Indonesia is on Track to Stay Competitive in Global Economy

IMG_3640_Gita Wirjawan, former Trade Minister delivered a talk about the Microeconomics of Competitiveness in Indonesia as part of TK Low Series of Seminar at Jakarta campus (14/6/2017). He started the discussion by looking back to the history of this planet. The human population reached the first billion in 1800, the second billion in the early 1900s, and now our planet is inhabited by 7.5 billion people. Every incremental billion took shorter time, the world is going global.

In this global stage, where exactly is the position of Indonesia? Gita presented some data that doesn’t look promising for us. In terms of productivity, Singapore is 6 times more productive than Indonesia, while Malaysia has twice productivity than Indonesia. Our R&D spending is only $8/person/year, while Singapore is $1,609/person/year. Competitiveness and productivity are positively related to R&D spending, and while our spending on R&D is still so small then our competitiveness is also in question.

Spending on R&D is also close associated with the number of scientists in a country. While China has 37 scientists in a million of people, Indonesia only owns 3.7 scientists in a million of people. Indonesia is also still lacking behind in terms of healthcare facilities (number of hospital beds) and medical professionals (doctors) compared to its ASEAN peers. Only having 0.9 hospital beds and 0.2 doctors per 1,000 population, Indonesia needs to catch up providing healthcare system to its citizens.

However, even though having some bleak data in supporting the country’s competitiveness, Gita still shared his optimism. “I can say that we are still able to be one of the top five economic powerhouses in 2030, but we need to be more productive.” He offered his advice, “we need to build a social system that values meritocracy, pragmatism, and honesty. These three factors are the keys that have made Singapore an advanced nation as it is today.”

Another solution offered by Gita to increase our competitiveness level is by reforming our tax system. “Among 120 million of working population, only 36 million of them who are registered taxpayers. From those numbers, only 16 million who pay their tax. Imagine if we can increase the number of tax payers and enlarge our tax base, we can use this tax income for R&D spending and infrastructure,” he added.

Closing his lecture, Gita concluded, “Indonesia will certainly innovate, and in the end, it is the most adaptive country that will sustain in the future.”

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