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Ada Pertanyaan? Hubungi Kami
Photo by: ASEAN Secretariat
Nadia Maharani, Nanda Narendra
The Association of Southeast Asian Nations (ASEAN) established the ASEAN Economic Community (AEC), with the ultimate goal of its member nations becoming a single market and production base. The AEC will allow for the free flow of goods, services, investment, capital, and skilled labor throughout the region with the intention of making ASEAN member nations more dynamic and competitive.
However Executive Director Hendri Saparini of the Center for Economic Reform (CORE) is concerned about the nation’s preparedness for this new free-market zone, which is due to come into force at the end of the year. Compared with other ASEAN nations such as Malaysia, which is focusing its energies on strengthening its medical and tourism sectors, or the Philippines, which is working on its education and tourism sectors, Indonesia lacks a clear strategy regarding which sectors it should be focusing on with an eye towards being able to compete in the new-free trade area.
At a seminar held on Thursday at the Perbanas Institute, Kusumaningtuti Soetiono, representing the Financial Services Authority (OJK) Board of Commissioners for Consumer Education and Protection, moved to reassure the public that Indonesia possesses a number of strengths that it could focus on in order to meet the challenges posed by the AEC head on.
“Let’s take a look at what exactly is going to happen at the end of the year. There will be a free-flow of movement in five specific areas: goods, services, investment, skilled labor, and capital. And in relation to financial services, I will be focusing more on service flows,” stated Mrs. Soetiono.
Mrs. Soetiono suggested three areas in which the nation could gain a competitive edge, namely the economic, geographic and investment sectors. According to Soetiono, these three sectors are worth promoting and working on as the country faces the new AEC free market,
Referring to the economic sector, Mrs. Soetiono stated that Indonesia was the leading ASEAN country with regard to its gross domestic product (GDP).
“Indonesia’s GDP is the highest of the 10 ASEAN member states. In 2014, for instance, the nation’s GDP reached USD 888 million. Our GDP growth has also been quite high and reached 6.5 percent in 2011, despite it subsequently dropping to a mere 4.67 percent in 2015,” Mrs. Soetiono explained.
According to Mrs. Soetiono, the second strength that the nation should focus on is its geography. Not only is Indonesia the largest country in the ASEAN region, but the country’s population is also the highest, at 251 million.
The third sector that could lend Indonesia a competitive edge when the AEC era gets underway is its economic sector, and economic investment in particular. According to a 2014 World Investment report, Indonesia is the third most-visited country with regard to its economy after China and the US. Furthermore, the nation also ranked first as the go-to country to invest in.
In spite of these three competitive areas however, there are also a number of challenges that the nation will have to face when the AEC is implemented. These challenges include per capita GDP, the country's current-account deficit, and high inflation.
As previously mentioned, Indonesia is the highest-ranking country with regard to its gross domestic product, however if the country's GDP is viewed from a per capita angle, then it is clearly inferior to that of other ASEAN members. Indeed, with its huge population of 250 million, Indonesia’s per capita GDP is currently a mere USD 3,600, far below that of Malaysia.
“Indonesia’s GDP was ranked 16th at the G-20, which means that it ranked first amongst its neighboring ASEAN members. If looked at on a per capita basis though, a population of 251 million means that we have only reached a level of USD 3,600 per year. Meanwhile, Singapore is currently at USD 60,000 of per capita GDP, Brunei Darussalam is at USD 36,000 of per capita GDP, and Malaysia has almost reached USD 11,000 of per capita GDP, with its population of only 29 million,” explained Mrs. Soetiono.
A second challenge lies in the nation’s current-account deficit. Amongst the 10 ASEAN members, Indonesia is the only country that is currently running a negative deficit (of -2.95 percent). Despite this unpromising picture however, Mrs. Soetiono is optimistic that things will improve in the future, due to the progress that the country is making with regard to reducing its deficit.
“The current account deficit among all ASEAN members, aside from Indonesia, is positive. Our current account deficit remains negative however, despite its steady decrease over the last few years. The deficit is currently tightening and sits at -2.95 percent,” stated Mrs. Soetiono.
The final challenge that Indonesia will have to face is that of high inflation in comparison with that of other ASEAN member states. According to Mrs. Soetiono, one of the primary causes of the current high inflation rate is the country's purchasing power when set besides that of other ASEAN countries. Furthermore, there are other economic challenges that need to be faced according to Soetiono, such as interest rates, the exchange rate, lending, and financial policy in general.
“Our buying power here is the largest in comparison with other ASEAN members, however our competitiveness is currently being challenged,” concluded Mrs. Soetiono.
(sp)
Photo by: ASEAN Secretariat
Nadia Maharani, Nanda Narendra
The Association of Southeast Asian Nations (ASEAN) established the ASEAN Economic Community (AEC), with the ultimate goal of its member nations becoming a single market and production base. The AEC will allow for the free flow of goods, services, investment, capital, and skilled labor throughout the region with the intention of making ASEAN member nations more dynamic and competitive.
However Executive Director Hendri Saparini of the Center for Economic Reform (CORE) is concerned about the nation’s preparedness for this new free-market zone, which is due to come into force at the end of the year. Compared with other ASEAN nations such as Malaysia, which is focusing its energies on strengthening its medical and tourism sectors, or the Philippines, which is working on its education and tourism sectors, Indonesia lacks a clear strategy regarding which sectors it should be focusing on with an eye towards being able to compete in the new-free trade area.
At a seminar held on Thursday at the Perbanas Institute, Kusumaningtuti Soetiono, representing the Financial Services Authority (OJK) Board of Commissioners for Consumer Education and Protection, moved to reassure the public that Indonesia possesses a number of strengths that it could focus on in order to meet the challenges posed by the AEC head on.
“Let’s take a look at what exactly is going to happen at the end of the year. There will be a free-flow of movement in five specific areas: goods, services, investment, skilled labor, and capital. And in relation to financial services, I will be focusing more on service flows,” stated Mrs. Soetiono.
Mrs. Soetiono suggested three areas in which the nation could gain a competitive edge, namely the economic, geographic and investment sectors. According to Soetiono, these three sectors are worth promoting and working on as the country faces the new AEC free market,
Referring to the economic sector, Mrs. Soetiono stated that Indonesia was the leading ASEAN country with regard to its gross domestic product (GDP).
“Indonesia’s GDP is the highest of the 10 ASEAN member states. In 2014, for instance, the nation’s GDP reached USD 888 million. Our GDP growth has also been quite high and reached 6.5 percent in 2011, despite it subsequently dropping to a mere 4.67 percent in 2015,” Mrs. Soetiono explained.
According to Mrs. Soetiono, the second strength that the nation should focus on is its geography. Not only is Indonesia the largest country in the ASEAN region, but the country’s population is also the highest, at 251 million.
The third sector that could lend Indonesia a competitive edge when the AEC era gets underway is its economic sector, and economic investment in particular. According to a 2014 World Investment report, Indonesia is the third most-visited country with regard to its economy after China and the US. Furthermore, the nation also ranked first as the go-to country to invest in.
In spite of these three competitive areas however, there are also a number of challenges that the nation will have to face when the AEC is implemented. These challenges include per capita GDP, the country's current-account deficit, and high inflation.
As previously mentioned, Indonesia is the highest-ranking country with regard to its gross domestic product, however if the country's GDP is viewed from a per capita angle, then it is clearly inferior to that of other ASEAN members. Indeed, with its huge population of 250 million, Indonesia’s per capita GDP is currently a mere USD 3,600, far below that of Malaysia.
“Indonesia’s GDP was ranked 16th at the G-20, which means that it ranked first amongst its neighboring ASEAN members. If looked at on a per capita basis though, a population of 251 million means that we have only reached a level of USD 3,600 per year. Meanwhile, Singapore is currently at USD 60,000 of per capita GDP, Brunei Darussalam is at USD 36,000 of per capita GDP, and Malaysia has almost reached USD 11,000 of per capita GDP, with its population of only 29 million,” explained Mrs. Soetiono.
A second challenge lies in the nation’s current-account deficit. Amongst the 10 ASEAN members, Indonesia is the only country that is currently running a negative deficit (of -2.95 percent). Despite this unpromising picture however, Mrs. Soetiono is optimistic that things will improve in the future, due to the progress that the country is making with regard to reducing its deficit.
“The current account deficit among all ASEAN members, aside from Indonesia, is positive. Our current account deficit remains negative however, despite its steady decrease over the last few years. The deficit is currently tightening and sits at -2.95 percent,” stated Mrs. Soetiono.
The final challenge that Indonesia will have to face is that of high inflation in comparison with that of other ASEAN member states. According to Mrs. Soetiono, one of the primary causes of the current high inflation rate is the country's purchasing power when set besides that of other ASEAN countries. Furthermore, there are other economic challenges that need to be faced according to Soetiono, such as interest rates, the exchange rate, lending, and financial policy in general.
“Our buying power here is the largest in comparison with other ASEAN members, however our competitiveness is currently being challenged,” concluded Mrs. Soetiono.
(sp)