INDONESIA: EMERGING ECONOMY AND POWER IN THE 21 ST CENTURY’S WORLD ORDER presentation at the Aarhus University Academic Day 2012 Conference: “NEW BRICKS ON THE BLOCK – SYMPTOMS OF A FUTURE WORLD SOCIETY?” Aarhus University, 19 September 2012 Prof. Dr. Bomer Pasaribu Ambassador of the Republic of Indonesia to the Kingdom of Denmark and the Republic of Lithuania Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania 1
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INDONESIA: EMERGING ECONOMY AND POWER IN THE
21ST CENTURY’S WORLD ORDER
presentation at the Aarhus University Academic Day 2012 Conference:
“NEW BRICKS ON THE BLOCK – SYMPTOMS OF A FUTURE WORLD SOCIETY?”
Aarhus University, 19 September 2012
Prof. Dr. Bomer Pasaribu Ambassador of the Republic of Indonesia to the Kingdom of
Denmark and the Republic of Lithuania
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
I. INTRODUCTION. I.1. INDONESIA AT A GLANCE I.2. INDONESIA: A LESSON LEARNT II. THE DYNAMIC OF INDONESIA II.1. POLITICAL REFORMS & ROLES II.2. COMPOSITION OF THE CURRENT COALITION II.3. PRIORITIES OF THE CURRENT GOVERNMENT
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL ®IONAL CONTEXT: SUPER-CYCLE III.1. SUPER-CYCLE/KONDRATIEFF WAVE III.2. INDONESIA IN THE GLOBAL CONTEXT III.3. INDONESIA IN APEC & G20 IV. INDONESIA AND ASIAN TRIANGLE EMERGING ECONOMIES/POWERS IV.1. INDONESIA AND ASEAN CENTRALITY IV.2. NEW EPICENTERS : ASEAN, CHINA, INDIA
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
V. INDONESIA AND THE ESTABLISHED POWERS: UNITED STATES AND EUROPEAN UNION V.1. INDONESIA-UNITED STATES STRATEGIC/COMPREHENSIVE PARTNERSHIP V.2. INDONESIA-EUROPEAN UNION COMPREHENSIVE PARTNERSHIP AGREEMENT V.3. INDONESIA AND EU ECONOMIC CRISIS VI. CONCLUSION
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
II. DYNAMIC OF INDONESIA II.1. POLITICAL REFORMS AND ROLES
A. 1999 1ST PARLIAMENTARY ELECTION IN THE EARLY REFORM ERA.
B. 2004 2ND PARLIAMENTARY AND 1ST PRESIDENTIAL DIRECT ELECTION DURING REFORM ERA.
LAW ON DE-SENTRALIZATION MASSIVE
DIRECT LOCAL ELECTIONS (300s).
C. 2009 3RD PARLIAMENTARY AND 2ND PRESIDENTIAL DIRECT ELECTION; MASSIVE DIRECT LOCAL ELECTIONS (300s) INDONESIA: “ELECTION CAPITAL OF THE WORLD” (WORLD BANK,2010).
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
II. DYNAMIC OF INDONESIA (CONT.) II.3. PRIORITIES OF CURRENT GOVERNMENT (CONT.)
D. INDONESIA’S AMENDED 1945 CONSTITUTION (chapter XIII/31) HAS MANDATED A MINIMUM 20% OF THE ANNUAL BUDGET BOTH NATIONAL & REGIONAL, TO BE PROVIDED FOR EDUCATION SECTOR
THE ONLY CASE IN THE WORLD.
EDUCATION: PERMANENT/CONSTITUTIONAL PRIORITY.
EDUCATION: PRIME MOVER SUSTAINABILITY OF THE 5 PILLARS INTO HIGHER QUALITY.
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
II. DYNAMIC OF INDONESIA (CONT.) II.3. PRIORITIES OF CURRENT GOVERNMENT (CONT.)
D. 2008-2010 PROJECTION EXERCISE “DEBOTTLENECKING”, ACCELERATION AND EXPANSION OF INDONESIA’S NATIONAL DEVELOPMENT WITHIN 2010-2015
E. 2011 BREAKTHROUGH “MASTER PLAN FOR ACCELERATION AND EXPANSION OF INDONESIA’S ECONOMIC DEVELOPMENT (MP) 2011-2025” (INTEGRAL PART OF THE NATIONAL DEVELOPMENT PLANNING).
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
II. DYNAMIC OF INDONESIA (CONT.) II.3. PRIORITIES OF CURRENT GOVERNMENT (CONT.)
F. MASTER PLAN 2011-2025:
1. ACCELERATE AND EXPAND THE ECONOMIC DEVELOPMENT IN SIX INDONESIAN ECONOMIC CORRIDORS;
2. STRENGTHENING NATIONAL CONNECTIVITY;
3. STRENGTHENING HUMAN RESOURCE AND NATIONAL SCIENCE AND TECHNOLOGY CAPABILITY.
G. COMPRISED OF MAJOR INVESTMENT PROJECTS ON INFRASTRUCTURE, CONNECTIVITY, AND OTHER ECONOMIC SECTORS AND SUB-SECTORS, WITH A TOTAL VALUE INVESTMENT OF RP 4,000 TRILLION (US$ 450 BILLION) UNTIL 2014.
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
II. DYNAMIC OF INDONESIA (CONT.) II.3. PRIORITIES OF CURRENT GOVERNMENT (CONT.)
H. POLITICAL ECONOMY OF STRUCTURAL REFORM :
STRUCTURAL REFORMS SYSTEM AND INSTITUTION BUILDING PROCESS INDONESIA ALSO INVESTED ITS STRUCTURAL REFORM THROUGH ITS COMMITMENTS IN THE ASEAN, G20, APEC, AND OIC SYNERGIZED WITH THE GOVERNMENT’S EFFORTS TO STABILIZE PERMANENTLY THE DEMOCRATIC REFORM IN INDONESIA USING ALL THE POTENTIAL OF ECONOMIC DEVELOPMENT BOTH DOMESTICALLY AND INTERNATIONALLY SUSTAINABLE DEVELOPMENT PRO-GROWTH, PRO-POOR AND PRO-ENVIRONMENT 5 PILLARS: DEMOCRACY; HUMAN RIGHTS; ECONOMY; ECOLOGY; RULE OF LAW.
PRIME MOVER: EDUCATION/HUMAN CAPITAL.
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
III.1. SUPER-CYCLE / KONDRATIEFF WAVE
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
A. THE SUPER-CYCLE (STANDARD CHARTERED REPORT 2010)
‘A PERIOD OF HISTORICALLY HIGH GLOBAL GROWTH, LASTING A GENERATION OR MORE, DRIVEN BY INCREASING TRADE, HIGH RATES OF INVESTMENT, URBANISATION AND TECHNOLOGICAL INNOVATION, CHARACTERISED BY THE EMERGENCE OF LARGE, NEW ECONOMIES, FIRST SEEN IN HIGH CATCH-UP GROWTH RATES ACROSS THE EMERGING WORLD’
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
III.1. SUPER-CYCLE / KONDRATIEFF WAVE (CONT.)
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
C. THE RAPID INDUSTRIALISATION AND URBANISATION OF APP. 85% OF THE WORLD’S POPULATION LIVING IN EMERGING MARKETS ARE DRIVING THE PRESENT SUPER-CYCLE.
D. (STANDARD CHARTERED REPORT 2010) PROJECTION OF EAST ASIA
1. CHINA: In the next 20 years, China will provide one-fifth of global growth, and will become the world’s largest economy by 2020; by 2030, China will be nearly twice the size of the US.
1) NEXT-11 (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam), The N-11 countries share the characteristics of rapidly growing populations combined with significant industrial capacity or potential and indicate a growing consumer market with increased earning potential, creating business opportunities for both local and international firms (2005: Goldman Sach and economist Jim O’Neil).
2) BRIICS (Brazil, Russia, India, Indonesia, China, South Africa),
Initially refer as BRIC countries named by Jim O’Neill-Goldman Sachs in their 2003’s report as the most developing countries with greatest economic potential, with China experiencing the highest growth in the group and Brazil the lowest. Indonesia and South Africa named in the later reference of BRIICS.
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
III.2. INDONESIA IN THE GLOBAL CONTEXT
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
3) EMERGING-7 (China, India, Brazil, Mexico, Rusia, Indonesia, Turkey), A group of seven countries with emerging economies. The E7 are predicted to have larger economies than the G7 countries by 2050. It refers to PWC 2006 & Goldman Sach Report 2007.
4) CIVETS (COLOMBIA, INDONESIA, VIETNAM, TURKEY, SOUTH AFRICA), A favour Emerging Markets for several reasons, such as "a diverse and dynamic economy" and "a young, growing population".
This group is comparable to the Next-11 (2009: Robert Ward, Economist Intelligence Unit)
5) EAGLE (EMERGING AND GROWTH LEADING ECONOMIES), A grouping acronym created in late 2010 by BBVA Research to identify all emerging economies, whose expected contribution to world economic growth in the next ten years is expected to be larger than the average of the G6 economies (G7 excluding the US). Consist of 10 economies in which Indonesia also listed.
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
III.2. INDONESIA IN THE GLOBAL CONTEXT (CONT.)
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
III.2. INDONESIA IN THE GLOBAL CONTEXT (CONT.)
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
6) TIMBI (TURKEY, INDIA, MEXICO, BRAZIL AND INDONESIA), Indonesia is also grouped, according to Jack Goldstone “Foreign Policy” (2011). These countries which have a high potential of becoming, along with the BRICs, the world’s largest economies in the 21st century.
7) TRILLION-DOLLAR CLUB: In 2012 Indonesia has entered the so called Trillion-Dollar Club with GDP surpassed 1 trillion USD.
8) MIST (MEXICO, INDONESIA, SOUTH KOREA, TURKEY), a new acronym coined recently by Jim O’Neill-Goldman Sachs in August 2012, are the 4 biggest markets in the Goldman Sachs N-11 Equity Fund. The Goldman Sach Fund for MIST has increased 12% in the past year surpassing equity fund for BRIC which only stand for 1,5%.
EMERGING MARKETS AND DEVELOPING COUNTRIES ALREADY ACCOUNT FOR OVER HALF OF THE WORLD ECONOMY AND ITS GROWTH.
F. Indonesia ranked nr. 76 out of 208 countries in the 2012 KOF Economic Globalization Index, and it was nr. 77 in 2011.
G. INDONESIA’S TREND IN GLOBALIZATION SHOWS A BEYOND ENCOURAGING TREND SUPPORT BY SUPER-CYCLE PROJECTION AND INCREASING SIGNIFICANCE OF INDONESIA’S 5 PILLARS OF SUSTAINABLE DEVELOPMENT IN THE GLOBALIZATION CONTEXT LEAD TO A NEW ERA FOR EAST ASIA.
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
The Asia Pacific Economic Cooperation (APEC) established more than two decades ago many achievements peace, stability, prosperity and increased economic integration.
9 out of the 21 APEC members are G20 members and the world’s largest economies (United States, Japan and China) & includes emerging economies such as South Korea, Indonesia, Mexico, Russia, Vietnam etc. (next few decades, most of Asia Pacific economies will join the ranks of middle-income countries).
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
1. G20 started 1999 Summit started 2008 & replaced G8 as MAIN economic council of wealthy nations.
2. Set up by established powers to reflect new economic realities in which they saw new emerging powers as an opportunity for potential cooperation in addressing financial & economic global challenges.
3. Indonesia is the only ASEAN countries represented in the G20
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
III. INDONESIA IN THE GLOBAL AND REGIONAL CONTEXT: SUPER-CYCLE
A. ASIAN TRIANGLE EMERGING ENONOMY AND POWERS 3 EPICENTERS ASEAN, CHINA, INDIA
Asia’s economic rise in the current era focused on its newly-industrialized economies, known as NIEs: South Korea, Taiwan, Hong Kong, Singapore, China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam (“developing Asia” : IMF Report)
IV. INDONESIA AND ASIAN TRIANGLE EMERGING ECONOMIES AND POWERS
IV.2. NEW EPICENTERS: ASEAN, CHINA, INDIA
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
• INDONESIA’S POSITION AS THE 3RD LARGEST DEMOCRATIC COUNTRY AND THE BIGGEST MOSLEM COUNTRY IN THE WORLD (WITH DEMOCRATIC, MODERATE & TOLERANCE CHARACTERISTIC) .
• INDONESIA’S LEADERSHIP ROLE IN ASEAN.
• INDONESIA’S PROFILE AS EMERGING MARKET, EMERGING ECONOMY AND ITS PROJECTION TO BE EMERGING POWER.
A. INDONESIA – UNITED STATES
B. INDONESIA – EUROPEAN UNION (EU)
V. INDONESIA AND THE ESTABLISHED POWERS: UNITED STATES & EUROPEAN UNION
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
A. INDONESIA – UNITED STATES COMPREHENSIVE STRATEGIC PARTNERSHIP
1. 2010 LAUNCHED BY PRESIDENTS OBAMA AND PRES. YUDHOYONO A LONG TERM COMMITMENT TO ELEVATE BILATERAL RELATIONS BY INTENSIFYING CONSULTATIONS AND DEVELOPING HABITS OF COOPERATION ON KEY BILATERAL, REGIONAL, AND GLOBAL ISSUES.
2. COOPERATION UNDER THE COMPREHENSIVE PARTNERSHIP IS OUTLINED IN A PLAN OF ACTION CONSISTING OF THREE PILLARS: POLITICAL AND SECURITY; ECONOMIC AND DEVELOPMENT; AND SOCIO-CULTURAL, EDUCATION, SCIENCE, AND TECHNOLOGY COOPERATION.
V. INDONESIA AND THE ESTABLISHED POWERS V.1. INDONESIA-UNITED STATES
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
1. INDONESIA – EU COMPREHENSIVE PARTNERSHIP AND COOPERATION AGREEMENT (PCA) 2009.
2. THE ONLY ASIAN COUNTRY WHICH HAVE SUCH A COMPREHENSIVE AGREEMENT WITH THE 27 EU MEMBER COUNTRIES.
3. IT IS STILL WAITING FOR 5 MORE EU COUNTRIES TO RATIFY FOR THE FULL IMPLEMENTATION EXPECTED ON 2013.
4. ENHANCE SIGNIFICANTLY TIES BETWEEN INDONESIA-EU IN ALL AREAS AND MOST IMPORTANTLY IN TERM OF POLITICAL PROFILE, RANGE OF DIALOGUE &SCOPE OF COOPERATION.
V. INDONESIA AND THE ESTABLISHED POWERS (CONT.) V.2. INDONESIA-EUROPEAN UNION
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania
4. THE IMPACT OF EU ECONOMIC CRISIS TO INDONESIA HAS BEEN ANTICIPATED IN SEVERAL WAYS AMONG OTHERS:
A. DEMAND ASPECT INCREASING DEMAND BY THE MIDDLE CLASS BOOMING AND SCALE IN INDONESIA
B. INVESTMENT ASPECT MASSIVE DEVELOPMENT OF INFRASTRUCTURE AND CONNECTIVITY IN INDONESIA AND ASEAN FOREIGN INVESTMENT RELOCATION TO INDONESIA (30% OF GDP IN 2012) AND ASEAN BOTH EXPECTED TO SUPPORT THE EXPORT LED GROWTH PERFORMANCE
C. FISCAL EXPANSION INDONESIA STILL HAVE AMPLE ROOM FOR BUDGET EXPANSION:
- INDONESIA’S BUDGET DEFICIT HAS BEEN MANAGED ONLY BY 1,2%; ASEAN HAS ADOPTED A SAFE LIMIT OF 3% FOR BUDGET DEFICIT.
- INDONESIA’S PUBLIC DEBT HAS BEEN MANAGED ONLY 27% OF ITS GDP; ASEAN HAS ADOPTED A SAFE LIMIT OF 60%.
V. INDONESIA AND THE ESTABLISHED POWERS (CONT.) V.3. INDONESIA AND EU ECONOMIC CRISIS (CONT.)
Copy Right: PROF. DR. (IPB) H. BOMER PASARIBU, SH., SE., MS./2012; [email protected]
* Ambassador of The Republic of Indonesia to The Kingdom of Denmark and to The Republic of Lithuania