Economic Development and MDG Achievement Efforts in Indonesia and Malaysia

8/7/2019 Economic Development and MDG Achievement Efforts in Indonesia and Malaysia

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Economic Development and MillenniumDevelopment Goal Achievement Efforts

in Indonesia and Malaysia:A Comparative Study

Group D

Nidya Kartikasari MEP06055

Yasir Niti Samudro MEP06069Etjih Tasriah MET06072

Mochammad Hadi Pratomo MET06080

Meenachi Muniandy MEY06123


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Economic Development and MillenniumDevelopment Goal Achievement Efforts

in Indonesia and Malaysia:A Comparative Study

Outline

1. Culture and Historical Background

2. Profile of Indonesia and Malaysia in 1970

3. Profile of Indonesia and Malaysia in 2004

4. Political Comparison

5. Economic Development Comparison

6. Achieving Millennium Development Goals

7. Challenges and Prospects

8. Conclusion


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World Map


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Geographical Location

Indonesia

Area: 1,919,400 sq Km (5x of Japan)Population: 225 millions (300 ethnics,742 languages & dialects)Archipelago (17,508 islands)

Climate: Tropical, Humid

Malaysia

Area: 329,750 sq Km (1x of Japan)Population: 25 millions (Malay,Chinese, Indian)Peninsula, 2 main landscape

Climate: Tropical, Monsoons


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Commons and Similarities Language Malayo-Polynesian

Majority Muslim population Culture Influenced by a number of religions such as Islam,

Hinduism and Buddhism.

Natural resources (agriculture, minerals, forestry)

Colonized by European (Anglo-Dutch Treaty in 1824)

- VOC/Dutch Indonesia and British Malaysia
http://travel.yahoo.com/p-travelguide-191501632-action-pictures-bali_vacations-i-tgphotoid-990674;_ylt=ArUECGt1JjCRAviscp4oL3RAFWoL


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Indonesia

Various autonomouskingdoms existed basedon ethnics.

War and conflict amongkingdoms Trade of Spices &

Agricultural product asmain income

Migration of the Indian,Arabian, and Chinese intoIndonesia attracted bytrade & religion

Malaysia Some autonomous

kingdoms existed

Relatively stable

Trade of Spices &Agricultural product asmain income

Migration of the Arabian,Indian and Chinese intoMalaysia attracted bytrade & religion

Period of Pre-Colonialism


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Prosperity Period of Nusantara

Spice Trade

Strategic Location between the East and West


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Prosperity Period of Nusantara

attracted Europeans to invade Indonesia and Malaysia Anglo-Dutch Treaty in 1824- VOC/Dutch Indonesia and

- British Malaysia
http://en.wikipedia.org/wiki/Image:Vascodagama.JPG


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Indonesia

Migration of the Chinese,Arabs and Indian

Social hierarchy ranks

Development of plantationeconomy (Cultivationsystem)

War and conflict

Introduced of basicmodern governmentaladministration

Migration of European intoIndonesia

Malaysia

Migration of Chinese andIndian

Divide and rule betweenthe ethnics

Structured reform

Relatively stable

Introduced well-designedand modern governmentaladministration

Migration of European intoMalaysia

Period of Colonialism


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Indonesia

Declare independence in

1945

Lost decade (1945-1955)

Revolution Period Autocrat and Revolutionary

leadership style

First democracy electionsin 1955

Began to focus oneconomic development inthe1960s

Major exports of rubber,

palm oil, tea, pepper

Malaysia Independence was

granted by British in1957

Economic reform pre

independence MalayaPlan 1956

First democracy electionwas in 1951

Focused on stateinvestment in industry andinfrastructure

Major exports of rubber,

tin and palm oil.

Period of Post-Colonialism


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Indonesia(Soehartos Era)

Malaysia

Government Type Presidential democracy Parliamentary democracy

GovernmentsFocus

Anti-communism, pro-West,ASEAN+3

to stabilize the country, pro-growth

Pro-West, ASEAN+3, Mainaim to maintain the ethnicharmony

Governments

Characteristics

State-military control and autocraticleader

Democracy (Present)

Autocracy with strongexecutive branch

Governments

Functioned

Co-opting the unions andcontrolling the indigenous elite

Providing growth and stiflingcriticism

State-Laborrelations

Antagonistic, co-opted Antagonistic; union powermostly eviscerated

Post-Independence

Political Environment Comparison


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Indonesia

Population: 134.4 million

GDP growth: 7.55%

Population below poverty

line: 54.2 million (1976) Population below poverty

line (%): 40.1% (1976)

Unemployment: 7.8%

HDI Index: 0.464

Malaysia

Population: 12.3 million

GDP growth: 7.1%

Population below

poverty line: 6.06 million

Population belowpoverty line (%): 49.3%

Unemployment:7.4%

HDI Index: 0.615

Key Indicators in 1970s


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Indonesia

Population:223 million

GDP: US$ 254.3billion

GNI per capita: US$ 1,130

GDP growth: 5.6% Population below poverty

line: 36.2 million


line (%): 16.7% Unemployment: 10.3%

HDI Index: 0.711

Malaysia Population: 25.6 million

GDP: US$ 118.3 billion

GNI per capita: US$ 4,520

GDP growth: 7.2% Population below poverty

line: 1.46 million


line (%): 5.7% Unemployment: 3.5%

HDI Index: 0.805

Key Indicators in 2004


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Indonesia Malaysia

Overall regime State-controlledindustrialization

Private sector driveneconomy with thegovernment as facilitator

Foreign DirectInvestment

Yes Yes

Market Reform Deregulation and marketliberalization

Deregulation and marketliberalization

Monetary Policy Price stabilization and defenseof foreign reserves

State spending throughdomestic borrowing

Exchange RatePolicy

Dual rate that favoredexporters; managed peg XR;managed float

Before 1997 free float1997 pegged to US dollar

2005 - managed float

Tax Policy Manipulated regularly to targetspecific sectors or industries

identified by government

Excise duties on petroleumexports; tax policy used as a

tool to target sectors.

Economic Policy Comparison


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Government DevelopmentExpenditure (%)

Sector 1969 1979 1989 2000 2004

Social 6.0 15.5 19.6 20.3 21.6

Health 2.6 3.5 3.4 4.1 3.8

Education 6.8 9.0 10.9 10.8 14

Sector 1970 1980 1990 2000 2003

SocialServices

11.2 15.9 24.5 39.6 45.0

Health 2.8 1.1 4.3 4.6 6.8

Education 6.1 7.5 15.3 25.4 25.9

Indonesia

Malaysia Sources: Hill, H. 1996, Bappenas


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Achieving MDGsSuccess & Challenges

Goal 1 Eradicate poverty and hunger

Malaysia

Reduced poverty from49.3% in 1970 to 5.1% in

2004 Strategies:-Agriculture and ruraldevelopment

-Labor-intensive export

industrialization

- Channeling of publicinvestment into education,health and basicinfrastructure

Indonesia

Reduced poverty from 40.1%in 1976 to 16.7% in 2004 Strategies:-Broad rural development-Food self-sufficiency program-Wealth distribution (pro-equity)development-Govt expansion on public

infrastructure esp. oneducation, health, road, energyChallenges-Increasing inequality betweencities and rural areas- Lower HDI compared to

neighborhood countries


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Relationship of Growth and Poverty inIndonesia


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Goal 2 Achieve Universal Primary Education

Malaysia

In 1970, 1/3 neverattended school By 1990, 97% completedprimary education

Strategies:- Provision of educational

infrastructure to ensureaccess of the rural poor toeducation

Indonesia

In 1971, only 25.1% of populationattended primary schoolBy 2002, 96.1% attended primary

education

Strategies:- Massive investment in primary

education infrastructure based ondemographics.

- Achieved in 1984Challenges-Low education quality andoutcome- Unequal distribution of educationfacilities


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Goal 3 Promote Gender Equality and Empower Women

Malaysia

gender gap in education

improved significantly now the womenoutnumbered the men 2:1 inpublic universities

Establishment of Ministry

of Women, Family andCommunity in 2001

Indonesia

In education, woman

participation ratio is around 100 Increasing literacy ratio forwoman to man from 97.9% in1990 to 99.7% in 2004

Strategies & Challenges-Improving law and regulationto prevent bias gender-Unsatisfactory womanparticipation in public sector

A hi i MDG


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Achieving MDGsSuccess & ChallengesGoal 4 Reduce Child Mortality

Malaysia

Child mortality ratedropped from 57 per 1000

live births in 1970 to 0.5 in2005

Strategies:- well-developed primaryhealthcare system

- infant immunization- child nutrition- better education

IndonesiaChild mortality rate fell from 216 per1000 in 1960 to 43.5 per 1000 in 2000Strategies-Substantial investment in primary

healthcare (Puskesmas) started in1978- Campaign on family planning- fertilityrate reduced from 5.6 in 1970 to 2.6 in1990-Mass immunization and improving

babies nutritionChallenges- Low access of poor people to healthservices (cost barrier)- Low education for healthy life


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Goal 5 Improve Maternal Health

Malaysia

Maternal Mortality Ratiodeclined to 30 per 100,000live births in 2005 from 141per 100,000 in 1970

Strategies:

-Improved access to qualitymaternal health services

-Skilled health personnel

Indonesia

Maternal Mortality Ratio decreasedfrom 450 in 1986 to 307 in 2002 per100,000

Strategies:- Family Planning campaign- Improving pre-natal health education- Increasing skilled midwivesChallenges

- Insufficient budget to provide adequatehealth facilities

- Availability of skilled midwives inremote areas

- Affordability of health care- Awareness of importance of skilled

midwifery during birth


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Goal 6 Combat HIV/AIDS, Malaria, and Other Diseases

Malaysia

remarkable strides incontrolling infectious

diseases such as malaria Strategies:-Safe drinking water- child immunization- improved healthcare

services

still not achieve the targeton HIV/AIDS

IndonesiaHIV/AIDS prevalence below 0.1%

Strategies:

- Built clinics, improved nutrition byplacing price controls on staple

foodsChallenges- Increasing threat for HIV/AIDSinfection

- Malaria prevalence is still high

about 850 of 100,000 in 2001- Inadequate health servicepersonnel

- Prevalence for tuberculoses is stillhigh about 786 of 100,000 in 1998


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Goal 7 Ensure Environmental Sustainability

Malaysia

Preserve forest

- retained at 59.5%

Clean water supply- 87% to rural population- 98% to urban population

Palm oil industry achievedtarget of zero discharge of

pollutants

Indonesia Ratio forest of the land is

63.4% in 2004

Strategies Illegal logging eradication Import restriction of CFC Improving basic sanitationChallenges

Deforestation Increasing CO2 emission Low access to clean water

supply for poor families Limited budget & low

participation of private sector


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Goal 8 Develop A Global Partnership For Development

Malaysia

Continue efforts to developa global partnership

RM343.3 million in 8MP toADB, IDB, UN and WTO

knowledge sharing throughMTCP

regional cooperation suchas ASEAN, ASEAN+3,APEC, NAM and OIC

Indonesia

Continue efforts to developglobal partnership

Initiating Debt Swap to MDGAchievement from MDC to LDC

Jakarta Declaration for MDGsounds the importance for

regional partnership andcooperation

Actively participated in NonAlignment Movement


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Malaysia to Become a Developed Nation by 2020

Knowledge-driven

Productivity-driven

Investment-driven

Labor-driven

Labor-driven

1960 1970 2000 & Beyond19951980

Primary

Commodities

MSC

Medium-techmanufacturing &services

High-techmanufacturing &services

Assembly-typemanufacturing

Knowledge-

based


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Sum of Indonesia Development

increaseproduction ofstaple food &infrastructuredevelopment

agriculture,employment,

and regionallyequitable

development

developmentof

agriculture-related and

otherindustry

basicindustries

transport andcommunications

big bangdecentralizatio

n

increase welfare,maintain security& peace, equality

& democracy

reform era

1969-1973

1974-1978

1979-1983

1984-1988

1989-1996

1998

2001 2004-beyond


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Asian Financial Crisis

IndonesiaPre-Crisis

High annual growth (7%-8%)

1.1 million individuals wereescaping poverty every year

Currency rate US$ 1 = Rp.2,400.-

IndonesiaDuring Crisis

negative growth of 13.1 percent in1998

plunging 25 percent of Indonesiasnon-poor population back intopoverty

Currency rate US$ 1 = Rp.18,000.-


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Asian Financial CrisisMalaysia

Pre-Crisis

Top investmentdestination

High growth rate Vision

2020

KLSE Composite Index

was above 1,200

The ringgit trading atUS$2.50

Overnight rate below 7%

Malaysia

During Crisis

Growth in all sectorsdeclined

GDP fell to -6.2%

KLSE fell below 270points

ringgit value decreased tobelow 3.80 to dollar

Overnight rate jumped toover 40%


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Asian Financial Crisis

IndonesiaMeasures Taken

Macroeconomic & Socio-cultural Free float exchange rate regime Banking restructuring &

recapitalization Supra-structure & Political

infrastructure reformation Big-bang decentralization Repositioning of military function

For the Poor's Social safety net Subsidies focused on staple food

for the poor Intensify microfinance programs

for agricultural sector

MalaysiaMeasures Taken

Fixed exchange rate regime

Capital controls

CDRC dealt with corporateloans

Danaharta discounted andbought bad loans from banks

Danamodal recapitalized banks

Merging banks

After reaching pre-Crisis level

in 2005 removed peg


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-15

-10

-5

0

5

10

15

88-97 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Indonesia Malaysia

GDP Growth (%)Indonesia and Malaysia

9.3%

-7.4%

5.8%6.1%

6.9%

-13.1%

0.8%

6.0%

(%)


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Indonesia

Today

Effectiveness ofInstitution

High level of corruption

Low total productivityfactors compare toneighboring countries

Ahead

Preserve harmony andpeace among ethnics &regions

Remain competitive

Malaysia

Remain Competitive

Urban poverty

New Sources of Growth

Brain Drain

Retain peace andharmony among ethnics

Challenges Today & Ahead


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Some elements as lessons:

Good governance is crucial factor in economicdevelopment

Sustainable growth needs strong institutions as much

as clear rules and regulations

Sense of social cohesion and sense of ownership playimportant roles

Peace and stability as key elements

Creative and entrepreneurial spirit is essential

Most important, Human Development as fundamentalroles.

Which Model is better?

There is no single model would fitly apply in every countries


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Thank You

Terima

Kasih


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References:Bappenas (2005). Laporan Perkembangan Pencapaian Tujuan Millenium Indonesia .

Jakarta Indonesia

Bappenas (2007). Rancangan Pembangunan Jangka Panjang Nasional. JakartaIndonesia.

Hill, H. (1996). The Indonesian Economy Since 1966. Cambridge University Press.Australia

Millenium Development Goals Indicators, United Nations (2006)

Prawiro, R. (1998). Indonesias Struggle for Economic Development: Pragmatism inAction. Oxford University Press. USA

Todaro, M. & Smith, S. (2006). Economic Development. 9th Edition. Pearson AddisonWeasley. USA.

United Nations (2005). Malaysia Achieving The Millennium Development Goals. KualaLumpur, Malaysia

Wood, R.S. (2005). Strategies of Development: Indonesia and Malaysia 1960 Present.SAIS I-DEV Integrating Seminar. Professor Frank & Douglas

World Bank (2006). Making the New Indonesia Work for the Poor. Washington USA.

Documents

Economic Development and MDG Achievement Efforts in Indonesia and Malaysia