INDONESIA • GROUP 1 • AMJAD ALI MEMON • MAIDA AJMAL • SAMEEL NOMAN • GHUFRAN SHERAZ • AHMED ABDUL WAHID • NAWAB GHAZAFAR AHMED
INDONESIA
• GROUP 1
• AMJAD ALI MEMON
• MAIDA AJMAL
• SAMEEL NOMAN
• GHUFRAN SHERAZ
• AHMED ABDUL WAHID
• NAWAB GHAZAFAR AHMED
AGENDA
• BRIEF HISTORY
• REGIMES
• TRADE
• EFFECT OF OIL SHOCKS ON INDONESIA’ ECONOMY
• POVERTY
• POPULATION
• URBANISATION
• HEALTH AND EDUCATION
• ALL POLICY IMPLICATION COVERED ALONG WITH TOPICS
INDONESIA HISTORY
• INDONESIA IS ANCOUNTRY OF 17,508 ISLANDS (6,000 INHABITED)
• IN 1602 THE DUTCH ESTABLISHED THE DUTCH EAST INDIA COMPANY
• WORLD WAR II AND JAPANESE INVASION
• SUKARNO PROCLAIMED INDEPENDACE IN 1949
• MAJOR PRODUCER OF AGRICULTURAL PRODUCTS
• INTENSIVE IN ISLANDS OF JAVA AND BALI THAT ACCOUNT 7% OF TOTAL LAND
AREA
• WORLD TRADE ORGANIZATION RANKS INDONESIA AS 27TH LARGEST EXPORTING COUNTRY
• TOP 5 MAJOR EXPORTS TOP 5 MAJOR IMPORTS
• COAL BRIQUETTES (12%) REFINED PETROLEUM 15%
• PETROLEUM GAS (9.3%) CRUDE PETROLEUM 5.5 %
• PALM OIL (8.3%) PLANES, HELICOPTERS 2.4 %
• CRUDE PETROLEUM (5.9%) VEHICLE PARTS 1.8%
• RUBBER (4.1%) CARS 1.5 %
INDONESIA FROM 1980’S• INTEGRATION INTO WORLD ECONOMY BEGAN IN 1980’S
• TRADE BARRIERS REDUCED AND ECONOMY OPENED OF FOREIGN INVESTMENT
• CHINESE DOMINATION SUCH AS SINAR MAS GROUP, LIE MO TIE, LIEM SIO
LIYONG.
• LOOKING AT TRADE POLICIES IT AVERAGE TARIFF STOODS AT AROUND 2.6 PERCENT ALONG WITH OTHER
IMPORT LICENSING AND QUOTAS THAT FURTHER RESTRICT TRADE
• INFANT INDUSTRY ARGUMENT
PREBISCH–SINGER HYPOTHESIS
• BASIS OF HYPOTHESIS ON FLUCTUATING PRICES OF PRIMARY PRODUCTS
• LOW INCOME ELASTICITY OF AROUND 0.5 TO 0.6
• PRIMARY PRODUCTS PRICE IS FALLING, AS LDC’S BECOME RICHER THEY MAKE DEMAND MORE
MANUFACTURED GOODS, SO FLOW OF INCOME FROM LDC’S TO DEVELOP.
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.2
1.21
1.22
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Terms of Trade
Figure 9 IDR compared to US dollar 1991-2014
Figure 10 Foreign Exchange reserves
EFFECT OF OIL SHOCKS
• 1970’S OIL SHOCKS LEAD TO MAJOR REVENUES FOR GOVERMNET
• AT THE END GOVERMNET REDUCED ITS EXPENDITURE
• THE EXCHANGE RATE WAS REALIGNED IN 1973, 1983, AND 1986 IN RESPOND TO THE DRAMATIC CHANGES
IN INTERNATIONAL OIL PRICES
• DURING THE LATE 1980S TO 1990S, INTERNATIONAL OIL PRICES CONTINUED TO DECLINE AND
INDONESIA’S POLICY MEASURES
POLICY RECOMMENDATION
• INADEQUATE INFRASTRUCTURE
• DOMESTIC MARKET IS BIG ENOUGH, SUPPORT FROM GOVERNMENT
• IMPROVE QUALITY OF PRODUCTS TO MEET INTERNATIONAL STANDARDS
• INWARD VS OUTWARD LOOKING APPROACH
• TRADE AGREEMENTS
• COMPETITION MAY LEAD TO EFFICIENCY
• AN IMPORTANT ISSUE THROUGHOUT WORLD
• WIDESPREAD ISSUE IN INDONESIA
• SLIGHT IMPROVEMENT IN RECENT YEARS
• TYPES OF POVERTY
• RURAL POVERTY
• URBAN POVERTY
• DIVERSE NATURE POVETY STATISTICS DIFFER
• OVERALL A CONVINCING TREND
• GROWTH IN RECENT YEARS
• IMPROVEMENT IN HEALTH AND EDUCATION
• PPP HAVE DOUBLED FOR A DECADE TILL 2012
DISPARITY B/W RICH AND POOR
• GROWING TREND
• GENERAL PERCEPTION: PEOPLE GETTING BETTER IN TERMS OF CONSUMPTION AND LIVING STANDARDS
• CONTRAST IN THE FIGURES
• 2003-2010
REAL CONSUMPTION: 4%
RICH-5.9%
POOR-1.3%
GINI COEFFICIENT & LORENZ CURVE• GINI COEFFICIENT IN LINE WITH DEVELOPING COUNTRY
• SUPPORTS THE GROWING DISPARITY ISSUE
• 2000: 0.29
• 2011: 0.38
• SLIGHT CHANGE BUT CAN BE VERY DANGEROUS IF IT CONTINUES
• GOVERNMENT NEEDS TO CONTROL THIS
MIGRATION FIGURES
• RURAL TO URBAN MIGRATION
• PRESENCE OF URBAN INFORMAL SECTOR
• 3MILLION PEOPLE MIGRATE , JAKARTA- SEARCH OF BETTER JOBS
• LOWER END JOBS
• CONSTITUTES 70% OF THE GDP – INFORMAL SECTOR
DEVELOPMENT PLAN 2005-2025
• IMPROVING HR QUALITY
• SCIENCE AND TECHNOLOGY DEVELOPMENT
• STRENGTHENING OF ECONOMIC COMPETITIVENESS
IN TERMS OF KUZNETS'S ASSUMPTION
• INEQUALITY IN EARLY STAGES OF GROWTH
• STATISTICS SUPPORT THIS
• EXPECTATION OF EQUALITY IN LATER STAGES
• POVERTY REDUCTION:
MOVING FROM AGRICULTURAL TO INFORMAL SECTOR, AND MORE IF MANUFACTURING SECTOR
• STILL POOR INFRASTRUCTURE
CHILD LABOR
• ONE OF THE MOST POPULOUS COUNTRIES
• POPULATION ABOUT 220M
• 30% POPULATION BELOW AGE OF 15
• A LOT OF YOUNG PEOPLE, ISSUE EXISTS
• MANY STUDENTS DO NOT ATTEND SCHOOL
• DROP OUT RATES HIGH
• EXPLOITATION
• POVERTY RELATED, PARENTS FORCED TO SEND THEIR CHILDREN FOR WORK
POLICY RECOMMENDATION?
• POVERTY AND CHILD LABOR INTERRELATED
• REDUCTION IN INEQUALITY B/W RICH AND POOR
• MORE OPPORTUNITIES FOR POOR IN MANUFACTURING SECTOR
• LEARNING, TRAINING PROGRAMS AND SCHOLARSHIPS
• TO GET AS MANY CHILDREN IN SCHOOL AS POSSIBLE
• REDUCE DROP OUT RATES
• INCENTIVES TO PARENTS
• VOCATIONAL TRAINING PROGRAMS
• JOB OPPORTUNITIES
ASIAN FINANCIAL CRISIS JULY 1997• STARTED IN THAILAND
• THAI GOVERNMENT BURDENED WITH FOREIGN DEBT
• DECISION TO FLOAT BAHT CURRENCY
• MAIN IDEA: STIMULATION OF FOREIGN REVENUES
• HIT OTHER EAST ASIAN COUNTRIES
• NOT ONLY FINANCIAL, BUT ECONOMIC POLITICAL AND SOCIAL
• FOREIGN INVESTORS INITIALLY KEPT CONFIDENCE IN INDONESIA
• LATER IT BECAME ONE OF THE LARGEST HIT COUNTRIES
POPULATION
INDONESIA RANKS #4 AMONG THE MOST DENSELY POPULATED
COUNTRIES IN THE WORLD.
DEVELOPING COUNTRY WITH MUSLIM MAJORITY.
PAST REGIMES (SUHARTO-OLD ORDER, SUKARNO- NEW ORDER).
POPULATION
Trends in Indonesia’s HDI component indices 1980-2012
SOURCE: http://hdr.undp.org/sites/default/files/Country-Profiles/IDN.pdf
POPULATION THE RUPIAH, WHICH HAD BEEN IN THE RP 2,600/USD1 RANGE AT THE
START OF AUGUST 1997 FELL TO 11,000/USD1 BY JANUARY 1998, WITH
SPOT RATES AROUND 15,000 FOR BRIEF PERIODS DURING THE FIRST
HALF OF 1998.
FOR 2006, INDONESIA'S ECONOMIC OUTLOOK WAS MORE POSITIVE.
ECONOMIC GROWTH ACCELERATED TO 5.1% IN 2004 AND REACHED
5.6% IN 2005.
POPULATION THE COUNTRY IS THE LARGEST ECONOMY IN SOUTHEAST ASIA AND A
MEMBER OF THE G-20 MAJOR ECONOMIES.
BY NOVEMBER 1997, RAPID CURRENCY DEPRECIATION HAD SEEN
PUBLIC DEBT REACH US$60 BILLION
THE RUPIAH, WHICH HAD BEEN IN THE RP 2,600/USD1 RANGE AT THE
START OF AUGUST 1997 FELL TO 11,000/USD1 BY JANUARY 1998.
POPULATION THE RUPIAH, WHICH HAD BEEN IN THE RP 2,600/USD1
RANGE AT THE START OF AUGUST 1997 FELL TO
11,000/USD1 BY JANUARY 1998, WITH SPOT RATES
AROUND 15,000 FOR BRIEF PERIODS DURING THE FIRST
HALF OF 1998.
FOR 2006, INDONESIA'S ECONOMIC OUTLOOK WAS MORE
POSITIVE.
ECONOMIC GROWTH ACCELERATED TO 5.1% IN 2004 AND
REACHED 5.6% IN 2005.
POPULATION AMONG DEVELOPING COUNTRIES, INDONESIA’S
POPULATION CONTROL PROGRAM IS CONSIDERED TO BE ONE
OF THE MOST SUCCESSFUL.
YET, INDONESIA CONTINUES TO STAY IN THE TOP 10 MOST
POPULOUS COUNTRIES IN THE WORLD.
HOW DO WE EXPLAIN THIS?
POPULATION1. DOES HIGH POPULATION LEAD TO HIGH
EMPLOYMENT?
2. FOR THE SAKE OF PREVENTING ECONOMIC
CONSTRAINTS, CAN INDONESIA TAKE
EXTREME MEASURES TO REDUCE ITS
POPULATION?
3. HOW CAN A LARGE POPULATION PROSPER
THEN?
POPULATIONDOES HIGH POPULATION LEAD TO HIGH EMPLOYMENT?
NO, IT ONLY LEADS TO SEVERAL HEALTHCARE ISSUES.
CONGESTION, EASE OF WIDESPREAD FATAL DISEASES AND
OVERALL UNSANITARY CONDITIONS (REMEMBER ROSLING’S
POVERTY VIDEO-TED)
HOW CAN A LARGE POPULATION PROSPER THEN?
o THROUGH EFFECTIVE MASS EDUCATION
o EMPHASIS ON IMPROVING THE EDUCATION OF WOMEN
o AWARENESS IN THE USE OF MODERN CONTRACEPTIVES
o CONTINUATION OF TWO-CHILD POLICY: SIMILAR EXAMPLE OF CHINA’S
“ONE-CHILD” POLICY
FACTS
• 58% LIVING ON THE ISLAND OF JAVA, THE WORLD'S MOST POPULATED ISLAND
• INDONESIA'S POPULACE IS ANTICIPATED TO SURPASS USA AND TURN INTO THE GREATEST AFTER CHINA
AND INDIA BY 2043.
• INDONESIA INCORPORATES VARIOUS ETHNIC, SOCIAL, CULTURAL AND LINGUISTIC GROUPS, SOME OF
WHICH ARE IDENTIFIED WITH ONE ANOTHER WITH INDONESIAN BEING THE OFFICIAL LANGUAGE
LITERACY
• DEFINITION: AGE 15 AND OVER AND CAN READ AND WRITE
TOTAL POPULATION: 92.81%
MALE: 95.5%
FEMALE: 90.4% (2011 EST.)
• EDUCATION IS NECESSARY FOR YOUNGSTERS THROUGH TO GRADE 9 EVEN THOUGH ITS NOT FREE.
ETHNIC GROUPS
• THERE ARE OVER OF 300 ETHNIC GROUPS IN INDONESIA. 95% OF THOSE ARE OF NATIVE INDONESIAN
HERITAGE. JAVANESE IS THE GREATEST ONE WITH 100 MILLION INDIVIDUALS (42%), FOLLOWED AFTER BY
SUNDANESE WHO ADD UP TO ABOUT 40 MILLION (15%).
RELIGIONS
• INDONESIA IS THE WORLD'S MOST POPULATED MUSLIM MAJORITY NATION, WITH VERY NEARLY 87.18%
OF INDONESIANS PROCLAIMING MUSLIM IN THE 2010 CENSUS. 9.87% OF THE POPULACE IS CHRISTIAN
(OF WHICH MORE THAN 70% ARE PROTESTANT), 1.69% ARE HINDU, 0.72% BUDDHIST, AND 0.56 OTHER.
• MOST INDONESIAN HINDUS ARE BALINESE AND MOST BUDDHISTS IN ADVANCED INDONESIA ARE
TIONGHOA.
LANGUAGES
• THERE ARE AS OF NOW 737 LIVING DIALECTS, THE MOST GENERALLY USED BEING JAVANESE DIALECTS.
• VARIOUS CHINESE LINGOS, MOST NOTICEABLY MIN NAN, ARE ADDITIONALLY SPOKEN. PUBLIC
UTILIZATION OF CHINESE, PARTICULARLY CHINESE CHARACTERS, WAS FORMALLY DEBILITATED BETWEEN
AROUND 1966 AND 1998.
FACTS
• URBANIZATION IN INDONESIA EXPANDED HUGELY TAKING AFTER THE NATION'S QUICK ADVANCEMENT IN
THE 1970S.
• IN 1950, 15% OF INDONESIA'S POPULACE EXISTED IN URBAN AREAS.
• BY 2010 THE URBAN POPULACE REACH 44% AS REPORTED IN 2010
• THE AVERAGE POPULATION DENSITY OF JAKARTA, THE CAPITAL, HAD ESCALATED TO MORE THAN 14,400
INDIVIDUALS FOR EVERY SQUARE KILOMETER
SOCIO-ECONOMIC EFFECTS
• THERE IS A 'SOCIO-ECONOMIC DUALISM' WHICH IS PERCEPTIBLE INSIDE URBAN SOCIETY IN INDONESIA.
• SOCIO-ECONOMIC DUALISM DEPICTS INNOVATION AND 'KAMPUNG (TOWN)' SOCIETY EXISTING
TOGETHER IN URBAN TERRITORIES.
• IN CENTRAL JAVA, THERE ARE 14.1% OR 2092500 INDIVIDUALS WHOSE LIVELIHOODS ARE UNDERNEATH
THE POVERTY LINE.
• IN WEST NUSA TENGGARA, THE QUANTITY OF POOR INDIVIDUALS IS ACCOUNTED FOR TO BE 23.7%.
SOCIO-ECONOMIC EFFECTS (CONT..)
• WITHOUT AVAILABILITY OF EMPLOYMENT CATERED TO THE NEEDS OF RURAL-URBAN MIGRANTS, THE
INCOME SEGREGATION BETWEEN RICH AND POOR IN URBAN AREAS WILL WORSEN.
• THE CONSISTENT CONVERGENCE OR RURAL-URBAN MIGRATION MAY POSE A GENUINE DANGER TO THE
INFRASTRUCTURE IN THE URBAN COMMUNITIES.
• TRANSPORTATION, MOVEMENT EMERGENCY COSTS JAKARTA $1.4 BILLION A YEAR BECAUSE OF ACTIVITY
BLOCKAGE AND PUBLIC TRANSPORTATION WHICH ARE DIRECT RESULTS OF TRAFFIC CONGESTION.
IMPLICATIONS
• POPULACE AGED IN EXCESS OF 60 IN INDONESIA IS EXPECTED TO INCREASE BY 16% BY 2050
• THERE ARE MORE YOUNGSTERS MOVING TO URBAN AREAS LOOKING FOR BETTER WORK OPPORTUNITIES
NOW BECAUSE OF URBANIZATION
• AGRICULTURAL MINISTRY STATES THAT OUT OF THE 140 MILLION AGRICULTURISTS IN THE NATION, 80%
OF THEM ARE AGED 45 OR MORE.
IMPLICATIONS (CONT..)
• VP BOEDIONO CAUTIONED THAT THE CURRENT LEVELS OF NOURISHMENT CREATION WON'T BE
SUFFICIENT TO ADJUST THE INCREASING POPULATION EVEN IN THE SHORT/MID-TERM FUTURE.
• POPULATION OF INDIVIDUALS LIVING IN URBAN ZONES IS ANTICIPATED TO INCREASE BY MORE THAN
65% BY 2030
• LACK OF INVESTMENTS
• INFRASTRUCTURE SUFFERING BADLY.
CURRENT CONDITIONS
• ONE OF THE FEW FROM THIS CATEGORY WHO HAVE ACHIEVED GOOD RESULTS AS A RESULT OF THEIR
POLICIES
• AS A DEVELOPING NATION, INDONESIA IS STILL PLAGUED BY MANY PROBLEMS
BARRIERS TO EFFECTIVE HEALTHCARE
• THE DEMOGRAPHIC AND GEOGRAPHICAL LAYOUT OF INDONESIA
• A DECENTRALIZED LAYOUT FOR PROVIDING HEALTH CARE FACILITIES
• 33 PROVINCES WITH OVER 500 MUNICIPALITIES EACH HAVE THEIR OWN HEALTH BUDGET AND
FACILITIES
• HOME TO THE WORLD’S MOST ACTIVE EARTHQUAKE AND VOLCANO ZONE
• CORRUPTION IN GOVERNMENT DEPARTMENTS
• TRADE-OFF IN PUBLIC SPENDING
• LACK OF QUALIFIED PERSONNEL (LINKED TO EDUCATION)
• HEALTHCARE IS TOO EXPENSIVE FOR MANY IN SOME AREAS
• LOW INCOMES, LOW EDUCATION AND CULTURAL BARRIERS
NHIP
• NATIONAL HEALTH INSURANCE PROGRAM
• INITIATED IN 2004 AND PLANNED FOR A DECADE
• LITTLE PROGRESS TILL 2010
• 48% WITH HEALTHCARE INSURANCE BY 2014
• 100% OR 247 MILLION BY 2019
OBSTACLES IN THE NHIP PROGRAM
• LACK OF INFORMATION TO HOSPITAL STAFF
• FEAR OF NON-REIMBURSEMENT BY HOSPITALS
• LOW PAYMENT TO DOCTORS
• LACK OF QUALIFIED PERSONNEL IN LARGE NUMBERS
• CORRUPTION AND BUREACRACY
MEDICINE• INDONESIAN GOVERNMENT SPENDS AROUND $12 PER CAPITA PER YEAR ON
MEDICINES
• IN THE PRIVATE SECTOR, AVAILABILITY IS LARGELY LEFT TO MARKET FORCES, AND
IS GENERALLY GOOD
• INDONESIA HAS GRADUALLY OPENED UP ITS PHARMACEUTICAL MARKET TO
INTERNATIONAL TRADE
• IN THE PUBLIC SECTOR MOST OF THE SUPPLY OF MEDICINES IS OBTAINED FROM
THE DRUG WAREHOUSE OPERATED BY THEIR DISTRICT HEALTH OFFICE
• DISTRICT DRUG WAREHOUSES ARE SUPPLIED BY MULTIPLE PUBLIC SECTOR
SUPPLY CHAINS.
HUMAN RESOURCES
• THE HUMAN RESOURCES LINKED TO THE HEALTH CARE FIELD ARE VERY LOW IN
INDONESIA
• 25 HEALTH WORKERS PER 10,000 PEOPLE
• MEETS THE WORLD HEALTH ORGANIZATION'S MINIMUM OF 23
• TEND TO BE CONCENTRATED IN URBAN CENTER
RECOMMENDATIONS
• IMPROVING CHECKS AND BALANCES OVER HEALTH DEPARTMENTS OF DIFFERENT DISTRICTS
• PROMOTE PRIVATE FACILITIES AS WELL AS NGOS.
• SPEND MORE ON MEDICAL EDUCATION AND TRAINING
• ATTRACT MEDICAL PERSONNEL FROM OTHER COUNTRIES.
• THE NHIP IS ONE OF THE MAJOR PROGRAMS OF THE GOVERNMENT. NEED TO
ELIMINATE CORRUPTION AND BUREAUCRACY FROM THE PROGRAM.
• INCENTIVES TO DOCTORS, INFORMATION TO STAFF, TIMELY REIMBURSEMENTS TO
HOSPITALS ARE A MUST FOR SUCCESSFUL IMPLEMENTATION.
FACTS
• COMES UNDER THE RESPONSIBILITY OF THE MINISTRY OF EDUCATION AND
CULTURE AND THE MINISTRY OF RELIGIOUS AFFAIRS
• THE INDONESIAN EDUCATION POLICY MAKES IT MANDATORY FOR ALL CITIZENS TO
UNDERTAKE NINE YEARS OF EDUCATION
• THESE NINE YEARS ARE BROKEN INTO:
SIX YEARS OF ELEMENTARY EDUCATION
THREE YEARS OF SECONDARY EDUCATION
• THE MINISTRY OF RELIGIOUS AFFAIRS TAKES CONTROL OF ALL EDUCATIONAL
INSTITUTES GIVING ISLAMIC EDUCATION.
• THE CONSTITUTION OF INDONESIA NOTES THAT THERE ARE TWO TYPES OF
EDUCATION IN INDONESIA: FORMAL AND IN-FORMAL
• SCHOOLS ARE EITHER RUN BY THE GOVERNMENT OR THE PRIVATE SECTOR
• THE GROSS ENROLLMENT RATE IN PRIMARY EDUCATION IS 109% FOR BOTH GIRLS
AND BOYS COMBINED
• FALLS TO 91% IN LOWER SECONDARY
• AND IS 96% FOR SECONDARY SCHOOLS
• THE PRIMARY NET ENROLLMENT RATE IN INDONESIA IS 92% AND THE PRIMARY
COMPLETION RATE IS 105%
CURRENT STATE OF EDUCATION
• NEW POLICIES TO FOCUS MORE ON ISLAMIC EDUCATION RATHER THAN SCIENCE AND OTHER SUBJECTS.
• THESE POLICIES HAVE COME UNDER GREAT CRITICISM BY MANY NON-MUSLIMS LIVING IN INDONESIA AS
WELL AS THE UN
• DESPITE NOT BEING AN ISLAMIC STATE, INDONESIA HOUSES A POPULATION OF AROUND 240 MILLION OUT
OF WHICH 88% ARE MUSLIMS
• THERE IS RAMPANT CORRUPTION IN THE EDUCATION DEPARTMENTS
• MOST TEACHERS ARE UNQUALIFIED TO TEACH
• NOT MANY MAKE IT TO SECONDARY SCHOOLS
• TOO MANY DISTRICTS TO BE LOOKED AFTER
RECOMMENDATIONS
• CURTAIL CORRUPTION
• IMPROVE QUALITY OF TEACHERS
• FOCUS ON SECULAR EDUCATION
• RELIGIOUS EDUCATION TO BE IN HANDS OF GOVERNMENT