Eight credible opinion survey agencies (via
quick counts) have put Joko “Jokowi” Widodo and Jusuf Kalla as the winners of
the Indonesian presidential election. Of course, we have to wait until July 22
for official announcement from the General Elections Commission (KPU). But we
can ask now whether the ASEAN Economic Community (AEC), which is scheduled to
materialize at the end of 2015, will be included in Jokowi’s top work
priorities.
The new
Indonesian president will determine whether Indonesia will be a leader or
instead a victim of ASEAN policies.
Neither
of the two candidates (Prabowo Subianto being the other) has ever rejected the
integration process. Jokowi and Prabowo believe that ASEAN is important for
Indonesian welfare and its economy. In the second presidential debate, Prabowo
asked Jokowi about the potentially massive inflow of foreign products and
services to Indonesia that will come with the AEC and Jokowi mentioned that
Indonesian companies must fight to gain a bigger international market share. He
argued further that in order to protect local business, he would expedite the
licensing and administrative process for local or domestic investors.
Foreign
investors should not be anxious about these comments. During the campaign, the
candidates had to offer much nationalist rhetoric to gain votes from their
constituents. Looking at Jokowi’s past history and experience as Surakarta
mayor and Jakarta governor, it is less likely there will be extreme trade
protectionist policies.
There
are three problems we can discuss. The first problem is Jokowi’s focus on
national domestic issues. Second is the Indonesian competitiveness index in
ASEAN, and lastly, the ASEAN Secretariat’s role.
It is
understandable that in the first year of his presidency Jokowi will be very
busy with domestic issues. He has to struggle to gain approval from the
opposition factions in the House. Prabowo’s coalition won a majority of seats
in the House with 59.12 percent of the total. Jokowi would need approval from
the opposition parties to realize his promises, such as cutting the fuel
subsidy and budget deficit, building infrastructure, establishing Indonesia’s
healthcare system, improving education and accelerating bureaucratic reform.
Secondly,
Jokowi must act immediately to increase Indonesian economic and business
competitiveness in facing tougher competition in the ASEAN integration process.
For example, Indonesian small and medium enterprises (SMEs), which contributed
57 percent to GDP and employ the majority of the Indonesian workforce, are very
vulnerable to be crushed by multinational companies and other ASEAN SMEs. Based
on the ASEAN SME Policy Index compiled by the Economic Research Institute for
ASEAN and East Asia, Indonesian SMEs are still underdeveloped in areas such as
financing, technology and technology transfers, and in effective representation
of SMEs’ interest.
Moreover,
the Indonesian workforce has to be ready to compete with other ASEAN countries.
Architects, nurses, engineers and accountants are included as critical
professions for labor market integration. How many Indonesian architects or
nurses are there who speak English well? We need to seriously question the
quality of the Indonesian workforce in comparison with other ASEAN countries.
Therefore,
Jokowi needs to have a comprehensive strategy to secure Indonesian national
interests in the ASEAN Economic Community. Actually, President Susilo Bambang
Yudhoyono issued Presidential Decree No. 11 in 2011 regarding the
implementation of the ASEAN Economic Community Blueprint. The blueprint is
being implemented by 27 Indonesian ministries and bodies.
If all
responsible ministries and bodies implement the blueprint, we do not need to
worry about Indonesian readiness. The blueprint advises many specific programs
to empower SMEs and for the Indonesian workforce to be ready for ASEAN
competition.
For
example, the presidential decree ordered the cooperatives and SMEs ministries
to establish forums to facilitate cooperation between Indonesian SMEs and other
ASEAN SMEs. However, lack of coordination between Indonesian agencies and
bodies is a major obstacle for the full implementation of the blueprint.
Here
the ASEAN Secretariat (ASEC) can play its role as the information hub for the
Indonesian leaders. ASEAN Charter Article 11, point 2 (b) stipulates the ASEAN
secretary-general has the responsibility to facilitate and monitor progress in
the implementation of ASEAN agreements and decisions and submit an annual
report on the work of ASEAN to the ASEAN leaders.
However,
ASEC is too small for its current mandate. Its annual budget of about US$15
million is far below the European Commission’s operating budget of over $200
billion in 2012. The 260 staff members in ASEC will not be able to manage all
the complex and vast problems of 600 million ASEAN citizens. ASEAN member
states, especially Indonesia, need to seriously put more financial and human
resources to ASEC for more effective monitoring and facilitation.
The
author agrees that ASEAN single market integration is inevitable. However, it
is important to ensure Indonesian readiness to compete with other nations.
Despite limited time to implement the ASEAN Blueprint, there is still hope that
the next president can produce breakthrough innovation to ensure Indonesian
interest in the AEC.
Verdinand
Robertua
The writer is a lecturer in the International
Relations Department at the Christian University of Indonesia (UKI) and a
researcher at the Marthinus Academy and UKI Center for Security and Foreign
Affairs (CESFAS).
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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