Big Market Not (Strong) Enough to Attract Investors

KOMPAS/FERGANATA INDRA RIATMOKO

A worker of PT Tower Bersama Infrastructure Tbk (TBIG) checks one by one the devices at the telecommunication tower managed by the company at Maguwoharjo Stadium, Sleman, Yogyakarta, on Wednesday (9/10/2019).

JAKARTA, KOMPAS — Improving the quality of human resources is considered urgent for Indonesia to boost competitiveness on the global stage. The quality of human capital is one of the considerations of the investors entering Indonesia.

"Indonesia\'s advantage, which has always been relied on, is its jumbo market. We forget that after the FTAs [free trade agreements], the jumbo market is no longer an attraction," said Institute for Development of Economics and Finance (Indef) senior researcher Enny Sri Hartati in Jakarta on Thursday (10/10/2019).

This is because through a free trade agreement, investors can make Indonesia a market, wherever they invest. Enny expressed her opinion in a focus group discussion entitled "Non-Tariff Measures as an Instrument for the Protection of Domestic Industries" held by the Indonesian Chamber of Commerce and Industry (Kadin).

Previously, the World Economic Forum (WEF) in the 2019 Global Competitiveness Index (GCI) report released on Wednesday (9/10) put Indonesia in 50^th position out of 141 countries, down from last year when it was ranked 45th out of 140 countries.

KOMPAS/PRIYOMBODO

Irons are assembed at PT Selaras Citra Nusantara Perkasa in Cileungsi, Bogor regency, West Java, Thursday (10/10/2019). In the midst of the American-Chinese trade war, Selaras Citra Nusantara Perkasa seized the opportunity to export its first batch of electric air purifiers to the United States. The factory with a production capacity of 4 million devices per year is an Original Equipment Manufacturer (OEM) for a variety of household appliance brands and has its own brand, Turbo.

There are 12 assessment pillars in the index. Indonesia has the lowest score in innovation capability (37.7) and the best score in macroeconomic stability (90). Education and health need extra attention because they are at the bottom of the list.

Enny compared Vietnam and Indonesia. There are five factors that are considered to be the key to Vietnam\'s investment attractiveness, namely ease of investment regulation, human resources, economic openness or trade agreements, infrastructure support and macroeconomic stability.

Referring to World Bank data, Indonesia\'s Human Capital Index rank was outperformed by several countries in ASEAN or East Asia and the Pacific. "In fact, Indonesia has long had a policy of allocating an education budget of 20 percent of the state budget," Enny said.

However, the reality is that there are still many workforces with a maximum of elementary and junior high school education. This problem can be overcome if Indonesia is able to build an education system that truly produces superior resources.

According to Indonesian Chamber of Commerce and Industry deputy chairman Johnny Darmawan, Indonesia’s richness in natural resources and large population is actually an attraction. However, other issues, including legal uncertainty, make investors think twice before coming to invest in Indonesia.

KOMPAS/HENDRA A SETYAWAN

Patients wait for treatment at Pavilion B of Siloam Lippo Village Hospital Karawaci in Tangerang, Banten, on Friday (9/8/2019). Nearly 90 percent of the patients seeking treatment at Pavilion B are insured through the Health Care and Social Security Agency (BPJS Kesehatan).

Society behavior

Indonesia\'s health situation in the 2019 Global Competitiveness Index is ranked 96^th out of 141 countries. The score is measured based on the healthy life expectancy in Indonesia, which stands at 62.7 years.

The healthy life expectancy is lower than the life expectancy at birth stated in the 2018 Human Development Report, which stood at 69.4 years or 71.39 years according to 2018 Central Statistics Agency data. This shows a discrepancy of 7 to 9 years, during which people suffer from various diseases and have their productivity declined.

Jakarta State University early childhood education professor Fasli Jalal sees the situation as ironic. The government has actually shown its seriousness in improving the level of public health both in various programs, regulations and budgets. "The problem is that changing public health behavior is still a big challenge," he said.

For certain communities, the change in behavior can be made by strengthening old instruments, such as the integrated health service (posyandu), village midwives and public health clinic (puskesmas). These institutions need to be equipped with employees and health workers with good communication skills.

KOMPAS/PRIYOMBODO

A worker tries to put on a gas stove produced by PT Selaras Citra Nusantara Perkasa in Cileungsi, Bogor regency, West Java, Thursday (10/10/2019). In the midst of the American-Chinese trade war, Selaras Citra Nusantara Perkasa seized the opportunity to export its first batch of electric air purifiers to the United States.

Regarding the education issue, Fasli highlighted the need to improve the quality of teachers. The teacher is the foundation to upgrade the learning process that improves the quality and logic of the students.

The quality of teachers must be improved for all levels of education. This method will eventually affect the quality of the prospective workforce.

(CAS/MZW/DNE)