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  • Neighbor has different strategy

    It seems like the neighbor has a different - and successful strategy - compared to Indonesia. In Malaysia they actually offer incentives to attract foreign investment... http://thejakartaglobe.beritasatu.co...nies-relocate/

  • #2
    Very true Malaysia does have a better business strategy compared to this country, but that said they have are a tiny consumer market in comparison to the population of RI

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    • #3
      Malaysia GDP - 313.2 billion USD (2013)
      Indonesia GDP - 868.3 billion USD (2013)

      Indonesia has had roughly twice the Malaysian GDP over last 40 years or so, however, over the last 10 years Indonesia is moving closer to having 3 times Malaysian GDP. Of course, Indonesia is starting from a lower development index, but still, it seems to be moving in the right direction economically, so the policy cannot be all bad.
      Take my advice, I don't need it.

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      • #4
        Sometimes GDP per capita makes more sense

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        • #5
          Originally posted by Niko Z. View Post
          Malaysia GDP - 313.2 billion USD (2013)
          Indonesia GDP - 868.3 billion USD (2013)

          Indonesia has had roughly twice the Malaysian GDP over last 40 years or so, however, over the last 10 years Indonesia is moving closer to having 3 times Malaysian GDP. Of course, Indonesia is starting from a lower development index, but still, it seems to be moving in the right direction economically, so the policy cannot be all bad.
          Your numbers are not the ones that make sense to compare - the correct comparison is:

          Malaysian GDP per capita, 2013: USD 10,538.06
          Indonesian GDP per capita, 2013: USD 3,475.25

          It's also illogical to claim "well, the country is moving in the right direction so the policy cannot be all bad." Yes, it could be. Indonesia could be experiencing overall growth in GDP due to population growth, increased exploitation/higher world prices of a natural resource, worldwide trends in GDP -- the pressure exerted all of those or other factors could lead to an increase in GDP despite terrible policies.

          ETA: Ninja'd by Kroshka!

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          • #6
            Originally posted by ScooterIndo View Post
            Very true Malaysia does have a better business strategy compared to this country, but that said they have are a tiny consumer market in comparison to the population of RI
            Considering the revenu of the majority of the population, I'm not sure how much someone can consider indonesia as a consumer market... Other than for the basic life thing like food transport and phone.
            La motivation vient en se motivant ~ Motivation come by self-motivation

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            • #7
              Originally posted by Puspawarna View Post
              It's also illogical to claim "well, the country is moving in the right direction so the policy cannot be all bad." Yes, it could be. Indonesia could be experiencing overall growth in GDP due to population growth, increased exploitation/higher world prices of a natural resource, worldwide trends in GDP -- the pressure exerted all of those or other factors could lead to an increase in GDP despite terrible policies.
              Well, if we are going to nitpick, the right numbers to look at would have been PPP adjusted GDP per capita, somewhat smaller gap than it seems by looking at pure GDP per capita.
              Any set of numbers that you look at, over last fifteen years Indonesia has been steadily closing the gap with Malaysia. That is why I say they must have been doing some things right. The reliance on natural resources alone has actually decreased in that period as the government has reduced illegal logging and oil and gas output has been falling. The population argument stands though.
              Take my advice, I don't need it.

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              • #8
                Originally posted by PhilippeD View Post
                Considering the revenu of the majority of the population, I'm not sure how much someone can consider indonesia as a consumer market... Other than for the basic life thing like food transport and phone.
                Perhaps for luxury items Phil but I was thinking more of things such as TVs, Fridges, and motorcycles for example as even the poorest households can boast at least 1 of each. Times that by a 50-60 million that's a lot of Fridges mate.

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                • #9
                  Originally posted by Niko Z. View Post
                  Well, if we are going to nitpick,
                  Not nitpicking. I'm not a fan of either country's FDI strategy, myself, just interested in keeping the discussion evidence-based. Saying that "the gap is closing" proves nothing - is Malaysia such a paragon that it is the only valuable comparison for Indonesia?
                  Last edited by Puspawarna; 27-02-15, 18:57.

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                  • #10
                    Originally posted by Puspawarna View Post
                    ...is Malaysia such a paragon that it is the only valuable comparison for Indonesia?
                    This. Exactly my reaction to the original post.

                    I don't believe that Indonesia should by default follow Malaysian way of doing this, even if it works well enough for Malaysia.
                    Hence the statement that Indonesian policies are not necessarily all bad. A lot of procedures could definitely get more streamlined, but in my view, the
                    basic problem of development in Indonesia lies not with policies but with human resources available.
                    Take my advice, I don't need it.

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                    • #11
                      Originally posted by Niko Z. View Post
                      This. Exactly my reaction to the original post.

                      I don't believe that Indonesia should by default follow Malaysian way of doing this, even if it works well enough for Malaysia.
                      Hence the statement that Indonesian policies are not necessarily all bad. A lot of procedures could definitely get more streamlined, but in my view, the
                      basic problem of development in Indonesia lies not with policies but with human resources available.
                      Saying that Indonesia shouldn't follow Malaysia and saying that Indonesian policies aren't "necessarily all bad" are two completely separate things. Both are interesting and debatable propositions, they just don't go hand in hand.

                      What exactly is it about Indonesian FDI strategies that you think are good?
                      Last edited by Puspawarna; 27-02-15, 21:22.

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                      • #12
                        Well, for example, in the 60s and 70s you had a move from concessionary contracts to production sharing contracts, and recently the government is trying to move towards service contracts in order to tighten the control over dwindling natural resources and generally trying to re-balance the contracts to have more profit for Indonesia. This only makes sense.

                        Could you please clarify your own position? Surely you are not arguing that all Indonesian FDI policies are terrible?

                        Saying that Indonesia shouldn't follow Malaysia and saying that Indonesian policies aren't "necessarily all bad" are two completely separate things. Both are interesting and debatable propositions, they just don't go hand in hand.
                        Btw, you should read my original statement as a reaction to the original post. By posting an example of Malaysian 'different and successful' policy it was implied that Indonesian policies are unsuccessful, and I don't think that's completely true. What is your proposition in that regard?
                        Last edited by Niko Z.; 28-02-15, 07:49.
                        Take my advice, I don't need it.

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                        • #13
                          Indonesian oil and gas production sharing contracts would not appear to be very successful.
                          - exploration has declined to a point where the reserves have been depleted but new fields are not opening at the same rate
                          - most exploration is in deep offshore basis where only foreign companies have the skills and investment capacity to work the fields. Only a few are interested in dealing under the current PSCs.
                          - even the state owned company has not kept up its investment locally, shifting much of its budget for new fields offshore. Pertamina also cannot keep its own refineries up to date and says it will shut down most of them because they are inefficient.
                          - Problems with offshore land rent and no clarity on contract extensions has seen the entire market slow down
                          - The PSCs have been used to criminalize innocent government officers and private company employees by vengeful commercial interests. The AGO in league with prosecutors and judges appear to be targeting employees when companies do not allocate contract work under the PSCs to the "right" company. The PSC is used as the legal basis to claim there has been a loss to the state, wham bam thank you maam, some poor sucker is in prison for 5 years.
                          - The PSCs attract rent seeking and corruption, this is well known and plenty of cases in the media.
                          - When the state asks for FDI and then prevents companies from making the agreed return on investment, the state will see a lack of enthusiasm in the area of FDI. This is exactly what has happened over the past 10 years in oil and gas.

                          That is the proposition.
                          Last edited by akubrahat; 28-02-15, 10:04.

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                          • #14
                            Originally posted by Niko Z. View Post

                            Could you please clarify your own position? Surely you are not arguing that all Indonesian FDI policies are terrible?
                            I can't compare Indonesia and Malaysia directly because I lack sufficient up to date knowledge of the latter. I don't know every last scrap of wording of every policy that GoI has ever promulgated; I'm sure there are a few things that are positive or least moving in the right direction (though I'd be willing to bet that implementation has often been erratic even where the policies are good on paper - just speculation on my part but that's always how it seems to be here). However with respect to FDI, Indonesia needs to rationalize incentives and allocate risk better than it does now. It needs to clarify the roles of local versus central government in developing large-scale projects. Land acquisition is a big mess. The difficulty of transport logistics discourages foreign investment, and this is something that it is the responsibility of government to address.

                            Indonesia has a terrible record with respect to PPP. Early efforts totally flopped and current ones have stalled - there was quite an ambitious list floated a while back, but most things have fizzled. I was actually going to provide some stats, but my computer is in the middle of crashing and I can't open the files I want to cite! More later if a reboot fixes things.

                            ETA - ah, here is the data I was thinking of (from an engineering consultant my office works with):

                            Of the 24 water projects on the government’s updated PPP list from year 2011, only four (4) have reached the prequalification stage:
                            · Umbulan Spring (East Java)
                            · Bandar Lampung
                            · Maros (South Sulawesi)
                            · Pondok Gede (Bekasi)
                            However not a single one has yet come to tender for various reasons.
                            That's just one sector so maybe PPP is thriving in other sectors due to the progressive nature of GoI efforts! Eh, I doubt it.
                            Last edited by Puspawarna; 28-02-15, 11:05.

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                            • #15
                              ... what I do not understand very well is that Indonesia seems not to be very productive, it seems the work force lack professional skills, it also seems to me Indonesia lack money. It also seems like they say.. we can manage ourselves, we do not need somebody from the other side of the border.. we will fix it ourselves.. at the same time we will put the bar higher, so it becomes much more difficult for the companies - the investors - to chip in with the slice of the development pie.. the companies that are lining up in the banks to deposit investment dollars.. Most countries that I have heard of welcome foreign investors.. as the believe that will bring growth to their country..

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