As Indonesia takes over the chairmanship of the Asia-Pacific Economic
Cooperation forum from Russia next year, here is a chance for one of the
region’s biggest developmental success stories to lead by example.
However, despite its achievements
so far, Indonesia should improve its trade and investment environment before it
can really chart the way for the 21-member grouping. Only then can it can make
sure that the 2013 APEC Summit will be more than a photo op where leaders make
sweeping declarations and empty promises.
APEC in the past has done well in
formulating ambitious visions. The last time Indonesia was chair in 1994, APEC
leaders set forth the so-called “Bogor Goals.” These stipulated that developed
nations should achieve free and open investment by 2010, and developing nations
by 2020. Eighteen years later, a lot of work has been done, but much more lies
ahead. In fact, it would not be realistic at this point to expect the Bogor
Goals to be achieved in just eight years’ time. Such goals should, instead, be
seen as just one part of an overall vision that keeps driving us forward.
Indonesia’s ascension to the
chairmanship comes midway between the 2010 assessment of the Bogor Goals and
the next assessment in 2015. This gives Indonesia’s leaders the opportunity to
help create a more far-reaching vision that goes beyond the Goals and which
should focus on APEC’s long-term growth strategy.
By pushing forward the growth
agenda, Indonesia’s leaders can enhance their prominence both at home and
abroad. They should, however, provide examples of local success stories to
showcase at the 2013 Summit. And they can.
Six strategies would be
particularly fruitful and can be implemented through Public-Private
Partnerships (PPP) ahead of the summit.
First, infrastructure development
as an application of the APEC Public-Private Dialogue. Indonesia’s own PPP
Scheme can be developed further, especially under the Master Plan for the
Acceleration and Expansion of Indonesian Economic Growth (MP3EI).
Second, promoting small to medium
enterprises (SMEs) and developing entrepreneurship. SMEs and entrepreneurs are
important to the APEC economy as a source of innovation and employment.
Indonesia should emphasize regional cooperation to break down trade barriers
and boost financial development and quality improvements in education.
Third, encouraging tourism.
Indonesian tourism is an underperforming sector with large untapped potential.
Jakarta has much to gain from reinforcing the 2010 Nara Declaration on
strengthening APEC tourism cooperation.
Fourth, encouraging private
investment in green technology. Events such as the Green Investment Summit
Indonesia offer plenty of opportunity to shine a good light on Indonesia’s
efforts at dealing with climate change.
Fifth, promotion of sustainable
management of resources and agriculture. While President Susilo Bambang
Yudhoyono’s Rio+20 speech already put the spotlight on the “Blue Economy” of
marine resources, Indonesia must keep up its efforts to protect forests and
other resources.
Sixth, improving its
counter-terrorism profile. Given Indonesia’s history and recent rise in
religious radicalism, a strong policy push for more counter-terrorism efforts
would signal Jakarta’s commitment.
These are all issues of primarily
domestic concern, but the geopolitical environment also offers plenty of
opportunities for Indonesia to present itself as a regional leader.
China is aggressively changing
its role. Its rising assertions in the region have come at the expense of
cooperation between the members of the Association of Southeast Asian Nations
and the G-3 (the United States, Europe and Japan). Due to friction over
territorial disputes in the South China Sea, the July 2012 Asean Summit failed
for the first time in the association’s history to issue a joint communique.
At the same time, increasing
Sino-Asean trade threatens America’s economic position in the region. European
financial woes have led to expanding Chinese influence not just in Asia — but
globally. But as China and the United States continue to grapple for influence
in Asia, Jakarta can take advantage from the fact that both the Chinese and the
Americans will try to win Indonesia over, and will likely do so through defense
cooperation. However, it would be wise for Indonesia to avoid taking a firm
stance in support of one or the other, as that would be detrimental to its
strategic interests.
Meanwhile, China is slowly
transforming from exporter to importer of Asian goods. As wages and costs rise,
its one-child policy is taking its toll on the working population. This changes
China’s competitive advantage compared to populous countries with a younger
work force, such as Indonesia and India.
In all, Indonesia has vast
potential to succeed on the global stage, both in terms of trade and politics.
It is the fourth-most populous country in the world. Its large consumer base
allows domestic demand-led growth and increasing resilience to external shocks.
Sustained improvements have been made in Indonesia’s fundamentals, including
sound fiscal and monetary policies.
Indonesia’s successes have so far
been recognized in its inclusion in the G-20 and the upgrade of its debt rating
to investment grade by Moody’s and Fitch. Recent projections by consulting firm
McKinsey show Indonesia becoming the seventh-largest economy by 2030. Standard
Chartered even projects it to be in sixth place.
Leading APEC again will be an
important stepping stone for Indonesia to build confidence and show it is a key
player on the international stage. Indonesia has already accomplished much to become
one of today’s emerging-market stars. But it must not rest on its laurels —
success should motivate it to work harder.
Indonesia has done well to come
this far. But it is essential to ensure that improvements will continue and
that vested interests do not get in the way of an even brighter future.
Complacency should not be allowed to sink in and the 1997 Asian financial
crisis should serve as a stark reminder of what can go wrong.
The Bogor Goals have become
synonymous with APEC’s trade and investment agenda ever since they were set
forth in 1994. The 21st century is bringing many other challenges, from human
resource development to sustainable growth. The year 2013 will be the moment
for Indonesia to once again help APEC reach a historic milestone.
Ann Marie Eu
Ann Marie Eu is an analyst with Pereira International, a Singapore-based
political consulting company.
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