The truth behind economic nationalism

The truth behind economic nationalism

Andre Sinaga ;  An Undergraduate Student at the Toronto University, Canada

Sumber :  JAKARTA POST, 26 Juni 2012

The recent implementation of several protectionist policies and an increase in government involvement in the economy have led to mixed reactions throughout the country.

Several investors and economists worry that the policies will harm Indonesia’s growth, especially at a time of global economic uncertainty. Other citizens however laud the government, believing these steps will ensure that it is Indonesians, not foreign investors and firms, who benefit from Indonesia’s natural resources.

The changes in policy seem at first to be aimed at benefiting domestic producers. These policies include restrictions on imported foodstuffs, limits on foreign ownership, and renegotiation of mining contracts in favor of domestic firms.

Another event representative of the shift toward more protectionism is the controversy over an attempted takeover of an Indonesian bank, Danamon, by Singapore’s DBS Bank.

Almost immediately, Bank Indonesia (BI) reacted by revising bank ownership regulations, delaying the takeover bid for now.

The above acts and policies are examples of economic nationalism. Economic nationalism is actions undertaken in favor of greater domestic control over a nation’s economy.

Many citizens, perhaps under the impression that it is foreign actors who are benefiting from Indonesia’s economic growth, are happy with increased economic nationalism.

Unfortunately, however, economic nationalism does much more harm than good.

Several derogatory effects on the economy, such as the implementation of trade barriers by other nations, result but the most important is the threat posed to foreign direct investment (FDI).

With foreign investors already wary due to Indonesia’s underdeveloped infrastructure and political institutions, the new acts of economic nationalism will further discourage additional inflows of FDI.

Economic nationalism tends to be arbitrary and sudden, two factors abhorred by both domestic and foreign firms.

A reduction in FDI has wide reaching effects for several reasons in addition to job creation.

First, FDI is necessary in improving the infrastructure of Indonesia. Firms tend to develop the infrastructure surrounding their factories through the creation of roads, water services, electricity, etc. in order to lower costs of production and improve efficiency.

With a government plagued by bureaucratic barriers and corrupt officials, investments by foreign firms are the only sure way of improving the nation’s infrastructure.

Certainly, investments will be centered on the firm itself, but the resulting improvement in infrastructure will also improve the lives of nearby communities.

Second, FDI brings new technologies into Indonesia. This motivates students to learn the skills necessary in order to operate the new technology, resulting in a group of globally competitive technocrats.

These technocrats will allow domestic firms to be globally competitive through their expertise but will also spur on innovation within Indonesia.

Innovation is critical in a highly competitive world and with the world shifting toward more sustainable and less fossil-fuel based technologies.

Indonesia must take the initiative through innovation in order to benefit from these changes. This in turn will lead to a reduction in unemployment as new industries are created in order to produce the new, innovative products.

Hence, one can observe that FDI is extremely beneficial. Economic nationalism only serves to hamper inflows of FDI and the government must therefore seriously reconsider their policies.

Ultimately however, the need for FDI is a direct result of the sheer ineffectiveness of the government in the field of infrastructure and innovation.

Despite being a member of the exclusive G20, Indonesia’s infrastructure is extremely undeveloped. The 2011 Doing Business Index placed Indonesia an embarrassing 161 out of 183 nations in getting electricity and 126 in getting credit.

Overall, the nation was placed 129 in “ease of doing business”, beaten by countries such as Honduras and Tanzania. With new players from Africa and Eastern Europe offering low labor costs, the current economic situation is highly competitive and Indonesia cannot afford to be limited by a lack of infrastructure in order to continue on its path of economic growth.

Innovation in Indonesia is also seriously lacking. The 2011 Global Innovation Index ranked Indonesia 99th out of 125 nations.

Unlike other state-led research departments such as Taiwan’s Industrial Technology Research Institute (ITRI), Indonesia’s various governmental research bodies have failed to create a high-tech economy, with labor-intensive manufacturing still the order of the day.

The technology necessary for high-tech manufacturing is still largely lacking in Indonesia, as illustrated by the fact that the majority of exports are commodities.

The point is that the government simply does not have the credibility to launch policies of economic nationalism. The incapacity and inefficiencies that plague public institutions beggar the imagination and have played a direct role in stifling improvements in infrastructure and encouraging innovation.

With a lack of regard for the rule of law, rampant corruption, unnecessarily complex bureaucracy and several other issues affecting public institutions, the Indonesian government to date cannot be depended upon to improve the nation’s infrastructure and encourage innovation.

Hence, whether one likes it or not, FDI is absolutely necessary for Indonesia’s economy and the long-term benefits are tremendous as highlighted above.

Policies of economic nationalism must therefore be halted immediately in order to further encourage inflows of FDI. Were the government effective in improving infrastructure and encouraging innovation, economic nationalism would not be such a major issue.

Unfortunately however, the government is galaxies away from being effective and therefore, the government should drop its current policies of economic nationalism in order to attract the foreign investment so necessary for the future of this country. ●

Lady Gaga, liberalism and Indonesia’s future

Lady Gaga, liberalism and Indonesia’s future

Andre Sinaga ; An Undergraduate Student at The University of Toronto

SUMBER :  JAKARTA POST, 28 Mei 2012

The controversy surrounding singer Lady Gaga only managed to grow as a result of her planned “Born This Way Ball” concert in Jakarta on June 3.

Protests from various organizations, individuals, and religious groups that the singer promotes homosexuality and pornography has led to uncertainty over the concert itself occurring.

At one point denied permission by Jakarta Police, the singer is now allowed to perform provided that she tones down her skimpy outfits and on-stage antics.

The fact that over 50,000 tickets have been sold for the concert clearly indicates that demand to see the singer perform is present in Jakarta, if not in the whole of the archipelago.

Thus, there is a market pull to see Lady Gaga. But her songs’ controversial themes and on-stage outfits, both of which are considered by many to be wholly against Indonesian culture, has also led to a societal push, in which many desire to shove the singer as far away from Indonesia as possible, lest the young be contaminated with her behavior.

Frankly, I believe that Lady Gaga’s often quoted self-description as a “moral crusader”, advocating the cause of persecuted lesbians, gays, bisexuals, and transgender (LGBTs), is not the whole truth.

Why must she wear skimpy outfits and perform simulated sex acts in her videos if her intention is to advocate support for LGBTs and other oppressed individuals?

While I am not suggesting that her intention to advocate for LGBTs is used as an advertising ploy, Lady Gaga is not above taking off clothes in order to make money in the cut-throat music world.

On this, I support those in Jakarta protesting her visit and demanding that she tone down her appearance and antics should her Jakarta concert proceed.

If her intention is to advocate support for LGBTs — which I agree is still a taboo issue that must be brought to light in Indonesia — then there should be no argument in toning down her appearance and on-stage antics.

Besides, her songs themselves are pretty good and should be enough to make a fantastic concert.

But that is not the point. The Lady Gaga controversy is just one of many incidents in Indonesia and many parts of the world in which the often liberal forces of a market pull are pitted against the often conservative forces of societal push.

Interactions between these two poles do not always lead to aggression. Sometimes, one gives way to another or an accepted balance is reached between the two.

But often, they are fundamentally opposed to one another and can cause several issues, the most extreme of which is violence.

Furthermore, conflict and tension between these two poles are inevitable in Indonesia’s case. As the nation adopts more and more liberal policies in order to be economically competitive, new sources of tension will arise between market pull and societal push.

Consider the case of Lady Gaga’s concert. Here, liberal market policies of globalization and free trade have led to imported goods from the West, in this case Lady Gaga and her songs, performances or videos, in exchange for Indonesian exports.

Numerically sound for economic growth, as her concert will surely invite future tourists into the country, Lady Gaga is yet shunned by many Indonesians who see her as promoting values and norms fundamentally opposed to Indonesian culture.

The question now is how to deal with this inevitable tension between market pull and societal push. Many theories are present that deal with this issue.

One of them is called “modernization theory”, which states that as a nation experiencing economic growth and getting “rich”, it is inevitable that citizens will adopt secular, liberal democracy as a form of governance.

With Indonesia being praised by many as a model secular democratic state in a predominantly Muslim society, will the nation also be liberal in the future? Will Indonesia produce its own Lady Gaga in 2020?

This is clearly a highly sensitive issue. The term “liberal” here refers to an ideology in which everyone is equal irrespective of race, ethnicity, gender, income bracket, etc.

Policies biased towards a religious value such as heterosexuality are, for example, eliminated in favor of accepting any type of marriage.

Again, this is an extreme example of what liberalism can lead to but it is one outcome.

As an Indonesian who has lived abroad for many years and is currently studying in Canada — a liberal society — for my university degree, I must say that liberalism can be, well, liberating.

The notion that we are all equal irrespective of any distinction destroys barriers to friendships and encourages acceptance and compromise between two opposing parties.

But there were many times where I felt challenged and disturbed by liberalism.

The liberalism which I experienced meant that barriers that preserve the social norms and values which I was brought up in with were non-existent. At many times, liberalism seemed to me like an “anything goes” mentality.

What is required is a dialogue in one form or another that achieves a balance between liberal forces of market pull and the conservative forces of societal push in Indonesia.

This can be achieved in several ways, such as discussions between the government and the public on policies through open forums and town-hall-style meetings, civil protests to reflect disapproval and a heavier emphasis on voting to ensure that parliamentary members listen to their constituents.

None of these recommendations are easy, short-term solutions. They lead to several other necessary reforms. such as more rigorous application of checks and balances and the rule of law. But these are just the technical details.

The point is that rigorous dialogue between the forces of market pull and societal push must be ensured to preserve a healthy Indonesian future for all.

Hence, violent rhetoric and demagoguery, of which we have heard in the Lady Gaga controversy, are counter-productive, abhorrent and should be shunned from Indonesian society.

Lady Gaga’s concert can be a useful catalyst to stimulate these dialogues. The mass presence of debates and discussions among individuals about Lady Gaga indicate an Indonesian society keen for dialogue in order to achieve a consensus. We must always ensure that the forces of dialogue and reasoning trump those of violence and demagoguery in order to ensure a healthy Indonesian future. ●