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Theme: Indonesia and The Future of ASEAN

Maximizing the World Economic Power Shift


By Callistasia Anggun Wijaya

The recession in America and the economic turbulence in European Union (EU) which are still ongoing right now (without the sign of refinement) brought the global enigma about future. US, EU and Japan which were called as Safe Haven could not do much in releasing themselves from financial problem. It induced many countries which had depended on them as traditional export market to find the other trading partners. Joseph E. Stiglitz, Nobel laureates in economics said that this crisis is a sign of shift in global economic power. Two Asian giants such as China and India plus Russia and Brazil (BRIC) are predicted to be the next world leader, substituting US, EU, and Japan.1 Looking it with the perspective of Asian, this crisis could bring the stepping-stone of Asian countries to catch their progress in economy, especially ASEAN countries. Several key ASEAN economies will grow faster than the rest of Asia over the next five years. GDP growth in Vietnam (7 percent), Indonesia (6 percent), and Malaysia (5 percent) will be notably faster than in the established markets of Japan (2 percent) and Australia (3 percent). 2 Indonesia as an Emerging Power President Susilo Bambang Yudhoyono said that Indonesias economic growth in the last quarter of 2011 reached the point of 6.5 percent which showed the highest rank of economic growth among the other ASEAN countries. Furthermore, in 2011, Indonesias inflation was the lowest among the other countries in Asia-Pacific3. It was such an enormous achievement during the global crisis. It can be concluded that the global recession did not really interfered the economy stability in Indonesia because it depends not only to US or EU countries but also Asian countries like China
1

Tim Edisi Outlook Ekonomi 2012, Taman Surga Dengan Sejumlah Syarat, Majalah Tempo edisi 12-18 Reet Chaudhuri, Vinayak HV, and Jean-Marc Poullet, Capturing the investment-banking opportunity in

Desember 2012, hlm. 62-63


2

ASEAN, Mckinseyquarterly, diakses dari http://www.mckinseyquarterly.com/Capturing_the_investment_banking_opportunity_in_ASEAN_2763, pada tanggal 4 Januari 2012 pukul 16.10
3

Pertumbuhan ekonomi Indonesia tertinggi di ASEAN, diakses dari

http://www.antaranews.com/berita/291212/pertumbuhan-ekonomi-indonesia-tertinggi-di-asean, pada tanggal 4 Januari 2012 pukul 16.30

and India. As an example, director of Aneka Tambang, Alwinsyah Lubis and Abrun Abubakar, secretary of PT Timah stated that the main export destination of Indonesian mining is Asia-Pacific, India, Japan and South Korea.4 It supports the Indonesian economy resistance. Not only mining, the export of palm oil is also directed to giant of Asia. Indonesia, as a largest palm oil producing country, sold 30 percent to India , 12 percent to China, 17 percent to Europe and the rest for the other countries.5 It shows that Indonesias market could survive even if the US and Europe are in trouble. The two areas, from the example above, which brought large revenue to Indonesia, seem to be in a sustainable condition. This stable condition could be seen as a blessing for Indonesia itself because it can allure the investors attention. Moreover, Fitch Ratings also stated that Indonesia has been achieved the status of investment grade. This is such a big opportunity for Indonesia to welcome many investors in it. The huge quantity of Indonesia citizens, rich natural resources and stable economy condition could be seen as plus points that are searched by investors. If the investments are flourishing in Indonesia, the economy position of Indonesia could be strengthened. As an effect, the prosperity of citizens could be improved. The ideal circumstance that could be portrayed is the enhancement of people living standard where citizens who live in low class could become people in middle class. Cooperation in ASEAN is a Key ASEAN countries are now seen as potential field for global investment. To make the effective improvement for each economic field, the cooperation among them has to be uplifted. As an implementation of Bali Concord III which second pillar to enhance the economy in ASEAN, all the ASEAN members have to put extra concern in trade relations, especially AFTA. In 2011, utilization of AFTA was increasing 373 percent.6 It showed how effective AFTA for ASEAN members is. AFTA will fulfill the need of investment in ASEAN countries which can stimulate the power of ASEAN to rise. Indeed, there are still a lot of works to do for ASEAN members to reach that goal. Improvement of infrastructure, such as roads, ports and power plans should be considered by all

Tim Edisi Outlook Ekonomi 2012, op.cit., hlm. 84-86 Tim Edisi Outlook Ekonomi 2012, loc.cit. Pemanfaatan AFTA Naik 373 Persen, diakses dari

http://bisniskeuangan.kompas.com/read/2011/07/06/04134968/Pemanfaatan.AFTA.Naik.373.Persen, pada tanggal 4 Januari 2012 pukul 20.10 http://bisniskeuangan.kompas.com/read/2011/07/06/04134968/Pemanfaatan.AFTA.Naik.373.Persen, pada tanggal 4 Januari 2012 pukul 20.10

the ASEAN members to create the convenience for investment. Every country also has to create the market regulation which does not bring any complexity for investors. In Indonesia, the improvement of infrastructure is so crucial. Report from Tempo Magazine showed the slow construction of roads, port, power plant and airport in many cities of Indonesia. It could be the stumbling block of Indonesia to attract the investors attention. Additionally, ASEAN members also have to put concern in high-cost economy. It will be very influential for investment. As an example to get the electricity in Indonesia, investors should wait for 108 days while in Singapore, it only takes 36 days. Logistic cost in Indonesia is almost twice higher from Malaysia.7 This kind of thing could hamper the investment in Indonesia and even ASEAN countries. All the members also have to learn from each other in peace. For example, Indonesia can learn about technology and efficiency from Singapore. Then, Indonesia can gain knowledge about effective rice-planting technique from Thailand and Vietnam. Thus, the relationship in here is not only about theory but also a real relationship which can enrich the quality of each country in every part. If Indonesia and the ASEAN members can do self-improvement within their country, the future of ASEAN will be bright. Looking at the potential from ASEAN countries, it is not impossible for them to be the emerging power if they are ready to compete with the other countries.

Tim Edisi Outlook Ekonomi 2012, loc.cit.