JAKARTA (TheInsiderStories) – The 2019 presidential election is run today. All debates have been held with the two candidates colliding ideas and strategies to build Indonesia. Both incumbents and opposition agree on the development challenges facing the country, and what policy solutions should be.
But whoever is elected must face the economic challenges and industrial revolution 4.0 in an uncertain political climate and with state institutions that are still weak and burdened by corruption.
In the debates, both Joko Widodo-Maruf Amin and Prabowo Subianto-Sandiaga Salahuddin Uno seemed to understand the challenges facing the country amid tremendous progress over the past half-century, and are now the seventh largest economy in the world, as measured by purchasing power parity, and the market 17th largest stock, according to the World Bank.
But social and economic indicators are of concern. High income, consumption and wealth inequality, the Gini Coefficient figure for income inequality has increased from 0.3 in 2000 to near 0.4 now, being one of the highest in East Asia. Access to health care, education services, and employment, unevenness, increased food insecurity and energy.
Then the deficit in infrastructure and human resources continues to increase, technological and innovation capabilities are still far behind those of competing countries and corruption is still rampant.
Amid this problem, the challenges of the Indonesian economy in the years ahead will not only come from within the country, but also from global conditions. Many economists see the global economic slowdown, will be one of the bad sentiments that envelop the economy in at least the next 1-2 years. Especially after the International Monetary Fund cut its forecast for world economic growth from previously 3.5 percent to 3.3 percent in 2019.
Meanwhile, the business and industrial climate is projected to be not encouraging for Indonesia. The Japan External Trade Organization survey mentions obstacles in investing in Indonesia due to taxation, labor issues, and projected wage increases that are considered to be risk factors in business.
The increase in wage for workers in Indonesia has a business impact of 47 percent. Compare for example the cost of wages in Vietnam which has an impact on business by 30 percent. So the risk of increasing production costs from within is greater in Indonesia due to labor costs. The increase in labor wages in the manufacturing sector in Indonesia is estimated to reach 8.2 percent in 2019, while Vietnam is only 7.4 percent.
Although the cost of wages is higher, it does not guarantee that the quality of labor in Indonesia is better than Vietnam. Because, as many as 60-70 percents of Indonesian laborers are only elementary and junior high school graduates. The next president has the task of increasing the competence of community resources. Quality improvement needs to be done rather than wage adjustments. Because a decrease in wages can hinder the performance and productivity of workers.
In the midst of low-quality human resources, Indonesia was faced with the Industrial Revolution 4.0. when information technology takes an important role in changing the industrial landscape and business development. Especially, in terms of the way business, people offer their products and services.
The logistics industry in the country, for example, grew significantly in 2018 and is expected to continue in the next few years, because of the development of e-commerce. The released report Pricewaterhouse Cooper said the integrated supply chain system allows companies to have an integrated distribution chain starting from the stages of suppliers, producers, distributors, to consumers.
The system will facilitate the company, starting from the administrative process or recording the flow of goods in and out of the warehouse, integrated database, to marketing.
The question is, with the low quality of human resources, is Indonesia ready to face that era? Will this 4.0 industrial revolution become a new golden bridge for all Indonesian peoples towards prosperity? Or, this revolution will actually make the real concern of many people about the loss of livelihoods, especially for human resources who are not ready to compete and prove their humanity exceeds artificial intelligence? This is the next task of the president to find a solution.
Meanwhile, widespread corruption prevents or weakens the implementation of policies and programs, making it ineffective. Currently, Indonesia is ranked 89th out of 180 countries in the global ranking of corruption perceptions compiled by Transparency International.
The Corruption Eradication Commission (CEC) has a very high sentence record in a hostile political environment. Indonesian Corruption Watch noted, 254 members and former members of the parliament became corruption suspects in the past five years, including the House’s head Setya Novanto and Deputy Taufik Kurniawan.
In fact, the CEC also dared to arrest the Chairman of Persatuan Pembangunan Party Romahurmuziy last March even though he served as an advisory board in the winning team of Widodo-Amin, related to corruption in buying and selling positions within the Ministry of Religion.
But other institutional frameworks and public administration tools are in desperate need of improvement. Ministries tend to work in a closed manner, sometimes with conflicting goals, and the implementation of strategic economic goals does not have high-level coordination in all governments, including local governments.
Even the government announced a policy only to cancel the proposed actions, such as the ups and downs of fuel prices in October 2018. And the justice system has largely failed to provide legal certainty to investors, companies, and individuals.
Obviously, such basic deficiencies cannot be corrected within a five-year presidential term. The reality is that institutional systems that are complex, interdependent, and competent, require time to be created and maintained. They will not be easily changed. Only cumulative progress through small and gradual improvements that will produce fundamental transformations.
Changing the culture of corruption will require strong leadership. Indonesia can seek inspiration from other countries but in the end, the solution must be unique to Indonesia, to ensure that the country survives in unique historical, political and cultural backgrounds.
Written by Lexy Nantu, Email: email@example.com