ENGLISH EDITION
The President Post T H E
S P I R I T
O F
I N D O N E S I A
IDR 20,000
November 2012 No. 38 www.thepresidentpost.com
EDUCATION
PROFILE
PROPERTY
Gerakan Indonesia Berkibar has four programs covering boosting teacher professionalism; educational leadership and school management; school governance program; and other advanced program. – Page A8
Suzuki develops “value-packed products” for the new generation and changeable lifestyles, constantly creating new technologies and applying them to the products with affluent imagination. – Page B4
A well-known property company from Dubai, Damac, plans to invest in Indonesia specifically in Special Economic Zone of tourism sector Tanjung Lesung. – Page C6
Gerakan Indonesia Berkibar to Boost Quality of Indonesian Education
Suzuki: Providing Value-packed Products
Dubai Investor: I'm Comfortable when I Come to Indonesia Suzuki Regina
Inequality Threatens Stability Leaders of the World Bank warned that the wide rich-poor divide in America, China and several Asian countries complicate global economic recovery because finances in those countries are still concentrated in the middle-class and have not benefitted the manufacturing sector.
By Juwono Sudarsono*
T
he re-election of US President Barack Obama is being watched closely by the world. Europe sees an important role of America as the continent embarks on economic and financial recovery. African leaders hope Obama will be more concerned with the region, East Asia and Latin America. As the world's largest economy (GDP: $16 trillion), the weight and role of America in official multilateral and private arenas remain strong. The leadership transition of the People’s Republic of China (PRC) signaled that the country, as the second largest econo-
my (GDP: $ 7.5 trillion), wishes to maintain its strategic economic partnership with the US. The slow economic recovery of the US and China has an impact on the growth rate of Northeast and Southeast Asian countries. Yet the US and PRC are both facing domestic problems that are far more complex, affecting in no small degree the US’ economic recovery, the economic growth of the PRC as well as Southeast Asia’s economic sustainability. The inequality gap in the US is due to the crisis that has been ongoing since September 2008, and stems from 10 years of overspending during the George W. Bush era. The US’s current economic mess is the result of foul play in bond tradings, bank loans, the money market and the housing sector as well as "toxic shares" worth $500 billion annually, thanks to the dubious acts of brokers in the American financial markets, all of which have undermined the competitiveness of America’s manufacturing sector.
One percent of the American population controls nearly 60% of the country’s financial assets, while 90% of Americans do not have adequate savings. Grand theft and and bank frauds by the leaders of 13 banks (six of which are members of the financial industry on Wall Street) have impoversihed hundreds of thousands of account holders and banks around the world, including a number of state and private banks in Southeast Asia. The economic and financial crisis that is felt in Asian bourses has also hit the stock and capital markets in Jakarta, Kuala Lumpur, Singapore, South Korea and Taiwan. The manufacturing industry in Northeast Asia is suffering as a result of the economic slowdown in the US and Europe. The American and European crises ultimately slowed down the world economy, although some markets in East Asian countries have been galvanized to maintain a growth of above 5% per year. The leadership change in the PRC and developments in the US are important for Indonesia to watch, as the symptoms of financial-economic inequality in the two countries are also evident in the disparity in the country’s monetary and bank sectors. About 70% of Indonesia’s financial assets are controlled by a small number of the financial
services industry’s brokers (8%), while the opposite is seen in the the real sector. Corruption within the political elite in the US’s and the PRC’s financial and banking sectors also takes place in Southeast Asia, including Indonesia. The gap between the lowest income and the highest income has widened sharply, from 120 in 2004 to 2,500 times in 2010. Innovations in information technology and financial management have engendered a sharp distinction between the incomes of professional workers (finance, insurance, services, high- technology, and health) and those of manual labor. Leaders of the World Bank warned that the wide rich-poor divide in America, China and several Asian countries complicate global economic recovery because finances in those countries are still concentrated in the middle-class and have not benefitted the manufacturing sector. Thanks to technology, a variety of new financial and banking instruments have exacerbated inequality in the real sector in the US, China, Europe, South Africa and Southeast Asia. The most striking form of inequality is seen in the services sector. For every professional person in this sector, 120 to 250 people are not part of the social security system. The labor unrest that has
occurred in the last four years represents a heavy challenge for ministries responsible for social affairs, labor, health and even state-owned companies. The American working class who live on $45-50,000 a year is losing even more ground to those whose income is above $250,000. In the beginning of 2013, President Obama must find a way for American taxpayers with income of over $250,000 to bear more tax than those earning less than that amount. The "fiscal gap" caused by greed and economic mismanagement during the 2000-2008 period and the Senate-House of Representatives financial committees collusion has compounded the already heavy burden of President Obama, who is seeking to build "a consensus" to overcome the government’s budget deficit. In 2009, when President Obama reminded the rich on Wall Street that a social revolution will occur if the imbalance is not addressed, Republicans accused him of being the instigator of "class warfare." Meanwhile, before the leaders meeting of the Chinese Communist Party on November 2012, debates raged among party cadres angry on the greed of the party’s elite during 2002-2012. Intra- and inter-elite collusion and corruption must be addressed to prevent the gap between the
rich and the poor in large cities and rural areas and among cities and regions from leading to "social contradictions" that can threaten national stability. We in Indonesia also should be able to overcome the financial gap of the rich and the poor in cities, regions and between cities across the region. Our task is to make 60 million middleclass professionals in banking, insurance, property, telecoms, oil and gas sectors remain concerned with the bottom layer of our society, such as labors, peasants, and young freelancers who are not part of the nation’s social network. Public-private partnerships to develop cross-subsidy programs in favor of labors and workers in pockets of poverty should be in place within the next 3-5 years. Social benefit costs are indeed high, but the social and political costs will be even larger and more dangerous in the absence of public-private partnerships. In the US some public health programs have been slashed in the quest to balance the budget. In the PRC social benefit programs have been increased in areas that are prone to unrest, especially where similar and rivalling plants are in operation. We too need to be more vigilant in anticipating socio-economic stagnation that at times occurs in the form of clashes between
We in Indonesia also should be able to overcome the financial gap of the rich and the poor in cities, regions and between cities across the region. Our task is to make 60 million middleclass professionals in banking, insurance, property, telecoms, oil and gas sectors remain concerned with the bottom layer of our society, such as labors, peasants, and young freelancers who are not part of the nation’s social network. citizens. Globalization is always a double-edged sword: it benefits the few who have skills but harm a large number who do not. Indeed, the US, the PRC and Indonesia face common complex and alarming problems. Board of Trustees of President University, Cikarang
Top CEO Backs Jakarta Minimum Wage Increase www.viva.co.id
A prominent Jakarta-based CEO has thrown his weight behind Jakarta Vice Governor Basuki Purnama's promise to increase the city’s minimum wage. “I support Vice Governor Basuki's idea. Bear in mind that in 1997, before the monetary crisis, the minimum wage was Rp 600,000 or $280 when the American dollar was worth Rp 2,300,” says SD Darmono, the president director of listed PT Jababeka, which owns and manages Southeast Asia’s largest industrial estate in Bekasi, south of Jakarta. “We can afford to pay higher wages as the country is back on track, our bourse’s composite index has risen by 400% in the last seven years, and our foreign exchange reserves stand at an alltime record of over $100 billion,” he added. Jakarta Deputy Governor Basuki Tjahaja Purnama last month told hundreds of protest-
The new figure will not reach that high. That’s too much, as companies must pay tax.” Jakarta Vice Governor Basuki Purnama
ing laborers in front of City Hall that Jakarta’s minimum wage will be increased in line with the rising cost of living. The laborers had demanded the city administration increase next year’s minimum wage from Rp 1.5 million (about $160) per month to nearly Rp 2.8 million a month. “Many businessmen own private jets and Roll-Royces. But at the same time the minimum wage stands at about $160. The widening disparity between the rich and the poor is not healthy for business. A rapid adjustment is required to stop workers from holding strikes,” says Darmono, in an apparent reference to two
large-scale workers demonstrations and strikes in Jakarta and other parts of the country in the past ten months. “If minimum wage can go back to $300 in two years’ time, Indonesians’ purchasing power will increase significantly. This in turn fuels our economy and will make the country even more attractive to investors,” added Darmono. “Basuki’s promise merits support from the business community if they really want to see Indonesia have a stronger economy. As Jakarta is the barometer of the country, it is very important that we set an example in treating workers in a just manner.” While Basuki promises to increase the minimum wage, he also finds that the Rp 2.8 million per month proposed by the laborers was too high. “The new figure will not reach that high. That’s too much, as companies must pay tax,” he said.
Jakarta Deputy Governor Basuki Tjahaja Purnama last month told hundreds of protesting laborers in front of City Hall that Jakarta’s minimum wage will be increased in line with the rising cost of living.