnic background. We should continue to realize the vision from 1928 Sumpah Pemuda that is to create a unified Indonesia that is able to bridge its people's aspiration and hope no matter who they are.

Happy 65th Independence Day Indonesia

2010-08-16T07:59:00.001+08:00

KLIA Airport Express

Indonesia will celebrate its 65th independence on August 17th, 2010. It is a good time to reflect what has been achieved in the past 65 years and what will Indonesia look in the next 65 years. Indonesia is the world's third largest democracy. It has a stable macroeconomic environment as the result of key reforms undertaken in the past 5 to 6 years. It is a decentralized nation in which local governments at the district and city levels have the autonomy to set direction for local development. It is the 16th largest economy among G20 nations. There are multiple and complex challenges faced by Indonesia going forward.

Infrastructure development is one. Jakarta is probably the only major capital city in Asia Pacific without a functioning public/mass transport system. Jakarta's International Airport needs a major revamp including planning and implementing of passenger flow such as setting up an efficient airport express connecting to the city (systems such as deployed in Hong Kong or Kuala Lumpur are examples), cutting the time for immigration check, luggage retrieval, etc. Infrastructure is also needed to connect the various locations in Indonesia - make Indonesia as a single domestic market. That also means removal of unnecessary, overlapping and costly levies for businesses in the country.

The second major challenge will be in the area of governance at the national and local levels. The role of free press is important. Accountability needs to be institutionalized in public institutions. The new Law on Public Information Disclosure (Keterbukaan Informasi Publik) is a good step, however it should lead to improvement.

The third challenge is the need for equal access to quality education and healthcare. And the fourth challenge is the protection of Indonesia's citizens right as stipulated under the 1945 Constitution despite difference in race, religion, gender and ethnic background.

Selamat Ulang Tahun Kemerdekaan Indonesia. Much needs to be done going forward.

Differentiation and Competence

2010-07-29T22:07:00.001+08:00

I had the opportunity to speak on "Indonesia PR and globalization" during a convention of Indonesia's PR practitioners on July 21st, 2010. My session was immediately after a keynote speech by Indonesia's State Minister for State-Owned Enterprises. The convention was officially opened by Indonesia's Vice President. I recommended that PR practitioners to continuously invest in key skills such as research, problem analysis, business writing and public speaking. It is a continuous learning process.

Picture is courtesy of the organizing committee of Perhumas Convention 2010

Tourism, Trade & Investment

2010-07-23T23:24:00.001+08:00

During a discussion with Bisnis Indonesia earlier this month (exactly on July 6th, 2010), we talked about the progress with tourism campaign in Indonesia. I mentioned that there was a strong linkage between tourism, trade and investment activities in any country, including Indonesia. Despite the size of the country, Indonesia's foreign tourists only reached 6.45 million in 2009 according to Coordinating Ministry of Economy. Let's compare with Singapore's 9.7 million foreign tourists or Malaysia's 23.6 million tourists in 2009. Foreign tourists would explore trading opportunity, which could lead to small scale investment. Thus it is important to have strategic tourism campaign in Indonesia. It begins with a recognition of the need to change. And Indonesia needs to take advantage of increased level of intra-Asian's tourism, trade and investment flows, which I shared during discussion at Bisnis Indonesia, although from the perspective of public relations consultancy. This was also discussed during the recent convention of Indonesia's PR practitioners on July 21st, 2010 in Jakarta.

Jakarta Needs Public Transport Badly...

2010-06-26T23:08:00.001+08:00

I had the chance to travel around a couple of major cities in Europe this month. In addition to all the 'must see' places, there were three aspects of my recent trip with relevance for Indonesia. One is the preservation of old places and cultural heritage and their integration into the current development agenda. In many parts of Asia Pacific, cultural heritage would be given away for shopping malls, office buildings, etc. Second is the global brands in different sectors of the economy such as banks, airlines, retailer, food & beverage, infrastructure, etc. Third is an investment in infrastructure. As much as possible, I try public transport. Aside from possible union strike, public transport functions throughout Europe. Paris is revamping its metro system to make a way for an automated metro line. Amsterdam is building its metro system (not easy given its geographical condition as the city is below sea water), but its tram and buses operate effectively.

How about Indonesia? Let's look at Jakarta with its busway system. It is starting to run down in my view. The line that is supposed to operate in the Gatot Subroto to Grogol area has not been operational for at least two years now. I think the city officials should exert leadership to tackle Jakarta's public transport sytem. A tram or monorail system is a start. We should also use energy efficient trams or trains, which will encourage greater energy efficiency in the capital city and later on other major cities in Indonesia.

Public policy is always about choice. Investing in infrastructure that will contribute to improved ways of live for ordinary Indonesians is a straight forward option. There has been at least three infrastructure summits held in Indonesia in the past 5 years. Implementation is urgently needed. We should begin with Jakarta as the capital city.

Clear Sky in Asia Pacific

2010-05-22T21:11:00.000+08:00

I was in Hong Kong for three days this week. As I was driving for my morning meeting on Monday, May 17th, 2010 at 8am, I took this picture. I wondered whether it was cloud or haze.

As the Asia Pacific region shows signs of strong economic rebound from 2009, there is a legitimate question on the role of environmental management in the course of economic development policy. The latest Environmental Performance Index by Yale University provides an overview on the environment and ecosystem well-being across the globe including Asia Pacific. The matrics place heavy emphasis on climate change and environmental burden of disease. Indonesia is ranked 134 with EPI score of 44.6, well below its Southeast Asia neighbors - Singapore, Malaysia, Thailand and the Philippines. Indonesia even lacks behind its neighbors when it comes to access to water and sanitation, which represent 12.5 percent of the weight in EPI metrics.

I believe that economic development needs to take into account environmental management to ensure the long-term sustainability of the development agenda. Governments will have a role to play to create a conducive environment to encourage investment in technology that promote energy efficiency, resource conservation, and alternative energy resources. Concerted public awareness and education campaign that involve industry and other stakeholders is important in order to ensure the effectiveness of public and private partnership to promote sustainable economic development agenda that benefits all stakeholders.

Institutional Reform

2010-05-17T21:35:00.001+08:00

As it has been reported extensively, Indonesia's Minister of Finance, DR Sri Mulyani Indrawati will join The World Bank as one of its three Managing Directors starting on June 1st, 2010. Analysts in Indonesia and other countries such DR Hal Hill suggest that Indonesia's reform momentum will suffer from setback with the departure of one of the key architects and promoters of reform in the country's public institutions.

Whilst I don't wish to participate in such debate whether reform will continue or not after the departure of DR Sri Mulyani, I hope it would be clear that reform momentum needs to be maintained. It is in the best interest of Indonesia to continue to reform its public institutions if the country wishes to exploit its potential. There maybe setbacks because of the reform especially among vested interests, but I believe the reform will benefit the society at large. Who does not want better access to quality education, proper health care, lower costs and barriers for businesses - micro, small and large, and quality infrastructure?

There is an urgent need to streamline the public institutions in the country as part of the reform. One example is in the area of business license. Licensing costs for small and micro business owners remain complicated and therefore should be streamlined. This can only occur if there is a strong commitment to streamline procedures for licenses in diferent government agencies at the national and local levels. Is there a possibility to streamline overlapping responsibilities (i.e. consolidate government agencies) at the national and local levels? I think so. And consolidation should include Indonesia's state-owned enterprises (SOEs). When can we have regional champions from Indonesia?

One suggestion: BAPPENAS' task should not be for planning purpose only. BAPPENAS should be tasked to expand Indonesia's economic development agenda/strategy. We have enough planning tools; we need more implementation. Policymakers in Indonesia can see how our regional counterparts are proactive to expand their economic development agenda. Take Singapore for example. Singapore's economic development board are aggressive in seeking ways to expand their economic competitiveness and attractiveness for foreign direct investment.

Eurozone Crisis

2010-05-08T14:23:00.000+08:00

I have been monitoring the situation in the Eurozone in particular with Greece' economic crisis for the past few weeks. It reminds of me what happened to Indonesia and other Asian countries in 1997/98 when a severe financial crisis hit the region. Whilst it will take some time for Greece to emerge from the debt trap, the key will be to unlock revenue generation potential from the domestic economy and at the same time, contain domestic spending. It won't be an easy task. Is Greece an isolated case in the Eurozone? Many analysts don't think so.

I am attaching an interesting chart published by The New York Times on May 1st, 2010 that illustrates how some countries in the Eurozone are owing money to each other. And once one of the countries is facing difficulty with repayment, then it will very likely affect other countries, if they don't have sound fiscal position.

DR Hadi Soesastro

2010-05-04T10:10:00.000+08:00

I was informed that Bapak DR Hadi Soesastro had passed away this morning, Tuesday, May 4th, 2010. He was in a coma after a stroke. The first time I met Pak Hadi was in 1994 when I interned for the United Nations Development Programme (UNDP) in Jakarta. Then we got to work together to convene a major international conference sponsored by the Jakarta Stock Exchange (now known as Indonesia Stock Exchange) in October 1995 to commemorate the shift from manual trading to electronic system. Pak Hadi suggested the theme along the line of borderless world that underscored the nature of capital flow. Since then, we continued to collaborate in various forums including through the Asia Foundation. I will miss Pak Hadi, his wisdom, knowledge and more importantly, passion, enthusiasm and commitment for a better Indonesia. Selamat jalan Pak Hadi...May God strengthen your family in this difficult time. The journey for a better Indonesia will continue...

Sustainable Recovery?

2010-04-21T22:55:00.001+08:00

I arrived in Jakarta for a short visit today and felt right at home with a major traffic jam. Jakarta's infrastructure is not coping well with the increasing number of vehicles in the capital city. Whilst the traffic condition presents a sign of recovery or increasing level of economic activity, there needs to be a major push on the infrastructure front. Back in April 2001, I wrote an article for the Jakarta Post titled "Threat of another financial crisis", which highlighted some of the structural reforms required to strengthen the foundation of key economies in SE Asia including Indonesia. The unfinished construction building in a middle of the business district in Jakarta in this picture shows an excess from the 1997/98 financial crisis. And how to avoid future excess in the economy requires strong foundations including at the institutional level. An article by Daniel Gross in Newsweek titled "The Comeback Country" is an worth reading. US economy can be very resilient and it remains home to many innovations. Barriers to entry and exit are low, which help to promote entrepreneurship. Sustainable recovery needs firm foundations on social, education, and economic fronts.

APEC 2013: Will It Still Be Relevant?

2010-04-10T16:29:00.001+08:00

Indonesia has committed to host APEC Summit in 2013. The first time Indonesia hosted APEC Summit was in 1994. Therefore, after 19 years, what will be the outlook for APEC? And what will be the relevance of APEC by then? It will be worthwhile to predict the trends prior to APEC 2013. The US would have its 2012 presidential election. China would probably become the second largest economy, replacing Japan. Efforts to curb carbon emissions would likely continue to be slow as developing economies have to prioritize on economic development to address poverty and deal with potential social unrest as the result of income gaps. Indonesia, as the host for APEC 2013, will be preparing for 2014 legislative and presidential election, which means domestic politics may overshadow international agenda. Depending on the commitment and willingness of both developed and developing economies to address trade barriers in the next 12 to 18 months, the outlook for Doha Round is rather bleak. And the race to secure energy supply will intensify, which will be led by national resource companies. As I don't have a crystall ball to be able to provide more insights (otherwise, I won't be writing this blog...), I can only think what should then be the focus of APEC 2013 to make it relevant? From Indonesia's perspectives, getting domestic audience' participation and support for APEC 2013 will be very important. The organizing committee may want to focus on concrete recommendations on how Indonesia's participation in APEC has brought benefits to the people in the country. To what extent can Indonesian government say that because of APEC, Indonesia's small businesses (in addition to medium and large businesses) have been able to trade with other countries at lower costs. And how about the progress with APEC to promote 'equitable development' as the leaders during APEC 1994 in Bogor called for? What concrete steps should APEC as a regional forum take to tackle poverty among its members especially from developing countries? And it may not be a bad idea to measure progress by each APEC member with regard to its commitment declared in Bogor in 1994 in terms of tariff reduction.

Source: Logo is courtesy of commons.wikipedia.org

Indonesia's Governance: Need A Tipping Point?

2010-04-07T20:29:00.002+08:00

I enjoy reading Malcolm Gladwell's books - The Tipping Point and Outliers. As I went through the books, I could not help myself thinking about governance (i.e. corruption) in Indonesia. In particular, should there be a "tipping point" leading to massive decline of corruption cases in Indonesia? I think there should be. Stay tuned on this subject....

Entertainment Economy

2010-03-26T09:07:00.002+08:00

Many countries in Asia Pacific, Singapore included, are developing their entertainment economy. Countries in the region are racing to open theme parks (e.g. Universal Studios in Singapore, Legoland in Malaysia, Universal Studios in Korea, etc) and casinos (Singapore, Macao, etc) in addition to ongoing investment for art and music festivals, which at the end of the day, aim to increase the contribution from entertainment economic activities to the overall national economy. Is Indonesia pursuing the same path? One factor in favor of Indonesia is the level of domestic consumption, which may be able to support such initiatives. Local theme parks such water bomb park in Bali is a favorite for domestic and international visitors. But focus on quality service and safety can't be taken for granted. This will require major investment on the people who are working in these theme parks. As the level of prosperity increases in Asia Pacific, entertainment economy will have bigger contribution to the overall GDP, and not to mention the need for mediums to channel the stress level for the citizens in the region.....

Is It Ever too Late to Govern?

2010-02-25T21:43:00.000+08:00

About a couple of weeks ago (around mid-February 2010), I met a friend who was visiting from Indonesia to Singapore. Given the ongoing debate in Jakarta (in particular, the vicinity around Senayan), we could not avoid not talking about a case with Bank Century. At one point, my friend said that it might be too late to do anything about this case. Now for readers of this entry, this case involved the government of Indonesia's decision to bailout a small bank that suffered from liquidity crisis at the height of the 2008 global economic crisis in November 2008. I will not talk about the case or whether the policy was right or not. The point of the discussion was if it was too late for the government of Indonesia to do anything about this case. I raised the point of "to govern" as the mandate of the elected officials anywhere in the world. To govern, according to Thesaurus.com, includes to "serve the people" or "to carry out" the mandate. The key is to serve the people. And serving the people does not recognize a specific timeline for elected officials (yes of course, there is a period to hold an office; in many cases that will be at least 4 years). There is never too late for any government, Indonesia included, to carry out its mandate. The key is to ensure programs that will benefit the people of the country are carried out in a transparent, accountable and effective manner. Elected officials need to be close to their constituents. Ultimately, it is the people who will tell elected officials if it is already too late to carry out the mandate or serve the people.

Productivity Drive

2010-02-06T17:28:00.001+08:00

The buzz word in Singapore these days (at least since January 2010) is "productivity improvement." The recent report produced by the Economic Strategies Committee (ESC) calls for an improvement in productivity growth to achieve 2% to 3% in the next 10 years. To common folks like me, productivity is mostly associated with long working hours. Is it accurate. I beg to differ. Let's look at the US, which has one of the highest productivity (manufacturing included) level among developed economies. According to 2008 data by the US Bureau of Labor Statistics, the US and South Korea registered the highest productivity growth among developed economies (table is attached). In the services sector, the US has also shown significant progress in improving productivity (see this link from Brookings). I spent almost 10 years living in the US as a student (from high school to graduate school). And in my recent trips to the US in the past 18 months, I notice a common pattern. People don't stay until 9pm, 10pm, etc to get things done. Majority of workers, especially working families, will have to go home to take care of families (i.e. cook for dinner, help their children with their homework, put them to bed, etc). And maybe later, they will go back online to check on tasks from office. True, there are many occassions where you have to stay late. My point is that productivity needs to be linked to prioritization and efficiency given the available hours during the day. Multiple taskings will be increasingly important now that we have online channels as means for research and communicating to external and internal stakeholders.

Disaster Preparedness

2010-01-24T11:06:00.000+08:00

The massive earthquake that hit Haiti was a shocking event. Massive international rescue efforts are underway. One way for you to assist is through Partners in Health, which has worked in Haiti for more than 2 decades. http://www.standwithhaiti.org/haiti

Countries will be confronted to have comprehensive and tested disaster preparedness and response systems for natural disasters. Whilst you can never be 100% prepared, at least key elements of the national institutions are ready with response and contingency systems. Indonesia needs to continuously update, refine and test the country's institutions level of readiness.

Our prayer goes to the recovery efforts in Haiti.

2010 Trends: Tolerance, Societal Responsibility

2010-01-17T12:22:00.001+08:00

At the end of 2009, Indonesia mourned the passing of its former president, Gus Dur. The late Gus Dur was appointed as Indonesia's fourth president by the national parliament in 1999. He was known as a champion of pluralism and tolerance in Indonesia. During his short presidency, he shut down Ministry of Information and Ministry of Social Affairs. He also recognized Chinese New Year, which has been celebrated since 2000. in 2000, he was removed from power by the very same national parliament that endorsed his presidency.
Indonesia also mourned the passing of Frans Seda, one of the economic architects of Indonesia in the late 1960s (after the transition of power from former president Soekarno to former president Soeharto). He was a former minister of finance of the Indonesia who inherited a practically bankrupt state. He was a key champion for accountability in the government's budget - the state must be confined to spend on based on revenue that it could generate. Today we still witness many countries' budget collapse due to significant public deficit.

2010 will be an interesting year. Whilst I won't talk about economic or political trends in Indonesia for 2010, I anticipate greater discourse or debate on the subjects of societal tolerance and responsibility given the social, political, economic, and environmental challenges that we will have to face. Societal tolerance and responsibility will be tested as we must navigate and work out differences in views and opinions from the various issues or challenges that we will face. One lesson from the generation of the late Frans Seda and Gus Dur is the need to have constant dialogue and respect differences without forcing one's agenda. And more importantly, they were committed to the nation building of Indonesia, not just the agenda of certain groups.

Is the Recession Over? Hold Your Breath....

2009-12-12T11:21:00.003+08:00

During the recent APEC 2009 in November in Singapore, many world leaders were somewhat optimistic that the global recession had finally ended. Such optimism was driven by better Q3 2009 GDP figures in Germany and France in addition to strong economic performance by China and India. The level of optimism also helped to fuel rapid increase in property prices in Singapore since September 2009. Are these signs pointing to full economic recovery at the global level in 2010? Before I provide my own views, let's consider the following recent events:

1. Greece and Spain are facing serious public debt problem and high unemployment rates
2. US unemployment figure is still above 10%, the highest in many decades
3. US wants to export more - i.e. Asia countries are expected to buy more from the US in order to rebalance global trade
4. Japan, the 2nd biggest economy in the world, needs to revise its own GDP figure on the back of lower than initially expected capital investment.

In the case of Greece and Spain, it suggests that EU is starting to feel the impact of the recession. The US, as the biggest consumer market in the world, is unlikely to buy goods and services from Asia in a massive scale given its weak domestic consumption.

I think the economy is not completely out of the woods yet. Some countries in Asia Pacific with strong domestic market base such as India, Indonesia, the Philippines will still manage to grow in 2010. However it will take full recovery in major consumer markets such as US and EU in order to bring back balanced growth to the world's economy.

Aspiring Ministers for 2009-2014

2009-10-19T11:30:00.002+08:00

As of the writing of this blog, President SBY still has to interview around 16 more candidates for the various ministerial positions for the period of 2009-2014. Given Indonesia's presidential system, President SBY has the authority to select members for his cabinet. I would suggest coordinating ministerial posts to have more authority through reporting line. This means all respected ministers under the coordinating ministry's responsibility will have part of the ministers' KPI to ensure coordinated policy formulation and implementation. Otherwise, the classic Indonesia's barrier to maximize the effectiveness of policy implementation, which is coordination, will never be resolved. The other option is to abolish coordinating ministry's post and be replaced with President's chief of staff, national security council, national economic council and national social welfare council. Whatever option it is, the most important is in coordination and concerted execution.

Natural Disaster Preparedness and Management

2009-10-02T14:08:00.002+08:00

Two earthquakes affected Indonesia in the evening of 30 September 2009. Padang, a city of more than 900,000 people in West Sumatra province, was the worst hit. During a couple of forums in Washington, D.C. that I attended on 30 September 2009, speakers from the US expressed their condolescence to the families of the victims of the earthquake. Not to mention that US Samoa island was struck by earthquake and tsunami.

Indonesia is vulnerable to earthquakes. I had to come down from 16th floor of a building when an earthquake was felt in Jakarta on 2 September 2009. My thoughts and prayers are with the families of the victims. And I hope recovery and restoration process will take place smoothly.

Natural disaster preparedness and management will need to be a priority for Indonesia. Investment for equipments and transportation (i.e. air and land) will need to be made. Government and civil society organizations as well as the general public should be involved as part of the country's natural disaster preparedness and response. The military should also establish units that will be ready to be deployed anywhere and anytime natural disaster strucks in Indonesia.

G20 Forum: What is Next?

2009-09-26T18:10:00.002+08:00

Leaders of G20 issued several statements from the Summit in Pittsburgh. One of the statements stated the importance and vital role that G20 would play in the area of international economic cooperation. In fact, the communique called for the replacement of G7/G8 Summits with G20 given the latter's inclusivity and relevance in today's world. Australia, China, India, Indonesia, and Japan represent Asia Pacific in G20. Asia Pacific needs to be represented in any global forum given the region's diverse economies and increased role in global trade and investment. Major sovereign funds from Asia Pacific have become more active global investors. China, India and Indonesia manage to grow positively in 2008 and 2009 in the midst of the global economic crisis. The region is home to more than 2.5 billion people with fast emerging middle class. The next challenge will be to ensure effective implementation of promises and action plan issued after each G20 Summit.

Indonesia's Governance Needs to Move Forward

2009-09-21T11:15:00.003+08:00

Local and international press have reported on the struggle faced by Indonesia's Anti-Corruption Commission (Komisi Pemberantasan Korupsi or KPK). The former chairman of KPK has been detained as a suspect on a murder case. Two of the deputy chairpeople of the agency have been declared as suspects by the national police for violating a criminal code with regard to investigative authority.

Indonesia has shown a remarkable progress in tackling governance and counter-corruption. This progress may now be at risk based on the latest development with KPK.

Indonesia needs to move forward with its efforts to improve governance. National and local governance should not be improved for the sake of reform; it is undertaken to improve and enhance the delivery of public services and accountability for the people of Indonesia.

20th Century Most Important Discovery

2009-09-02T09:04:00.002+08:00

Last weekend I had the chance to see Dead Sea Scrolls and Ancient Heritage Exhibition in Singapore. It was an informative exhibition given my general interest in history. Exhibition is being held at The Art House, One Old Parliament Lane in Singapore.

Singapore Property: Bubble in the Making?

2009-08-30T22:05:00.000+08:00

Property sector is the heart of Singapore's economy. There is not a day without talking about property in Singapore. So the question in many people's mind is whether the current increase (i.e. rapid increase) of property prices in Singapore is sustainable. My guess is probably the same as yours....The only reason to justify the rapid increase is the improved sentiment of certain groups of people (i.e. property owners and agents) about the economy (Singapore's Q2 2009 GDP rebounded by more than 20% compared to the previous quarter, although full-year GDP outlook for 2009 would be a contraction between 4 percent and 6 percent) and deferred payment scheme (DPS) for new projects. DPS means that you only have to pay 5% upfront. What does this mean for those who wish to rent private apartments in Singapore?

Having gone through an unpleasant rental experience myself, I can only suggest the following check list:
1. Make sure you have a property agent who will fight for your interest (forget about an agent who also represents an owner; he/she will ultimately defend the owner)
2. Insist that you meet the owner of the unit (don't buy the argument that everything has been delegated to an agent; Face-to-face meeting is important)
3. Document all communications with your agent and owner including ensuring everything you ask in the letter of intent (that means things that you want your landlord to do before you agree to take the lease) is included in the rental/lease agreement

A Devastating Day for Indonesia

2009-07-18T16:15:00.002+08:00

Two bombs exploded in the J.W. Marriott and Ritz-Carlton Hotels in Jakarta on Friday, July 17th, 2009. The blasts killed 9 people (the last official count) and injured more than 60 people. One of the casualties was Timothy McKay, president director of PT Holcim Indonesia. I met Timothy twice (in 2006 and 2007) and he was a decent and humble person. My prayer goes for his family and also other families of victims from the bombing.

This tragic incident reminds all of us the need to remain vigilant. However at the same time, I believe Indonesians will remain united to confront hatred associated with terror behaviors. Therefore national development must be inclusive and comprehensive that every citizen of the country is included in the process. Check and balance needs to be in place. Legal reform such as in the court system must be a priority for the new government. Why? This is to provide sense of justice and fairness to ordinary citizens. Any attempt to force an agenda that will divide a nation be it due to ethnic, religious, or racial reasons, must be prevented. Friday's devastating day underscores the need for Indonesians to unite.

Indonesia Presidential Election 2009: What is Next?

2009-07-11T18:52:00.003+08:00

Although the official result of the July 8th presidential election in Indonesia has not been issued, official tally of the results shows Susilo Bambang Yudhoyono has a commanding lead. So the question to many including me is what will be in the agenda in the next 5 years? Investment in infrastructure - not just physical but equally important the basic public services in education and health is critical. The H1N1 Influenza A pandemic shows the need for more investment in ensuring accessibility and affordability for public health services besides being fully prepared for new diseases. So that is one area. Another critical area is education.

At one point this month, I had to go to the Jakarta's port for a meeting and it was amazing to see the bottleneck in the road to and out of the port area. Clearly Indonesian economy can benefit from quality road, railroad and sea port infrastructure.

President Susilo has a strong mandate to push for more reforms to improve Indonesia's overall economic and social conditions. I also think Golkar Party (despite its chairman, Jusuf Kalla's poor performance in the polls) will try to align itself with President Susilo. The question is to what extent will such alliance affect the much needed reform agenda in the next 5 years? I guess it is still early to speculate since the official result has not been announced yet. One thing for certain is that key political parties that support President Susilo are certain to "demand" for cabinet seats. I hope that despite such political manuevering, the current cabinet will continue to complete its tasks during the transition period.

Indonesian Presidential Election 2009

2009-07-09T09:29:00.002+08:00

Yesterday marked another milestone as Indonesians went to elect the next president for 2009-2014. Democracy continues to evolve in Indonesia. Whilst the election was still underlined by popularity of candidates as opposed to policy platforms, the election was done in a peaceful manner. It took me 15 minutes to vote in the Embassy in Singapore. Wish all the best to the winner...

After Three Years of Blogging....

2009-06-23T22:15:00.004+08:00

June 2009 marks the third year of blogging for me. This blog has not been published externally as it will require commitment of time to maintain the blog. I am amazed by the consistency of many bloggers in keeping conversation current and updated. Hats off to them....

For now, this blog captures some of my thinking on issues that relate to Indonesia and its progress in all fronts. At the same time, there has also been an exponential growth of usage of blogs and social media network in Indonesia and other countries in the region. The growth is also driven by improved accessibility and connectivity. Investment in infrastructure is therefore important. It facilitates more efficient information exchange and not to mention, opens up new opportunities.

Indonesia Presidential Election Kicks on High Gear

2009-05-31T13:28:00.002+08:00

For all of us who follow Indonesian politics, the presidential election has been on a high gear at least since May 16th, 2009, although VP Kalla and his running mate, Wiranto started much earlier. Up to July 8, 2009, we will be constantly presented with various slogans from the campaign be it "Faster, Better" (Lebih Cepat, Lebih Baik), "Go On and Continue" (Lanjutkan), people's economy (ekonomi kerakyatan), Neo liberal (neoliberalisme), etc, etc.... With regard to these slogans, sometimes I wonder what these really mean. For example, what does neo liberal mean? It sounds nice to the common voters (I guess all political slogans are intended just for that), but does neo liberal mean that Indonesia leaves everything to the private sector and that there is no role for government? I think after the 1997/98 financial crisis and political transformation, Indonesia has established so many state institutions such as business competition, consumer protection, judicial commission, anti corruption agency, telecommunications regulatory body (BRTI), and even information commission. The government has become very active in regulations. An interesting article on the subject is attached based on a recent parliamentarian hearing involving Indonesia's Minister of Finance and Senior Deputy Governor of Bank Indonesia. Interested to know what you think...

What interests me about this presidential election is the way the coalition of political parties is set up to nominate presidential candidates. Was it done in a hurry? We'll know on July 8 when the first round of the presidential election takes place.

Indonesia Election 2009: April Election

2009-04-09T23:23:00.004+08:00

Today I exercised my right to vote for Indonesia's parliamentarian election at the Indonesian Embassy in Singapore (see photo on the right). It took me no more than 35 minutes from arrival to cast my vote. I must say that the process was well-managed at the Embassy. I think Indonesia is maturing with its democracy and that is the good news.

Many people can be easily skeptical of the benefit of democracy. To me, each country must follow its own system that works for it. In the case of Indonesia, we, as a nation, decided to take the path of democracy in 1999. Democracy provides an opportunity for people to voice their concerns. Sure 240 million voices (bigger than Malaysia, Thailand, and Singapore combined) are not easy to be managed and that Indonesia will need better managers at the General Election Commission to oversee this massive and significant undertaking called general election.

The immediate challenges for Indonesia's next elected leaders are to reform the bureaucracy and improve provision of the basic services for the people throughout the country.

2009 April Election: Going Forward?

2009-03-31T07:44:00.002+08:00

I have been following public discussions in Indonesia whether April 9th parliamentarian election should continue to be held or not . There have been reports of incorrect voters data that still require validation in several areas including East Java, Papua, etc. Such validation will take time and the government, in this case the General Election Commission (Komisi Pemilihan Umum or KPU), faces potential risks of litigation post-election. There will be at least 170 million voters who are eligible to participate in this year's election (I plan to cast my vote in the Embassy in Singapore on that day...).

Indonesia's election will be closely watched for many reasons. To what extent the country's democratic institutions can carry out a significant exercise of political rights given the current global economic downturn, geographical and infrastructure challenges? I think KPU should focus in validating voters data and ensuring adequate infrastructure to support the election. It does not need to "display unnecessary pride" by countering criticisms through rhetorics; action speaks louder than words. Going forward, KPU leaders must be equipped with individuals with extensive and successful organizational experience as well as project management capability given the tasks required in managing our election.

2009 Indonesia's General Election Begins...

2009-03-21T23:45:00.002+08:00

I came back from a trip to Jakarta recently. On Friday, March 20, Jakarta's traffic around business/financial district was held to a stand still. Massive traffic jam is nothing new in Jakarta, but Friday's traffic jam was worsened due to campaigns by major political parties including Democrat Party (Partai Demokrat) and Prosperous Justice Party (Partai Keadilan Sejahtera or PKS). This week was also the official kick off for the 2009 general election; April 9 is the election day for national and regional parliaments in Indonesia. This year's election is different because for the first time, voters will have to choose a candidate instead of political party of the candidate. I have seen voter education initiatives to inform voters on how to cast ballot during this year's election.

Candidates can no longer solely rely on their political parties' affiliation. The key to success will be concrete track record of the candidate and effectively communicate such track record in an efficient and effective manner. I think Indonesia's election will be more sophisticated in the long run with proper campaign team in place. I was recently approached by a candidate for a national parliament who is campaigning for votes from overseas Indonesians. The candidate stopped by in Singapore after traveling to Australia. I think the candidate will have more chance to secure votes from targeted overseas voters by establishing network of campaign volunteers with clear outreach program. Establishing effective network takes time and resources, which many of this year's candidates for regional and national parliament simply don't bother to set up (except to print lots of T-shirts and posters). That is why 2014 general election will be the starting point of "election rationalization" in terms of likely political parties and candidates.

How About That Change?

2009-01-26T13:17:00.002+08:00

During my recent trip to Jakarta before Chinese New Year, I ran to my old boss and at one point during our conversation, he asked me, "How about that change in the United States?" The discussion focused on the political change in the United States with the election victory and inauguration of President Obama as 44th President of the United States. I, among many other millions around the world, watched his inauguration speech on live TV. It was a good speech; a speech that focused on the challenges not only faced by the United States, but the entire world. A speech that also called the need to change and embrace greater responsibility.

Here in Singapore, the economy is expected to contract by 5% in 2009, a contraction that has not been seen in Singapore for decades. Based on 1997/98 Asian financial crisis experience, a country will require at least one year after contractionary period to reverse it, and a big IF for such scenario is when domestic consumption, investment and export are all back on positive/growth track at the same time. Based on Indonesia's experience during the Asian financial crisis, structural changes took place in order to have stronger economic fundamentals. The country's economy contracted by more than 13% in 1998 and the idea of Jakarta-centric economic development policy was changed with decentralization policy that opened up trade and investment opportunities and expanded domestic consumption level throughout Indonesia. I suspect China, which is feeling the impact of the global economic downturn, will also look at ways to expand its domestic consumption in order to keep the momentum going forward. Someone has to buy what China produces and at this stage, China's main buyers, the US and EU are not buying these goods.

Policymakers in Asia Pacific will certainly need to review what changes need to take place in order to mitigate the impact of the global economic crisis to the region. "How about that change" is a question that will be increasingly heard and debated in the days and months to come as we deal with changing environment we face.

2009 Outlook

2009-01-04T21:02:00.002+08:00

I just returned from a two-week trip in the US. The mood was understandably gloomy. Major newspapers focused on job losses, mortgage foreclosures, decline consumer spending, etc. Retailers held another round of major discount on December 26th (in addition to traditional black Friday sale the day after Thanksgiving) to generate sales before year-end. President-elect Barack Obama has called on a major economic stimulus program to create 3 million jobs. The program is also considering the need to prioritize 'made in America' products.

What will be the outlook for 2009? I don't think anyone can be so sure of anything. Despite the availability of information from various sources (i.e. information storm), we may get even more confused with information overload. Singapore has sharply lowered its 2009 economic forecast; as a hub, Singapore faces difficulties when its source markets (i.e. North America and EU) are struggling. Indonesia may be able to grow by more than 4% in 2009 given the size of its domestic economy and its low level of export exposure. The role of government will be more important in dealing with the current economic crisis. Understandably the first reaction is to protect domestic market and hopefully that will be done without erecting new barriers to trade and investment. If that is the case, recovery will take longer.

Getting Worse Before Better?

2008-12-08T11:12:00.000+08:00

We have heard US President-elect Barack Obama saying that the US economy would get worse before it would get better. He has said it at least twice when he announced his economic team and during his lates press interview on December 7th. Deterioration of US economy will have impact on global economy including in Asia. Whilst Asia's fast growing economies, China and India, will continue to have positive growth, the level will be well below the 8% to 10% level that we have heard in the past few years. Asia's recovery will depend on the pace of recovery in the US economy, Asia's largest trading partner.

A fundamental reform will take place in particular the way the US economy operates. One thing for certain is greater apetite for savings. Another major reform will be in the area of regulation. Whilst regulation will be more comprehensive, I hope regulation will not constraint innovation and risk taking, which are critical for enterprise and job creation. I am in favor of more consistent and non-discriminatory implementation of regulation. Innovation will continue to emerge including during an economic downturn. Companies will need to be responsive to changing operating environment. 2009 will present challenges and opportunities at the same time.

Stricter Control on Global Financial System

2008-11-16T10:41:00.000+08:00

This weekend saw a summit of leaders from 20 developed and developing nations to discuss possible global solution to current economic crisis. Participants from developing nations included BRIIC: Brazil, Russia, India, Indonesia and China, which reflect the increasing clout/influence of these nations in global economy. A point of debate during this summit is to what extent should government exert control on global financial system. There are two opposing camps on this point. On one hand, the US and Canada oppose any universal control of global financial system. On the other hand, France wants to see stricter global control of financial system. The current financial crisis started with the collapse of mortgage lending in the US. I think the US will need to sort out its mortgage sector in order to bring stability to its domestic economy. At this stage, every government should look at fiscal and monetary policy options to bring stability to each domestic economy. For example, all countries with massive foreign exchange reserves such as China, Singapore, South Korea, and Middle East/Gulf Coast Council nations should use those reserves to invest in their local economies for programs such as infrastructure, healthcare and education spending, and workers retraining. I believe that free market remains the best option in terms of job creation and innovation. What is needed is better and improved monitoring system in each market to ensure better governance and accountability going forward. But to apply universal control for global financial system is not realistic.

Historic Moment

2008-11-06T21:57:00.000+08:00

November 4, 2008 will be remembered as a historic day. US voters elected Senator Barack Obama as the 44th President of the United States. He is the first African American president for the United States. I congratulate the democratic process in the United States. The historic moment is not only felt in the United States, but throughout the world. The 2008 race to the White House has been watched in so many places around the world. It shows the level of interest that many of us have on US political development given its significance to world's affairs. Congratulations to President-elect Obama and wish him all the best.

The End of Capitalism? Not so Fast....

2008-10-11T17:26:00.000+08:00

Major financial institutions collapsed. Unsustainable loan portfolio. Too much leveraged financing. Bank runs. Political uncertainty. Governments became largest investors in different markets - Sounds familiar? Remember 1998 financial crisis in Asia? Governments of Malaysia, Indonesia, Thailand, and South Korea became investors after taking over bad loans in banking system.

Let's fast forward 10 years to 2008. Major financial institutions namely Lehman Brothers, Bear Sterns and if not saved by the US Treasury, AIG collapsed. This is not to mention other institutions that have been swallowed by larger firms at discounted prices such as Merrill Lynch and Washington Mutual (suffered deposit runs). Governments of major economies have to take concerted efforts to bring back stability in the market. What really happened?

My mother called me and asked what has happened in the market? Whilst many experts can provide much more complex explanations, here is what I think the cause of the problem (maybe too simplistic to some). The core problem is in the housing and consumer lending markets in the US. Someone who is probably earning US40,000 per year has mortgage loan valued at US$200K or that is 5 times more of his/her income. The homeowner probably pays weekly payment to mortgage lenders (similar to motorcycle financing in which borrowers pay weekly or daily). Now this is all ok until either (1) interest rate goes up, which makes his/her weekly payment higher, or (2) he/she loses job so can't make repayment. By the way, borrower has other loans in the form of credit card payments. Mortgage lenders make good returns from effectively charging higher interest rates. These lenders think they can make more money by issuing papers (similar to IOU papers) that are tied to repayment of housing loans. These papers are packaged in such that even many private bankers' customers in Asia also purchase these instruments. So what happens when homeowner can't make repayment of his/her loans somewhere in the US? The house of cards tumbles.

The question is will this bring an end to capitalism? Not so fast. It is very easy to say capitalism is dead and welcome back regulation. What is needed is more comprehensive and consistent regulation. Capitalism is about innovative ideas in different areas. It is the job of policymakers to create an environment to stimulate innovative ideas that will have broad economic value.

First F1 Night Race & US Financial Crisis

2008-09-30T21:54:00.001+08:00

Photo is courtesy of BBC Sports Motorsport (for more photos, click here: http://news.bbc.co.uk/sport2/hi/motorsport/formula_one/7640597.stm)

I had the chance to see first F1 race at night during the weekend of September 26-28, 2008. I must agree that it is very different to see the race "live" than on TV. I was never a big fan of F1 race, but I enjoyed watching the race. My wife and I talked about this race. It's interesting to note that many spectators in Singapore bet that the first three drivers in pole position: Filipe Massa, Lewis Hamilton and Kimi Raikkonen, respectively would end up winning the race. What do you know? It was Fernando Alonso who started in 15th position who won the race in Singapore.

There are so many unpredictable factors in a car race; we should never say never. This also applies to the current turmoil in the US financial market. Never say that an institution is too big to fail. I remember when insurance agents would tell me that this "XX" institution would not fail, so I should buy insurance policy from it. The underlying message is an F1 race, despite what seemed to be sure thing from starting position can deliver different results. That also goes for capital market and financial industry - there are too many uncertain factors in the industry.

US Government-World's Largest Investor

2008-09-20T22:03:00.001+08:00

The US government has emerged as the world's largest investor through its ownership of AIG, Fannie Mae, and Freddie Mac. And the US government will set up a separate entity to manage hundreds of billion of distressed mortgage assets held by major financial institutions. Now this sounds familiar to Asian financial regulators particulary Indonesia and Thailand, in which the governments had to set up separate restructuring/asset management entity to take over bad loans from the banking sector during the 1997/98 financial crisis. Unlike Indonesia and Thailand's cases in 1997-98, the US government will review the actual value of these assets and most likely end up acquiring them at steep discount. Nonetheless, recovery of public funds from assets sale will take years. Even the government of Indonesia has not completely repaid loans it extended to banking sector in 1998; ultimately individual taxpayers will have to bear the costs.

What does this financial debacle mean to you and me? We should expect slower global economic growth given lower US domestic consumption and Asia's dependence to the US. The theory about decoupling between US and Asia does not hold. I wrote about this back in 2007. As an amateur invesment commentator, we should all preserve our liquid assets, mainly cash.

Despite volatile financial markets, companies (especially listed firms) will need to demonstrate their strategies to deal with current business environments and communicate those consistently. Institutional investors will return to the markets before end of the year as they have obligation to invest in order to generate returns to their constituents.

What is Going On in SE Asia?

2008-09-13T19:26:00.000+08:00

SE Asia has been on the news lately and much of these stories have to do with politics. Malaysia is cracking down on the opposition. Thailand's politics and economy have been held hostage by opposition's protests over PM Samak Sundaravej, and he has decided against contesting for PM's position. Inflation remains a major issue in all parts of SE Asia, Indonesia included. I think SE Asia's major markets are going through transformation process. Of all the key markets in SE Asia, Indonesia went through dramatic changes in its political, social and economic systems starting in 1999. Many analysts had worried about negative implications of changes that took place in Indonesia. True there are still tensions as the result of changes in Indonesia, but at the same time, Indonesia has stronger foundations for economic and social development. I agree with a recent Bloomberg's article that Indonesia is a lot more stable than many people think. Keep reading the news on SE Asia...we are seeing changes happening in this part of the world.

Olympics Spirit

2008-08-24T12:40:00.000+08:00

Today is the closing of 2008 Summer Olympics held in Beijing. There are different reactions to how home team perform in the Beijing Olympics. Indonesia's team secured total of 5 medals with one gold medal from double men badminton. The Jakarta Post' editorial summed up the reaction and call for action for future Olympics competition. On the other hand, Singapore's Table Tennis Association President fired the team's manager despite the team's success to win the first medal for Singapore after in 48 years. At the end of the day, we should support our athletes through commitment and investment to improve competitiveness going forward. I am sure all athletes and their coaches will give their best when they represent a country and whatever the results they achieve, they will strive for better performance in the future.

Photo is courtesy of Reuters

Indonesia's Independence Day 2008

2008-08-17T11:13:00.000+08:00

Happy Independence Day, 17 August 2008.

Much progress has been made in the past 63 years and much more needs to be done going forward

2009 Presidential Campaign Kicks Off

2008-07-26T20:25:00.000+08:00

Indonesia's 2009 parliamentary and presidential elections are set for April 2009 and Indonesia's Election Commission has officially approved the start of the campaign in July 2008. This means that candidates will have 9 months of campaigning - that is a long time. Some candidates have also gone online to build profiles (e.g. Akbar Tandjung - former chairperson of Golkar party, current leading political party in the national parliament). Other candidates such as retired General Wiranto and current chairman of National Mandate Party (Partai Amanat Nasional or PAN) Sutrisno Bachir have taken advertisements in print media. And other candidates have taken steps to build own profile for the long campaign.

Who has a real chance? Over to you. Look forward to watching the campaign.

2 Years of Blogging & Indonesia's Development Model

2008-07-21T20:00:00.001+08:00

It is now two years since I started blogging. The question is so what? What has been achieved from my blogging since July 2006? My initial objective with this blog was to share my views on aspects related to progress taking place in Indonesia and global/regional trends that might affect Indonesia's progress. My blog has only reached limited audiences as it has been intended that way. Maybe someday it will be broadcasted for wider audience in a different format.....

I wish to talk about Indonesia's development model. I am writing this after last week's discussion with visiting CNBC team (July 14-17, 2008) on progresses in Indonesia.

The question to my mind is whether there is one for Indonesia. There is no one existing model be it Western-type development, centralized planning model or centralized combining with free market model (e.g. Singapore's and certain extent China paths) that can be applied to Indonesia. Consider the following contexts:

1. Once heavily centralized development and planning model, Indonesia has embraced decentralization since 1999 in which all local officials are directly elected;

2. Once the dominant force in Indonesia's politics and to some extent economic and social systems, the Indonesian military's role is more focused on national defense and disaster relief;

3. Indonesia's democratic process exists alongside Islam as the dominant religion in the country;

4. Jakarta is no longer the center of decision-making and wealth for Indonesia; other areas such as North Sumatra, South Sumatra, Riau, East Kalimantan, South Sulawesi, Bali, East Java, etc have emerged as growth centers for Indonesia;

5. Once heavily controlled and censored, Indonesia's civil society (e.g. think tanks, NGOs, academics) and media enjoy one of the freest public discourse setting comparable to established democracies.

These are some factors and there are others. True the changes since 1998 have shortcomings in terms of investment for health, education and infrastructure development. Future policymakers will need to ensure sufficient investment in health, education and infrastructure for Indonesia.

But clearly there is not one single model to explain Indonesia's progress to date. This is indeed Indonesia's model of development - a model characterized by progressive efforts for improvement.

Economic outlook H2 2008

2008-07-17T21:06:00.000+08:00

Outlook for global economy is getting gloomier especially with latest testimony by Ben Bernanke, Chairman of US Federal Reserves on July 15, 2008. In his testimony, he said of potential weaker US economy as the result of rising food and fuel prices and ongoing credit crisis. Weaker US economy will affect Asian economies especially countries that export largely to US such as Singapore. I have mentioned this possibility in my November 2007 blog entry. In the case of Indonesia, the economy should be ok given positive performance of the country's export, domestic consumption and direct investment. The challenge for Indonesia is to improve the country's infrastructure including roads and electricity. Infrastructure development is important as it provides job opportunities for the people. Infrastructure development is long-term in nature and it requires government's leadership to ensure successful public-private partnership.

Transaction Economy

2008-06-14T11:42:00.001+08:00

I have lived in Singapore as basis for my work for almost 8 years now. One descriptor about Singapore that consistently comes across is "transaction." Singapore is a transaction-based economy where there needs to be continuous transaction (as the case in corporate development or corporate finance) in order to keep the economy moving. For example, as an owner of a car, you will need to conduct daily transaction in terms of paying for electronic road pricing (ERP) charges when you pass highways or main roads. If you employ a maid, you will be part of a transaction where you will pay monthly fee to the authority; this is on top of maid's salary. I also notice that the apartment where my family lives goes through repainting at least every 2 years, in which costs will be paid by homeowners. If you own a property, you will be lucky if you can stay in the place for more than 15 years as the property may go through collective sale to make a way for newer building. Sometimes I can't help thinking that Singapore as a city-state is going through regular merger & acquisition (M&A) transactions. An M&A in a corporate setting will take at least 2 years to be absorbed fully including potential staff consolidation. The setting for Singapore is that this is a country or a state, not a company. I am only an observer and can only wonder the impact of consistent M&A in a country setting...........

Photo is courtesy of Bloomberg

Emergence of New Think Tanks

2008-06-01T14:51:00.000+08:00

I have noticed the emergence of new think tanks or institutes by politicians, ex-national leaders or bureaucrats in Indonesia in the past 5-6 years. Former president Habibie set up his The Habibie Center or THC (to model after former US president Jimmy Carter's Carter Center). Then former president Abdurrahman Wahid set up Wahid Institute. In 2005, Akbar Tandjung, former speaker of national parliament and ex-chairman of Golkar party (a major political party in Indonesia) set up Akbar Tandjung Institute. Then in early 2008, Ary Suta, former chairman of Indonesia's Capital Market Supervisory Body set up his Ary Suta Center for Leadership. Each institute or center has its own niche programming areas. The question is to what extent will each of the center will remain competitive and relevant in Indonesia. I have the privilege to work alongside many centers or think tanks that focus on international relations, economic and social affairs in Indonesia (such as CSIS, Center for Economic and Social Studies or CESS in Jakarta, LPEM UI, etc) that also partner with private and public institutions. The most important indicator of effectiveness of the various centers will be concrete and applicable course of action, instead of normative or subjective recommendations. Therefore these centers or think tanks need to have long-term plan in order to keep them relevant despite the changing political climate in Indonesia.

China Trip (Part 3)

2008-05-25T00:01:00.001+08:00

A friend of ours in Beijing told us that Beijing was a place for great architectural projects. Key features of the 2008 Summer Olympics area will be the main stadium (called Bird Nest; picture on the upper right) and National Aquatic Center (picture on the lower left). In Beijing Central Business District, China's state-controlled CCTV is building its new HQ (picture on lower right). And there are many other interesting architecture projects such as the new National Arts Center (picture on the upper left) and the new Terminal 3 of Beijing International Airport (which I must say is nicer than Singapore's Changi Terminal 3). Beijing is transforming itself into a city combining old heritage and contemporary architecture. It is a bold move. It is also a sign of China's ambition into the world's stage.

China Trip (Part 2)

2008-05-24T23:41:00.002+08:00

This was my first trip to Beijing. And my wife and I really enjoyed our trip there. We had been to Shanghai as well. If you are amazed by the development in Shanghai, you should also go to Beijing.

Beijing is really accelerating construction to prepare for the 2008 Summer Olympics. I was pretty amazed with Beijing's development projects in addition to projects for the 2008 Summer Olympics. Of course I went to visit historical sites in Beijing and nearby - there are plenty of these sites that you can spend at least 2-3 days alone such as Forbidden City, Temple of Heaven, Huodong area (near Huo Hai) and the Great Wall. My wife and I also went to see Beijing's Art District 798. The area will remind you of Soho New York (especially after it is fully revamped in the next 12-18 months). We also took public transports in Beijing: bus and subway. I often wonder whether Jakarta can ever get its act together to improve public transport system (unlike Jakarta, the Chinese government has the political will to carry out such infrastructure projects). My trip to Beijing reinforces my belief that China will indeed play a very critical role in world's affairs given the country's rising influence in global political, economic and cultural affairs.

China Trip (Part 1)

2008-05-20T20:24:00.000+08:00

My wife and I took a trip to Beijing, China on Monday, May 12th, 2008. Two hours before our flight departed to Beijing, I received an sms with regard to a major earthquake in China. It was not clear to us where the center of the quake. We browsed the net and read that the impact of the quake was felt as far as Bangkok, Thailand. We still decided to go. During our stay in Beijing, local media reporting focused on the earthquake and massive search and rescue operation. It was the first time, I think, that the Chinese media was very transparent with its reporting on the natural disaster. The earthquake was the strongest in China in the past 3 decades. The disaster also brought everyone together. A friend we met in Beijing who works in an entertainment industry told us that his company would have fundraising event on Sunday, May 18th. We also saw donation boxes throughout many parts of Beijing including by small business owners. Our thoughts and prayers are to the survivors and rescue team.

Jakarta Airport Floods

2008-05-10T19:03:00.001+08:00

I arrived in Jakarta airport on Thursday, May 8, 2008. As I was about to get off the plane, I got an sms from a friend that the toll road to the airport was closed due to floods. The road's leeve broke down from rising tide and the road was under water. This is at least the second time in 2008 that access to Jakarta's airport was closed due to floods. It took me about 2 hours 45 minutes to get to where I had to be in Jakarta. I also had to advise couple of clients to start leaving for airport at least 4 hours before the flight.

This condition highlights Jakarta and to large extent, Indonesia's infrastructure problem that seems to worsen year after year. The solution to Indonesia's infrastructure is not on funding or project management; it is commitment and complete resolve for total solution that consists of consistent implementation of Amdal's requirements and approval of building permits in water catchment areas near the airport. This will need bureaucracy that is not afraid to say 'no' for the benefit of the public at large.

Sovereign Wealth Funds

2008-04-06T12:41:00.000+08:00

Last week in Jakarta, I shared an idea on Indonesias sovereign wealth funds with legal practitioner and investment banker. Indonesia does not need to have separate sovereign wealth funds as the cases with Singapore, China, Middle East, etc. In fact, Indonesia already has its sovereign wealth fund (on top of its existing reserves), which is in the form of recap bonds. In 1998, the government of Indonesia spent around Rp 660 trillion (or almost US$60 billion) to recapitalize Indonesian banking sector. Almost ten years after the recap process, these banks including state-controlled Bank Mandiri and BNI as well as private banks such as Danamon, BCA, Bank Niaga, BII, etc have cleaner balance sheet and capital adequacy ratio (CAR) above requirements of Bank Indonesia. The idea is now to encourage these banks to start re-investing to real sector including through taking equity stake of Indonesian small medium enterprises (SMEs) in order to help them grow. There are investment opportunities in Indonesia in the SME sector. SMEs create jobs, not just in Jakarta, but other areas in Indonesia. To make this work, there needs to be comprehensive plan involving policymakers, banking practitioners, analysts and SME owners. This presents win-win solution to the government (that is trying to attract investment into the country), banks (lending and investment opportunities) and SMEs (source of capital for expansion, etc).

Vision, Planning and Execution

2008-03-23T11:25:00.001+08:00

I am currently reading a book, "Three Billion New Capitalists" by Clyde Prestowitz (Basics Books, 2005). The book talks about the rise of China, India and Russia - three billion-consumer markets - and their rapid development as part of globalization. Policymakers in China and India reoriented economic strategy since mid-1980s and have embraced forward-looking economic development strategy based on skilled human capital, competitive manufacturing and services-based sectors. I just wonder what happens if Indonesia's economic development strategy is also based on the notions of skilled human capital, competitive manufacturing and services-based sectors. Indonesia missed several opportunities to be able to enhance its competitiveness. It does not mean that Indonesia can't improve on its competitiveness. The country is a major supplier of energy resources with strong domestic consumption power. But Indonesia needs to address basic barriers to its growth potential - low investment in education and health and high transaction costs.

The government needs to allocate more funding for educaton and health as this is an investment for future generation. Bigger funding can happen in two areas: (1) reduce spending for national debt repayment, especially from the recapitalization of Indonesian banks and (2) increase revenue from tax. On the first point, the government and banking industry need to meet and address the issue of recapitalized bonds. Many of these banks have clean and stronger balance sheet; the government has the case to make that banks should be able to accept lower principal amount of the recap bonds. The government and Indonesian public at large took the burden to recapitalize these banks, which would have gone bankrupt. I will leave it to the experts to calculate and deal with the details. The key point is the government needs to free up funding for more critical purposes for the sake of country's long-term competitiveness and survival. It is in everyone's interest to find the best solution to the problem with recap bonds.

On the second point with regard to higher tax revenue, the focus is how can the government create a business environment that will encourage companies to expand and hire more people and in turn will result in higher productivity and broader tax base. One way to do it is through reduction or getting rid off unnecessary licenses or tariff as well non-tariff barriers to enterprise creation and development. The private sector will create jobs, not the government. The government should make it easier for setting up small businesses and reduce corporate taxes to stimulate further spending and investment. Companies should not be taxed from the beginning of production cycle; companies should be taxed after they produce goods and services. Keeping lower transaction costs in the beginning of production cycle will contribute to higher levels of output, which then can be subject to taxation. The idea is increase the size of the economy, which will in turn lead to higher tax revenue.

Can the vision of Indonesia's economy in the next 10 years be to create conducive business and investment environment in order to generate just and equal opportunities for all Indonesians? Vision is one thing; execution is critical. China and India provide an example. The two countries have different political systems, and yet they are able to pursue policies to improve competitiveness and welfare of their citizens.

Java Jazz 2008 & Creative Economy

2008-03-10T00:30:00.001+08:00

I had the chance to watch Java Jazz 2008, which was held between March 7 and 9, 2008 in Jakarta. It was a fantastic event! I saw Ron King and the great band, the Manhattan Transfer and several local jazz talents. The event succeeded in placing Indonesia on the map of world jazz music. I mentioned to couple of friends at the show about how such milestone/achievement should be leveraged to promote another Indonesia's strength - creative talent - that has positive impact to overall economic and social development. Congratulations to the organizer and the performers for great performance, and I look forward to future Indonesia/Java Jazz sessions....