8 01 2009 With abundant natural resources, 230 million population, and a strategic geo-economic position, Indonesia which has been independent more than 63 years should have become a developed and prosperous nation. Unfortunately, up until now Indonesia is still a developing nation with high unemployment and poverty and a declining competitiveness. If we fail to anticipate the repercussion of the on going global financial crisis, the country’s economy would even worsened in the years to come.
Many
factors have been affecting Indonesia’s poor development achievements,
from bad governance, an abusive political and legal system, to a lack of
technological capacity. However, one of the most determining factors is
inappropriate economic development policies which fail to develop the
country’s competitive advantages that can create a sustainable economic
growth and provide large employment opportunities. Most of our leading
industries developed since New Order Government, such as textile,
electronics, automotive, pulp and paper, and agroindustry are in essence
a foot-lose industry with a high import content. About 90% of
Indonesian industries so far rely heavily (more than 70 per cent) on
imported raw materials and technologies.
It is
therefore timely for Indonesia to boost competitive advantages based
upon its comparative advantages. As a resource rich country, our main
comparative advantages are actually in the form of resource-based
industries (RBI’s) which include agriculture, forestry, fisheries and
ocean resources, biotechnology, energy and mineral resources, tourism,
and non-conventional resources that include among others hydrate gas,
deep sea water industries, bioenergy from marine algae, pharmaceutical
products from aquatic organisms, wave energy, tidal energy, and OTEC
(Ocean Thermal Energy Conversion).
There are seven main reasons that support RBI’s as a competitive advantage of Indonesia. First, the growing population of both Indonesia and the world, predicted to reach 300 million and 7.5 billion
people respectively by 2030, will dramatically increase demand for
food, energy, pharmaceutical products, timber, pulp and paper, mines and
minerals, other natural resources and environmental services. Second, as major portion of natural
ecosystems (e.g. forests, lakes, rivers, and coastal zones) and
agricultural lands in almost all developed countries have been converted
into housing, industrial zones, cities, roads, harbors, airports, and
other infrastructures, the capacity of those countries in producing
natural resources and their derivative products is decreasing. Third, RBI’s generate large forward- and backward-linkage industries, and thereby creates much bigger multiplier effects. Fourth,
all RBI’s provide much bigger employment opportunities than other
industries (economic sectors). One per cent of economic growth generated
by RBI’s can absorb as many as 500,000 workers, while financial or
non-tradable sectors provide only for about 40,000 workers (Bappenas, 2007). Fifth,
since almost all RBI’s activities located in rural areas, coastal
zones, small islands, and outside Java and Bali, development of RBI’s
should create growth and prosperity centers throughout the archipelago.
At the same time, such a balance economic development will automatically
resolve a chronic national problem which is a skewed development
intensity and population distribution between Java and outer islands,
and between urban and rural areas. This in turn will increase economic
efficiency and productivity of the country, and strengthen the national
unity. Sixth, more efficient and productive
RBI’s will be able to improve purchasing power and welfare of the RBI’s
owners, employees, and stakeholders that make up about 70% of Indonesian
total workers. These roughly 70 million prosperous Indonesians who work
in RBI’s and their upstream and downstream industries as well as
related services will need more housing, clothing, medicines, household
equipments, radio, TV sets, electronic equipments, computers,
automobiles, and other consumer goods. This means strong and growing
RBI’s will also strengthen and develop other industries such as chemical
industries, cement factories, electronics, automobiles, and ICT
(Information and Communication Technology). Lastly,
most RBI’s are based on the utilization of renewable resources and
environmental services. Thus, if we apply environmentally friendly
development principles in managing RBI’s development, then it ensures
Indonesian sustainable development.
The
question is then why RBI’s have by far not been able to promote
Indonesia become a developed and prosperous nation. In the first place,
because we have not applied appropriate and state of the art technology
in production (extraction), handling and processing (manufacturing), and
marketing activities of most RBI’s. More than 70% of our
farmers and fishermen are traditional with a lack of technological
capability. The way our traditional farmers and fishermen producing
agricultural commodities and catching fish still depends heavily on the
whim of nature such as weather conditions, rainy and dry seasons, soil
properties, and fluctuation of fish population. As a result, the
production of agricultural commodities and other renewable resources is
far from efficient, productive, and reliable. In addition, frequent
shortages of fertilizers and other production inputs as well as a lack
of irrigation system, roads, electricity, telecommunication networks,
and other infrastructures in most of rural areas and outer Islands have
hampered efficiency, productivity, and sustainability of our agriculture
and other renewable resource-based sectors including aquaculture,
capture fisheries, animal husbandry, and forestry. Majority of our
traditional farmers and fishermen have not been able to meet economy of
scale of their business, so that their products are generally only
enough for their subsistence, not generating sufficient profit for their
prosperity. For example, the economy of scale of rice field business in
Java is 2 ha, while the current average of land ownership is only 0.4
ha per farmer with a tendency of decreasing. This partly explains why
most farmers in Java are getting poorer over time.
Underdevelopment
of handling and processing technology (downstream industries), and
storage and distribution system has resulted in roughly 20% product loss
during post harvest, less added values, and inability to supply
agricultural products and other renewable resources which meet quality
standards, competitive price, and supply sustainability required by both
domestic and global markets. A lack of an integrated approach which put
together production, processing, and marketing aspects into one
business system has also aggravated the poor performance of most RBI’s
in the country.
Besides wasting our foreign exchange, legally and illegally
imported subsidized agricultural commodities such as rice, wheat, corn,
soybean, sugar, fruits, vegetables, cows, and milk from China,
Thailand, Vietnam, USA, Australia, and other countries has also
paralyzed Indonesian farmers competitiveness who receive no or very
small subsidy. Moreover, illegal logging, illegal fishing, illegal
mining, smuggling, and other illegal economic activities have not only
resulted in the state financial loss as much as US$ 50 billions annually
but also reducing our RBI’s competitiveness. Contract agreements with
multinational corporations in oil and gas as well as other mining
businesses have benefited them more than to the nation. Last but not
least, state budget and credits allocated for RBI’s has been relatively
very small.
In conclusion, as a nation we must have a vision that by 2030 “Indonesia shall be a developed, just, and prosperous nation through sustainable RBI’s development”.
Based upon such a vision, the mission of RBI’s development is: (1) to
make RBI’s as a major source of the country’s sustainable economic
growth, (2) to produce highly competitive natural resources and their
downstream products to meet the ever increasing domestic demand and for
significant exports, (3) to distribute economic benefits of RBI’s
development fairly to all Indonesian people, and (4) to maintain
carrying capacity and quality of natural ecosystems including their
embodied natural resources to ensure RBI’s development taking place on a
sustainable fashion.
To
materialize such vision and mission, we have to apply appropriate
sciences and technology in all management chains of RBI’s including
production, handling and processing, distribution and marketing on an
integrated business system basis. In order to increase added values,
competitiveness, create more jobs, and generate larger multiplier
effects, we have to strengthen and develop down stream industries of
natural resources. Biotechnology that includes genetic engineering,
bioremediation, and extraction of natural products (bioactive
substances) from biota and microorganisms for food and beverages,
pharmaceutical products, and various other industries should also be
boosted on an environmentally sustainable manner. Quality
seeds, feed, fertilizers, and other production inputs should be
available any time at a reasonable price for farmers, fishermen, and
other producers of renewable resources throughout the archipelago. We
must improve existing irrigation system, road, electricity,
telecommunication networks, fishing ports, harbors, airports, and other
infrastructures and simultaneously develop new ones according to local
and regional needs. Supporting industries for RBI’s such as agricultural
machineries and equipments, fishing gears, boat engines, pedal wheels
for brackishwater ponds, cold storages, shipyards and dockyards, mining
and energy machineries and equipments, coastal and ocean engineering and
construction, and ICT technology should also be strengthened and
developed.
We have
to protect productive agricultural lands, plantation, forest,
aquaculture, fishing grounds, and other renewable resource systems from
conversion into other land uses, pollution, and other forms of
environmental degradation. This can be done by implementing stringent
spatial planning, pollution control, conservation of biodiversity,
mitigation of natural hazards (e.g. tsunamis, landslides, earthquakes,
storms, and floods), and rehabilitation of damaged natural ecosystems.
Government
and private sector must working synergistically to protect domestic
market from illegal and excessive imported agricultural commodities and
other natural resources that may undermine competitiveness of our
farmers and other producers of natural resources. At the same time, we have to boost domestic market, and strengthen
and diversify export markets. By doing so, we facilitate national
producers, processors, and packers of natural resource-based products to
be able to sell their commodities and products at any quantity and any
time with an economically profitable price. Illegal logging, illegal
fishing, illegal mining, and other illegal economic activities should be
immediately and thoroughly eradicated.
Access to
credits, technology, information, and other productive economic assets
should be made easier for individual farmers and fishermen,
cooperatives, national companies, traders, and other stakeholders
involved in RBI’s business and development. Investment
climate including procedures for obtaining business license, land
clearing, policy consistency, and business safety and security should be
more conducive and attractive for both domestic and foreign investors.
Monetary and fiscal policies must also be conducive for the flourishing
of RBI’s development. Last but certainly not least, is manpower
development through well planned education, training, and supervision
programs according to RBI’s development needs. Likewise is research and
development programs for strengthening existing technology and
developing new technology to make our RBI’s always in the competitive
edge.
It is
strongly believed that by implementing such a vision and roadmap of
RBI’s development, Indonesia will not only be able to alleviate chronic
national problems of high unemployment and poverty but also capable of
becoming self-sufficient and the largest exporters of food, energy,
mines and minerals, and other natural resources and their downstream
products on a sustainable basis. More than that, Indonesia shall be
joining Brazil, Russia, India, and China which have been predicted to be
new economic powers of the world by 2030.
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