Page 83 - Forbes - Asia (December 2019 - January 2020)

So what are the key impediments hold- directed mostly at the resource sector. FDI, 43.
ing back Indonesia? The usual suspects are which has played a key role in rapid indus- SOEGIARTO
well known. Infrastructure, regulation and trialization across Asia’s emerging markets, ADIKOESOEMO
bureaucracy all stand in the way of a better has simply bypassed Indonesia. The result $730 MILLION T
business environment. Subsidies distort price is that Indonesia’s industrialization has AKR CORPORINDO
AGE: 81
signals and need to be reduced, if not elimi- been stunted. The manufacturing sector
nated. Foreign investment needs to be made never managed to take off, and nonresource
44.
more welcome. Irregular employment in the exports failed to expand. AKSA MAHMUD
informal sector has to be regularized to cre- While Vietnam’s manufactured exports $710 MILLION T
ate more, better-paid formal sector jobs, and soared to more than 100% in 2018 from BOSOWA
that requires higher quality education and 50% of nominal GDP in 2009, Indonesia’s AGE: 74
more skilled graduates. Labor market regula- manufactured exports dropped from 25% to
tions, which impose high dismissal costs, are 18% over the same period, according to data 45.
a deterrent to job creation and need to be from Haver Analytics. And in some years ARIFIN PANIGORO
revamped. Greater policy certainty would in of the past decade, growth of Indonesian $670 MILLION S
turn encourage private sector investment in industrial production actually lagged behind MEDCO ENERGI
infrastructure, especially in partnership with real GDP growth. AGE: 74
the government. Indonesia’s economy is also held back by
To be fair, Jokowi in his first term tried to rent seeking. Since Suharto was president, 46.
HAMAMI FAMILY
tackle some of these issues, and made some the government’s intervention in the econo- $660 MILLION Ì
progress in increasing investment in infra- my conditioned the private sector to cultivate TIARA MARGA TRAKINDO
structure—such as the Jakarta MRT and a political connections. In this context, eco-
new terminal for Jakarta’s airport. But these nomic nationalism works hand-in-glove with 47.
efforts didn’t address the real challenges. rent seeking. When Indonesian companies EDWIN SOERYADJAYA
What are the challenges? In short, gain a privileged position, they tend to sup- $635 MILLION T
economic nationalism and rent seeking. port economic nationalism. Rent-seeking is SARATOGA
In Jokowi’s first term, he promised to open by definition anti-competitive, and compa- INVESTAMA SEDAYA
Indonesia to the world for business. Jokowi nies that grow rich on access to economic AGE: 70
did not address anti-foreign nationalism rent are less efficient than those that compete
in Indonesia’s political economy after the in an open market. They naturally resist eco- 48.
fiasco of the government’s attempt to revise nomic reforms. And because of this dynamic, KARTINI MULJADI
$630 MILLION S
its negative investment list, sectors closed to Indonesia’s track record on engaging foreign TEMPO SCAN PACIFIC
foreign investment. investors in infrastructure is subpar. AGE: 89
Within days of announcing In December Economic nationalism and rent seeking
2018 that this list was being revised and that are challenges that Jokowi and his new cabinet 49.
54 sectors were to be opened to foreign in- must tackle. If they work effectively on this, ARINI SUBIANTO
vestment, the government aborted the effort the Indonesian economy could inaugurate a $600 MILLION T
as cabinet ministers waded in to dispute why whole new chapter in wealth creation. ADARO ENERGY
some sectors should not be opened to foreign The Indonesian economy would become AGE: 48
investment after all. Private companies facing more globalized than ever, and with it, unprec-
exposure to foreign competition lobbied hard edented opportunities in expanding sectors 50.
to stop it. Jokowi did not try again. like manufacturing and infrastructure would IWAN LUKMINTO
No surprise that foreign direct invest- open to a new generation of entrepreneurs. F $585 MILLION 3
ment (FDI) in Indonesia has never exceeded SRI REJEKI ISMAN
AGE: 44
3% of GDP in the last decade. On a per- Yuwa Hedrick-Wong is the Chief Econom-
capita basis, Vietnam consistently attracts ics Commentator for Forbes Asia. The views
four times as much FDI as Indonesia. expressed are his own and do not necessarily
And whatever FDI there is in Indonesia is reflect those of Forbes Asia. SUP TDOWN WXFLAT
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