Constraints Development in Indonesia (Hambatan Pembangunan Indonesia)

8/8/2019 Constraints Development in Indonesia (Hambatan Pembangunan Indonesia)

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The Constraints Development in

Indonesia

By: David Raja Marpaung S.Ip M.Def

David Raja Marpaung. Associate Lecture University of Indonesia, also Indonesia Politic and Defense Consultant. Email:[email protected]


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Outline

Condition of Indonesia

PESTEL analyze

Political, Economical, Socio cultural,Technological, Environment, Legal

Conclusion



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Introduction:

Condition of Indonesia1998 become a momentum for Indonesia history as

a nation and also as a country.

At the point it was became an accumulation of

struggle to change Orde Baru regime. For more32 years, Indonesia commanded by Soeharto andhis cronies. Under this regime, corruption growthfertile.

But in the 10 years of reformation, there is only alittle essential change in Indonesia development.


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Development Constraints in PESTEL Framework


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Indonesia

Development

Constraints

Political

Economic

Sociological

Technological

Environmental Legal


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Politics

1. Corruption

Corruption is main issue in the body ofIndonesia government.

Indonesia in the number 38 as the most corruptgovernment in world (TII). And in Asia regionIndonesia is the second most corrupt country

after Philippines.Level of corruption in Indonesia is around 20-30

percent from national budget (Kompas).


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Effect of corruption

The direct impact of corruption

is decreasing of public

expenditure. So the target of

economic growth can not beachieved. Corruption also

destruct the morality.


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2. High cost of democracy

The direct popular vote for local since June 2005increase the national budget for election. Before

the time, the leader was chosen by legislative.

Rp 25 trillion for 350 local election and Rp 48 trillion for

national election.

Effect of high cost of democracy will reduce the budget

for another sector, especially health and education.

But investment in politic can not give short impactto the society. This is long term investment.


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3. Disintegration

Issue of disintegration especially in Papua and NAD makeunstable and insecure condition. These make investorbecome worried to invest their capital, even theseregion have rich natural resources.

So it is will reduce or make the economic growth runslower. Beside that, government must budgeting extracost for military operation. Once again, it reducinganother sector budget allocation.

Indonesian cost for military operation in these area is

around Rp 1,3 trillion (annually).


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4. Ineffective bureaucracy

The structure of Indonesia government is too big or not

efficient. This make the bureaucration process becomelonger. The impact is making very difficult to make adecision. And it make long process to use the nationalbudget.

Beside that there are no good coordination between one

department and others. Every institution make their ownplan without cooperation with others.

These two things will make the practice of economy becomeslower, include the development process.

Beside of that, the use of the budget is not transparent. It can

trigger potential issues of corruption.


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Economy

1. Poverty

36 Million from 213 million citizen of Indonesia are the

poor (Ind Govt). But World Bank says with the

indicator 2$ per a day per person consumption,about 50 percent people still live in poverty.

Government give directly fund aid (cash transfer) Rp 14

trillion in 2008 for the poor.

Obviously, the poverty number can be the burdenbecause government should expend the extra cost

for subsidy, example: education, health, and energy

consumption.


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2. Unemployment

9,70%

12,50%11,80 %

9,20 %8,70 %

10,60 %

Unemployment rate in Indonesia

is still high. This is became a

burden for the government. Job

creation still limited because not

equal with the worker agenumber. The quality of workers is

low so can not compete with

international competition. That is

why we just depend on domestic

worker market.

Unemployment also bringinequality economy distribution,

so only some people that enjoy

the development. Furthermore,

unemployment potentially rise

social conflict.


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3. InflationInflation rates are fluctuative so thegovernment difficult to make

decision, especially in budgeting.

Example: high price of oil trigger

high inflation so push the

government to rebudgetting national

budget.The direct effect of inflation is the

price of goods become higher and

the value of money going to reduce.

So the target of public expenditure

can not be achieved.

6,3 %

13,2%

10,5 %

6,10 %6,6 %

11,9 %


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4. Foreign Loan

137,2

130,4135

141,5

135,7131

In billion US$

30-40 Percent of national

budget is allocated to pay

the interest of foreign loan.

So the budget for

investment become limited.It make the Indonesias

economy will be depend on

the policy of other

countries.


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5. Lack of infrastructure

The infrastructure which support economy sector in

Indonesia still limited and in bad condition. For

example: the infrastructure of roads, bridges and

ports. Unworthy infrastructure makes ineffective and

inefficient of economy and development process.

The lack of infrastructure can not make the economic

process growth well.


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Socio-Cultural

1. Low quality of human resources

Indonesia Human Development Index (HDI) is in

108 position among 177 countries. Malaysia

in 63, Thailand in 78, and Singapore in 25. Thisdata showing that the level of education

quality and health service in Indonesia is still

low. Low quality of society will be the obstacleof development so can not produce maximal

goods and service and can not compete with

other countries.


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2. Horizontal and vertical conflict

Horizontal conflict is often happen in Indonesia., because of theimbalance of economy and social, and also because of issue intribe and religion.

Example: Tribal war in Papua, ethnic conflict in Kalimantan,religion conflict in Maluku.

Vertical conflict happen because of unsatisfied district to thecentral government. It because the decision from the centralgovernment can not accepted or not represent the localaspiration.

The conflict build unsurely and unsecure condition for

investment. Beside that the economic cost of conflict is alsohigh, because the government need to rebuild infrastructuresand other destroyed infrastructure.

Friction between central and local government will createdistrust of the society, so the government plan will not work

properly.


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3. Urbanization

Migration from rural to urban area is higher in order to

looking for the better welfare. Almost 60 percent of

total population of Indonesia is centralized in Java

island. In 2025, level of urbanization in Indonesia

predicted achieve 68%.

This make scarce of human resources in rural area and

also create a gap of development between rural and

urban area. Urbanization also potential to appear ofsocial problem.


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Technology

1. Gap of Technology

Because of low quality of human resources. No technology transfer from the

high tech country. Indonesia just buy the product and not the technology

so the technology growing slowly. Low of technology make limited

quantity and quality of production. It make the Indonesia product can

not compete with developed country. Beside of that Indonesia onlydevelop technology based on manufacture.

2. Less support from government

There are minimum budget for research technology, so the strategic industry

can not growth well. The budget only 0,07 percent from the GDP. But inneighbour country like Malaysia, the research budget is 2 percent from

the GDP.

Because of limited budget, Indonesia do not develop high technology for

public consumption, such as electricity and public transportation.


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Environmental

1. Potential natural disasterThe geographical position of Indonesia is in ring fire. It make the naturaldisaster potentially happen: volcano eruption, earthquake, and tsunami.

Government must spent a lot of money for the reconstruction program. Forexample: Reconstruction budget for Aceh and Nias when tsunami hitthese area in 2004, need Rp 8,4 trillion from national expend budget.

2. Environment hazard

The destruction of rain forest in Kalimantan become the snow ball effect. Thedestruction not only for forest area but also trigger natural disaster suchas flood and eruption.

The quality of human resources (quality of life) threatened because of naturalhazard that coming from pollutant. Because mining pollutant destroyquality of water, like in Minahasa. Then Industrial waste estimated at0.25 million tons in 1990, has reached over 1.2 million in 2001.Approximately 80% of this waste is hazardous, contaminated by heavymetals and other chemicals.



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Legal1. Bad law enforcement

The quality of law apparatus still not maximal. This is provedby a lot of corruptor defendant was punished free or lightpunishment.

Beside of that, the law apparatus still have low morality. Itproved by bribing in the court.

Illegal logging and illegal fishing is still in big number, becauseof less control from the government.

2. Unfair low enforcement

The government can intervene the process of law. Prosecutorcan make stop investigation letter with the advice ofgovernment. This is often happen to the law cases involvingentrepreneur or government leader.

David Raja Marpaung. Associate Lecture University of Indonesia, also Indonesia Politic and Defense Consultant. Email:

[email protected]


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3. Low respect to the intellectual right

The piracy growing in Indonesia is the prove of

low respect to the intellectual right. The

government do not give big attention to the

piracy case. In the future it can kill the societymotivation to creation. Furthermore, it can be

the inhibition of development.


[email protected] Raja Marpaung. Associate Lecture University of Indonesia, also Indonesia Politic and Defense Consultant. Email

[email protected]


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Conclusion

Corruption is become the main problem of

development in Indonesia. So we should

maximize the role of The Corruption

Eradication Commission.Make the bureaucracy more effective through

one roof policy.

In economy factor, poverty have linkage withunemployment. So the solution is the creation

of jobs.


[email protected]


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Low education give impact to the increasing ofsocial conflict. So the government should give

more attention to increase the education

quality.

Long gap technology with the other country.

The government have to begin the transfer

and develop technology.

Restructure of environment policy in order tominimize the natural hazard. Beside of that

need the forceful rule of company duty to

make analyze of the environment impact.David Raja Marpaung. Associate Lecture University of Indonesia, also Indonesia Politic and Defense Consultant. Email:

[email protected]


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Bad law enforcement also become a

development constraint in Indonesia. So

Indonesia need a transparent law process

through maximize the role of press and non-

governmental organization.


[email protected]

Documents

Constraints Development in Indonesia (Hambatan Pembangunan Indonesia)