Indonesia's current flagship case, the Corruption Repellent Commission (KPK) versus the Police Department, has become a serious threat to the nation's economy growth. Chairman of the Indonesian Businessmen Association (APINDO), Sofyan Wanandi, stated that there are potentially hundreds of millions or even billions of dollars of worldwide investment funds detained because of the potential uncertainty seen through the slow and probable failure of law enforcement. For this matter, why should Indonesian worry about the fact?
Indonesian need to worry very much about that because if investment commitment is detained then real sector expansion will reduce its speed. Indonesia can not have this. What we need right now is economic growth catalyst. This condition of uncertainty indicated by the flagship case, on the other hand, is given more negative supports if foreign investment funds would rather choose a much saver alternative, the Indonesian Treasury Bond, SUN. After all, Indonesia is still to big a potential to turn head from. Imagine a 200-million-people market.
The bond, by system of course, will eventually be used to fund the nation for any purpose. But the impact will not be quick and specific to the expansion of industries. As we all know, industry expansion brings a tremendous multiplier effect, namely increasing the dynamics of economic activities with a large scale in general, increasing productivity and providing an increasing purchasing power for the people. At the end of the day, we will see a growing economy through a dandy incline of GDP.
Constraint to Growth
Now, the reason why this matter can get the nation to something bad economically is because Indonesia is starving for development funds to finance its real sector. GDP is moving quite decently for the last three quarters of 2009. For some reason, this shows that there is a good hope for the economy's upturn. And that is exactly why Indonesia mustn't face another decline. A good performance does not necessarily show stability. Stability plays its own game based on economy pillars a nation can stand on, like policies and infrastructure. We have seen how the infrastructure in Indonesia brings about the high cost economy therefore the only hope for economy upturn movement is burdened on the shoulders of policymakers and enforcers. This means bureaucracy. If this last resort is too short to lay hope on due to thick corruption tendencies, then from the investment point of view Indonesia's only profitable alternative is the Treasury bond, which provides very little effect to concrete changes in real sector. And no concrete changes means no movements for the economic growth.
What to Do
Indonesia needs to implement strict measures when it comes to law enforcement, especially for this flagship case. Not only does this will bring settlement from the law perspective, and thus bring Indonesia a better face, but also give more certainty with regards to investment climate. Failed to do so will only bring a worse emotional and psychological effect toward the government. People will see an indecent display of law enforcement and in turn shall lose their trusts toward the law enforcer. This is not what foreign investors want to see, and clearly not what Indonesia needs to grow its economy.
Indonesian need to worry very much about that because if investment commitment is detained then real sector expansion will reduce its speed. Indonesia can not have this. What we need right now is economic growth catalyst. This condition of uncertainty indicated by the flagship case, on the other hand, is given more negative supports if foreign investment funds would rather choose a much saver alternative, the Indonesian Treasury Bond, SUN. After all, Indonesia is still to big a potential to turn head from. Imagine a 200-million-people market.
The bond, by system of course, will eventually be used to fund the nation for any purpose. But the impact will not be quick and specific to the expansion of industries. As we all know, industry expansion brings a tremendous multiplier effect, namely increasing the dynamics of economic activities with a large scale in general, increasing productivity and providing an increasing purchasing power for the people. At the end of the day, we will see a growing economy through a dandy incline of GDP.
Constraint to Growth
Now, the reason why this matter can get the nation to something bad economically is because Indonesia is starving for development funds to finance its real sector. GDP is moving quite decently for the last three quarters of 2009. For some reason, this shows that there is a good hope for the economy's upturn. And that is exactly why Indonesia mustn't face another decline. A good performance does not necessarily show stability. Stability plays its own game based on economy pillars a nation can stand on, like policies and infrastructure. We have seen how the infrastructure in Indonesia brings about the high cost economy therefore the only hope for economy upturn movement is burdened on the shoulders of policymakers and enforcers. This means bureaucracy. If this last resort is too short to lay hope on due to thick corruption tendencies, then from the investment point of view Indonesia's only profitable alternative is the Treasury bond, which provides very little effect to concrete changes in real sector. And no concrete changes means no movements for the economic growth.
What to Do
Indonesia needs to implement strict measures when it comes to law enforcement, especially for this flagship case. Not only does this will bring settlement from the law perspective, and thus bring Indonesia a better face, but also give more certainty with regards to investment climate. Failed to do so will only bring a worse emotional and psychological effect toward the government. People will see an indecent display of law enforcement and in turn shall lose their trusts toward the law enforcer. This is not what foreign investors want to see, and clearly not what Indonesia needs to grow its economy.
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