indonesia economic update

dadang-solihin.blogspot.com 2

Name : Dr. Dadang Solihin, SE, MAPlace of Birth : Bandung, 6 November 1961Campus : Darma Persada University Jln Radin Inten II (TerusanCampus : Darma Persada University, Jln. Radin Inten II (Terusan

Casablanca) Pondok Kelapa – Jakarta 13450Office Ph/Fax : +6221 864 9057C ll Ph +6281 2932 2202Cell Phone : +6281 2932 2202PIN BB : 277878F0Email : dadangsol@yahoo.comWebsite : dadang-solihin.blogspot.comJapan Experience

: 1. Regional Development and Planning Training Course, JICA, Sapporo, Hokkaido, 1999Experience

2. Local Government Administration Training Course, JICA, Higashihiroshima, Hiroshima, 2001

3. International Symposium on Intergovernmental Transfers in Asian Countries, Hitotsubashi University, Tokyo, 2001

4 A i P f G d S h l f A i P ifi S di4. Assistant Professor at Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, 2004

5. Assistant Professor at Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, 2005

6 Assistant Professor at Graduate School of Asia Pacific Studies6. Assistant Professor at Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, 2006

7. Assistant Professor at Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, 2007

8 Assistant Visiting Professor on Public Administration National8. Assistant Visiting Professor on Public Administration, National Graduate Institute for Policy Studies (GRIPS), Tokyo 2012

OutlineOutlineOutlineOutline• Remarkable Indonesia• Regional Economic Performance• Post Crisis Economic Performance• Persistent Disparity Amidst High

Economic Growth• Master Plan to Accelerate Economic

Growth (MP3EI) and Poverty Reduction (MP3KI)(MP3KI)

• Political Update

Sources:Sources: 1. Ginandjar Kartasasmita (2012)2. Investment Coordinating Board (2012)g ( )

United Nations Conference on Trade and Development (UNCTAD):

Regional Economic PerformanceRegional Economic Performanceeg o a co o c e o a ceeg o a co o c e o a ceMajor Regions (yoy,%)Major Regions (yoy,%) ASEAN (yoy,%)ASEAN (yoy,%)(y y, )(y y, )

2 9 4,02 7 2 94,0% yoy 16%, yoy2,9 1,82,5 2,02,7 1,7 2,92,04,0 121416 2009 20102011* 2012*-0,7-2,00,0 810-2,6 -4,1-6,0-4,0246

-6,3-8,0 US Europe Japan -20 Indonesia Singapore Malaysia Thailand Phillipinap p2009 2010 2011* 2012**ProjectionSource: WEO, IMF Juni 2011

-4*ProjectionSource: WEO, IMF Juni 2011

GDP Gro thGDP Gro thGDP GrowthGDP Growth

Wh I d iWh I d i ii M R ili t?M R ili t?Why Indonesia Why Indonesia iis More Resilient?s More Resilient?

• Measures taken in 1998/1999 not only to overcome the ycrises

• but also to better prepare the i t f teconomy against future

(external) economic shocks, establishing safetyestablishing safety mechanism and crisis protocol.

E port to GDP RatioE port to GDP Ratio1/21/2

Export to GDP RatioExport to GDP Ratio

4540.8

31.029.4

29.930

24.1 24.626.425

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Export to GDP RatioExport to GDP Ratio 22/2/2Export to GDP RatioExport to GDP RatioCompared Compared tto Other Regional Countrieso Other Regional Countries

Malaysia Philippines Singapore Thailand Korea Taiwan Hong KongAsian Countries

2006 116.5 47.5 234.4 73.7 39.7 68.0 205.2

2007 110.1 42.9 218.9 73.3 41.9 72.0 207.9

2008 103.0 37.2 233.4 76.4 53.0 73.0 212.4

2009 96.2 32.4 199.9 68.3 49.8 62.3 194.5

2010 97.4 35.0 211.1 71.3 52.4 73.6 222.9

I d i ’ E t D ti tiI d i ’ E t D ti tiIndonesia’s Export DestinationIndonesia’s Export Destination

E portE portExport Export

R piah Mo ementR piah Mo ementRupiah MovementRupiah Movement

Fiscal Deficit (%)Fiscal Deficit (%)Fiscal Deficit (%)Fiscal Deficit (%)

Debt ProfileDebt Profile(% GDP)(Trillion Rp)

Debt ProfileDebt Profile47%

39%35% 40%

35%33%

28%26% 25% 24%

22% 25%

655 609 652853 754 774 779 824 807 808

22%20%

659 693 737 784 836 902 1,034 1,134 1,205 1,221

655 609 652

0%02005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Domestic Foreign % GDP (right)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014GDP 2,774 3,339 3,957 4,954 5,613 6,423 7,227 8,120 9,123 10,278Total Debt 1,313 1,302 1,389 1,637 1,590 1,677 1,813 1,958 2,012 2,029

Debt Debt tto GDP Ratio o GDP Ratio iin Selected Countries (2009)n Selected Countries (2009)

PRC = People’s Republic of China, UK = United Kingdom, US = United States.1Daily stock price indexes of combined Shanghai and Shenzhen composites, weighted by respective market capitalizationsSource: ADB, 2011

33dadang-solihin.blogspot.com

National Currency ReserveNational Currency ReserveNational Currency ReserveNational Currency Reserve

Net International Reserves

InflationInflationInflationInflation

Source: BPSdadang-solihin.blogspot.com 35

Source: BPS

PovertyPovertyPovertyPoverty

Unemplo mentUnemplo mentUnemploymentUnemployment

Rising Gini RatioRising Gini RatioRising Gini RatioRising Gini Ratio

Regional DisparityRegional DisparityRegional DisparityRegional Disparity31.9 32.0

16 917.518.819.619.7

21.223.0

8.5 8.5 8.6 8.7 9.0 9.210.310.711.3

13.914.214.214.615.815.816.116.9

3.7 4.25.3 5.8 6.3 6.6 6.8 7.4

S La Be Go

Western vs Eastern IndonesiaWestern vs Eastern IndonesiaWestern vs Eastern IndonesiaWestern vs Eastern Indonesia% RGDP 1980 1990 2000 2010

WI 80 84 83 82

EI 20 16 17 18

% Population 1980 1990 2000 2010

WI 83 82 81 80WI 83 82 81 80

EI 17 18 19 20

GiniCoefficient 2007 2008 2009 2010

WI 0.33 0.31 0.32 0.35

Western Indonesia: Aceh, Sumut, Sumbar, Riau, Kepri, Jambi, Sumsel, Babel, Bengkulu, Lampung, DKI,

WI 0.33 0.31 0.32 0.35

EI 0.34 0.33 0.34 0.38

, , , , p , , , , g , p g, ,Jabar, Banten, Jateng, DIY, Jatim, BaliEastern Indonesia: Kalbar, Kalteng, Kalsel, Kaltim, Sulut, Gorontalo, Sulteng, Sulsel, Sultra, Sulbar, NTB, NTT, Maluku, Malut, Papua, Papua Barat

Open Unemployment Open Unemployment aandndUnderUnder--employment (2005employment (2005--2010)2010)

2005 2010Open Unemployment (Not Working) 11,9 Million (11,2%) 8,3 Million (7.1%)

Under-employment (Working Less than 35 Hours/Week) 28 9 Million (30 8%) 33 3 Million (30 7%)Under employment (Working Less than 35 Hours/Week) 28,9 Million (30,8%) 33,3 Million (30.7%)

OPEN UNEMPLOYMENT AND UNDER

33,311,9

OPEN UNEMPLOYMENT AND UNDER2001 - 2010

30,431,1

9,910,3

10,09,4

28,929,2

28,9 29,18,0

9,08,3

OPE2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UNDER-EMPLOYMENT OPEN EMPLOYMENT

Unemployment by AgeUnemployment by Agep y y gp y y g3.500.000

Age 15-243.000.000

Age 15-24 Years %

2007 (Ø) 352.500.000

31%29%

2008 (Ø) 292009 (Ø) 28

1 500 000

2.000.000

15 -19

29%2010 (Ø) 29

1.000.000

1.500.000 UN 19

20 -2425 -2930 -

Ø = Average February and August

500.000

3435 -3940 -4445 -

-2007 2008 2009 2010 2011 *)

4950 -54

Imbalance Economic Imbalance Economic aandndEmployment StructuresEmployment StructuresEmployment StructuresEmployment Structures

ECONOMIC STRUCTURE2010

EMPLOYMENT STRUCTUREFebruary 2011

Mining (11,15%)

Agriculture (15,34%)

Transportation (6,50%)

Finance (7,21%)

Services (10,19%)

Agriculture (38,17%)Transportation (5,02%)Finance (1,85%)

Social Services (15,30%)

Manufacturing (24,82%)

Trading (13,72%)

C t ti (10 29%)

Mining (1,22%)

M f t i (12 31%)

Trading (20,88%)

Construction (5,02%)

Unemployed

g ( , )Construction(10,29%)

Electricity(0,78%)

Manufacturing (12,31%)Construction (5,02%)Electricity, gas, water (0,23%)

Unemployed7%

Manufacturing/Industry

Others15%

Agriculture72%

Poor Householddadang-solihin.blogspot.com 44

Poor Household

Imbalance Imbalance iin Land Available n Land Available ffor or Farming Households (%)Farming Households (%)

GINI RATIOGINI RATIO 0.562HouseholdsLand

Source: BPS

Tradables and Non Tradables Tradables and Non Tradables i GDP 2001i GDP 2001 2010 (%)2010 (%)in GDP 2001in GDP 2001--2010 (%)2010 (%)

8,9610,00

7,13 7,81

8,96 8,55 8,19

4,89 5,28

6,30 6,02

3 81 3.85

5 03 5,69 5,506,35 6,01 6,103,00

3.863.51 3.23 3.72 3.47

3.81 3.853.05

3,644,50 4,78 5,03 , 5,50

0,002001 2002 2003 2004 2005 2006 2007 2008 2009 2010

PDB Sektor non tradable Sektor tradableNon TradableGDP TradableSektor tradable: (1) Agriculture, Animal Husbandry, Forest and Fishery, (2) Mining (3) Manufacturing Industry.

Sektor non-tradable: 1. Electricity, Gas, Clean Water, 2. Construction, Trading, Hotel, and Restaurant, 3. Transportation and Communication, 4.Finance, Real Estate and Corporate Service, 5. Social Services.

Human Development Index Human Development Index ppIndonesia, 1980Indonesia, 1980--20112011

Source: Human Development Report – UNDP, 2011

HDI Asean 2010HDI Asean 2010HDI Asean 2010HDI Asean 2010Country

2010L l I d

yLevel Index

Singapore 27 0.846Brunei 37 0 805Brunei 37 0.805

Malaysia 57 0.774

Thailand 92 0 654Thailand 92 0.654

Phillipines 97 0.638

Indonesia 108 0 600Indonesia 108 0.600Viet Nam 113 0.572

Cambodia 124 0 490Cambodia 124 0.490

Myanmar 132 0.451

# Countries 169# Countries 169In 2009 Indonesia’s HDI was 111Source: HDR 2010: The Real Wealth of Nations (UNDP)

HDIHDI bby Componentsy ComponentsHDI HDI bby Componentsy Components(Selected Countries, 2011)(Selected Countries, 2011)

Life Expectancy Means Years Of Schooling

Expected Years Of Schoolingg g

Philippines 68.7 8.9 11.9China 73 5 7 5 11 6China 73.5 7.5 11.6Thailand 74.1 6.6 12.3Malaysia 74 2 9 5 12 6Malaysia 74.2 9.5 12.6Indonesia 69.4 5.8 13.2Viet Nam 75 2 5 5 10 4Viet Nam 75.2 5.5 10.4

Source: HDR 2010: The Real Wealth of Nations (UNDP)

MP3EIMP3EIMP3EIMP3EINumber of Projects and Amount of InvestmentNumber of Projects and Amount of Investment

2011 2012Institution Investment

(Rp. Trillion)Project No. Investment

(Rp. Trillion)Project No.

Government 76.6 24 66.2 15SOE 131 24 90.3 20Private 168.6 38 301.6 38Mix 128.3 8 78.2 11Total 490.5 91 356.3 84

Investment Plan Investment Plan aandnd Employment Created Employment Created bby y Economic Corridor ActivitiesEconomic Corridor ActivitiesEconomic Corridor ActivitiesEconomic Corridor Activities

Investment (Trillion Rupiah) New Employment SUMATERA; 35,6 JAWA; 117,2

PAPUA-

SUMATERA; 93,9 JAWA; 188,0KALIMANTAN;

1.074,2

p y(Thousand)

KALIMANTAN; 488 ,1

PAPUAKEPULAUAN

MALUKU; 440,9

SULAWESI; 693,4PAPUA-

KEPULAUAN ;,MALUKU; 3.422, 4

SULAWESI; 189,7

BALI-NUSA TENGGARA; 57,, 1

BALI-NUSA TENGGARA; 241,0

INVESTMENTR 1 328 6 T illi

SUMATERA JAWA KALIMANTAN SULAWESI BALI-NUSA TENGGARA PAPUA-KEPULAUAN MALUKU SUMATERA JAWA KALIMANTAN SULAWESI BALI-NUSA TENGGARA PAPUA-KEPULAUAN MALUKU

Rp. 1.328,6 Trillion

NEW EMPLOYMENT5.713,0 Thousand

Employment Employment tto o bbe Created e Created iin Each Economic Corridorn Each Economic CorridorSUMATERA CORIDOR

KALIMANTAN CORIDOR SULAWESI CORIDORSUMATERA CORIDORLeading Sector: Palm Oil, Coal, and JSS (Sunda Strait Bridge)

Leading Sector: Steel, Bauxite; Palm Oil, Coal; Oil and Timber

Leading Sector: Nickel; Agriculture Food; Oil; Cocoa and Fisheries

JAWA CORIDOR

Leading Sector: Food BALI-NUSA TENGGARAPAPUA-MALUKU ISLANDS CORIDORg

Beverages, Textiles; Transportation Equipment; Shipping; iron steel, and defense

CORIDOR

Leading Sector: Tourism, Livestock and Fisheries

Leading Sector: Nickel; Copper; Agriculture Food; Oil and Fishing

NEWEMPLOYMENT

(Thousand)

93,9 188,0 1.704,2 693,4 241,0 3.422,4

NEWEMPLOYMENT

(Thousand)

NEWEMPLOYMENT

(Thousand)

NEWEMPLOYMENT

(Thousand)

NEWEMPLOYMENT

(Thousand)

NEWEMPLOYMENT

(Thousand)

Clusters Clusters oof Poverty Alleviation Programsf Poverty Alleviation Programs

3rd CLUSTER

Micro- & Small-scale Enterprise Empowerment1ST CLUSTER

2nd CLUSTER[Facilitate with fish rod]

3 CLUSTER[Assist to have fish-rod & boat]

Assistance &Social Protection Programs

Community Empowerment Programs

Block grants for 6,408 sub-

Micro credits provision (< Rp 5 million) through

banks, & other types of

[Provide fish]

Target: 17.5 mil. poor HH: rice subsidy, cash transfers, health

i & h l hi

gdistricts (rural, urban, dis-

advantaged regions, regional & village infrastructures)

PNPM Mandiri

, ypfinancial assistance

insurance, & scholarships

Target: the poorest, poor

Target: poor communities of subdistricts

Target: SMEs

4th Cluster& near poor Households

4 Cluster

6 Pro-Poor Programs and 3 additional

programs

Political UpdatePolitical UpdatePolitical UpdatePolitical Update• Indonesia is coping well with

democratic imperatives.– Strong parliament– Strong media– Strong civil society

• Indonesia’s Democracy: t bl ib t d d istable, vibrant and dynamic.

• Political temperature is rising ahead of 2014 Parliament and Presidential Election.

• With democracy comes:– Human rights– Freedom of association

F d f i– Freedom of expression– Etc.

• Giving rise to conflicts:Sectarian– Sectarian

– Environmental– Local interest– Labor and wage disputes

• Political implications of economic policiessubsidy issuepolicies subsidy issue

• Governance and CorruptionGovernance and Corruption Issues.

• These are the challenges that gIndonesia as a young, functioning democracy has the cope with, wisely peacefully and fairlywisely, peacefully and fairly.

IndonesiaIndonesia JapanJapanIndonesiaIndonesia--JapanJapan

BILATERAL G to G BILATERAL

REGIONAL

G to G

REGIONAL G to P MULTILATERAL P to G

P to PP to P

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