Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
MODULE
CODE
ILP210
PART 1
Tutors signatureDate
Second Marker (if appropriate): .Date
Provisional Mark
Subject to approval
by the
Board of Examiners
ILP 210
Fail / Refer
2.2
2.1
No clear understanding
of the issues
demonstrated
Limited understanding
demonstrated, too
descriptive with some
inaccuracies
Some understanding of
the issues limited
discussion of these, and
or need to expand depth
and breadth of argument.
A good understanding
evident. Good
breadth and depth to
develop argument.
Issues discussed
thoroughly and
demonstrates the ability
to be analytical in the
treatment of the issues.
/20
No development of
evaluation of issues
supported by reference
to the academic
literature.
Little development of
evaluation of the issues
supported by reference
to the academic
literature.
Some development
and/depth of evaluation
demonstrated, and some
support from the
literature.
Good development of
evaluation of the
issues, well supported
and referenced.
Excellent evaluation of
the issues thoroughly
supported and
referenced.
/20
/20
Bibliography not
included or evidence of
a 'ghost' bibliography.
Little or no use of
academic sources
Sparse or incorrectly
structured
bibliography.
Included a bibliography
predominantly in the
Harvard format with some
citations in the text. Good
evidence of accessing and
Included an excellent
bibliography in the
Harvard format, which
is cited fully in the text.
Evidence of accessing
extensive reading of
relevant materials using
a range of sources.
/20
English weak.
Some evidence of
accessing and reading
of relevant material.
Minimum level
acceptable for
business.
Included a good
bibliography in the
Harvard format, which
is fully cited in the text.
Evidence of thorough
reading relevant material. reading of relevant
materials using a range
of sources.
Few imprecise
statements.
Weighting
/20
MARK of 100%
Comments by Tutor:
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Table of Contents
INTRODUCTION...........................................................................................................
Indonesia Background.............................................................................................
Vision.......................................................................................................................
Mission....................................................................................................................
Development Programs.........................................................................................
1st Priority: Programs of Action in the Education Sector.........................................
2nd Priority: Programs of Action in the Health Sector..............................................
3rd Priority: Programs of Action for Poverty Reduction............................................
4th Priority: Programs of Action in Employment Creation........................................
5th Priority: Programs of Action on Basic Infrastructure Development....................
6th Priority: Programs of Action in Food Security...................................................
7th Priority: Enforcement Pillars of Democracy.....................................................
8th Priority: Law Enforcement Corruption..............................................................
9th Priority: Inclusive and Equitable Development................................................
10th Priority: Field Environment Sector.................................................................
11th Priority: Cultural Development......................................................................
THE IMPACT OF GLOBALIZATION IN INDONESIA........................................................
Globalization and the Financial Crisis....................................................................
Globalization on Trade and Investment, Export and Innovation (Technology).......
Globalization of Entrepreneurship in Policy Considerations for SME
Development in Indonesia.....................................................................................
CULTURAL AND ETHICAL ENVIRONMENT...................Error! Bookmark not defined.
Power distance......................................................................................................
Individualism.........................................................................................................
Masculinity............................................................................................................
Uncertainty avoidance..........................................................................................
Long Term Orientation...........................................................................................
The Pillar of Indonesia Economic Strength as Emerging Country in the Global
Economy...................................................................................................................
Potential Sectors for Investment...........................................................................
Infrastructure and Transportation Sector:..............................................................
Oil and Gas Sector:................................................................................................
Electricity Sector:..................................................................................................
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Mining Sector:.......................................................................................................
Technology and Telecommunications Sector:........................................................
Manufacturing and Agriculture Sector:..................................................................
Tourism Sector.......................................................................................................
Yogyakarta.............................................................................................................
Papua....................................................................................................................
Potential Sectors for Trading.....................................................................................
Fashion Sector:......................................................................................................
Textile Sector:........................................................................................................
REGIONAL AND ECONOMY INTEGRATION OF INDONESIA..........................................
Pattern of Indonesias Trade Policy........................................................................
INDONESIA INTERNATIONAL HUMAN RESOURCES MANAGEMENT.....................Error!
Bookmark not defined.
1. Recruitment.......................................................................................................
2. Dismissal of Workers.........................................................................................
3. Employment Conditions, Compensation and Benefits.......................................
4. Hiring Expatriates..............................................................................................
CONCLUSION............................................................................................................
REFERENCES............................................................Error! Bookmark not defined.
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INTRODUCTION
Indonesia Background
In 1511, Indonesia's abundant spices had attracted Portuguese merchants to be the key
trading port of Malacca. The kind of spices that attracted Portuguese merchants consist of
cloves, nutmeg and especially mace which Portuguese merchants believed that mace could
remedy everything from the plague to venereal disease, other than that, mace were literally
worth their weight in gold. Besides Portuguese, Indonesias abundant spices had also
attracted the Dutch merchants which they had been starting wrested control of the spice trade
from Portuguese and their tenacious in established a spice monopoly had encouraged them to
build Dutch East India Company (known as VOC) which lasted well into the 18th century.
During the 19th century, the Dutch began cultivating sugar and coffee in Java, which was
soon providing three-fourths of the world supply of coffee.
By the turn of the 20th century, nationalist stirring began to challenge the Dutch
colonial in Indonesia. The independence of Indonesia had helped by the successful diplomatic
maneuverings abroad after World War II which nationalists also led a four-year guerilla war
to against the Dutch on Java. On August 17th 1945, The Republic of Indonesia officially
proclaimed their sovereignty.
During the first two decades of independence, the republic was dominated by the
charismatic figure of Sukarno, one of the early nationalists who had been imprisoned by the
Dutch. General (ret.) Soeharto eased Sukarno from power in 1967. Indonesia's economy was
sustained throughout the 1970's, almost exclusively by oil export.
In mid-1997, The Asian financial crisis, Indonesian economy had lost 80% of its
rupiah
value
against
the
US
dollar
at
the
peak
of
the
turmoil.
On May 21, 1998 after 32 years in power, Soeharto resigned and was replaced by B.J.
Habibie following bloody violence and riots. Indonesia held its first democratic election in
October 1999, which put Abdurrahman 'Gus Dur' Wahid in the role of president.
Based on Economic Watch of Indonesia Economy stated that The Republic of
Indonesia is inhabited by 6,000 people whereby has an archipelago of over 18,110 islands.
With 230 million people, Indonesia becomes the fourth most populated country in the world
after China, India and United Stated. Besides that, Indonesia is also having the largest
Muslim population in the world.
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Once Indonesia became independent (after World War II, following Dutch colonialism
for three and a half centuries), the economic change, corruption, natural disasters and a
democratization process have made Indonesia became a turbulent nation.
Vision
The realization of an Indonesia that is prosperous, democratic, sovereign and independent.
Mission
Development Programs
In order to successfully achieve the vision and mission of the 2009-2014, government
are formulated and elaborated more operationally into a number of priority action programs
which is The Eleven Programs of Action to face the challenges in the future, as following:
1st Priority: Programs of Action in the Education Sector
1. To continue and make an effective school building rehabilitation programs that had been
initiated during the period of 2004-2009, as consequence adequate and qualified facilities
could be built by improving and augmenting physical infrastructure of schools, as well as
the use of informatics technology in the teaching process that will support learning and
teaching processes to be more effective and qualified.
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2. The utilization of the budget allocation of at least 20 percent of the state (governmental)
budget to ensure the consolidation of free and affordable education for the nine-year basic
education, and that will be gradually followed by a higher level of education at the high
school level.
3. The improvement in a fundamental manner of the curriculum quality and the provision of
good quality books to enhance the intelligence of the students and shape their character to
be faithful, knowledgeable, creative, innovative, honest, dedicated, responsible, and
hardworking.
4. To continue improving the quality of teachers, lecturers and researchers in order to
become the pillars of education who are able to sharpen the intelligence of the nation,
create an innovative environment, and transmit an intellectual mindset which qualified
and ever growing to their students.
5. To revise the remuneration of teachers and continue the efforts in improving the income
of teachers, lecturers and researchers.
6. To widen the areas of the application of the progress in Information and Communication
Technology (ICT) in order to support the performance in conducting the development of
education.
2nd Priority: Programs of Action in the Health Sector
1. To refine and strengthen the administering of the public health insurance programs in
terms of the quality of services, access to services, accountability of budgets, and
transparent and clean administrative arrangements.
2. To encourage efforts to manufacture affordable drugs and other pharmaceutical products
without sacrificing the quality and safety aspects of the drugs as it has been carried out
during the last three years.
3. To facilitate the construction of clinics or (and) hospitals of international quality either by
improving the professionalization of the management of public hospitals as well as by
encouraging the growth of private hospitals.
4. To improve the quality of services for mothers and children under the age of five years by
strengthening existing programs such as the Integrated Service Posts (Posyandu) that
enable the immunization and mass vaccination such as against Diphteria, Pertussis, and
Tetanus to be administered effectively.
5. To reduce maternal mortality rates, and prevent the spread of communicable diseases like
HIV / AIDS, malaria, and tuberculosis.
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6. The evacuation, treatment, and medication of the population at the natural disaster
affected areas.
3rd Priority: Programs of Action for Poverty Reduction
1. To continue, improve and perfect the implementation of the National Programs for
Community Empowerment (PNPM) Mandiri as the core of the poverty reduction
programs, which have been initiated since 2007, by expanding the number of districts
covered in the PNPM and by continuously increasing the funding allocation for each
district in accordance with its performance.
2. To continue the mainstreaming of all existing programs for poverty reduction in the
ministries and agencies as PNPM supporting programs.
3. The improvement of the Direct Cash Assistance Programs (BLT) by updating the target
household data. The target household data will be integrated into all the affirmation and
subsidy programs so that various duplications or leakages can be avoided.
4. The provision of cheap rice for poor families in order to ensure food security.
5. The development of multilayered programs for the poor people that are conducted
intensively, among others: the Public Health Insurance/Jamkesmas, School Operational
Support/BOS, Aspiring Family Program/PKH, Direct Cash Assistance/BLT, National
Program for Community Empowerment/PNPM, and Rice for Poor People/Raskin
programs.
6. Advocates to Small and Medium Enterprises and Cooperatives, among others, by
granting the People's Business Credit to provide capital access for low-income
communities.
4th Priority: Programs of Action in Employment Creation
1. The enhancement of the quality of workers either from the perspective of the received
wages, or the productivity and standard of qualification in order to be able to heighten the
increase of opportunities in the formal sector, and reduce the number of open youth
unemployment.
2. The increase of investment through improved investment climate both at the central and
regional levels, so that new employment opportunities can be created.
3. To conduct reforms at the micro-economic level, among others the improvement of the
business climate and the advocation to the improvement of business opportunities for the
small and medium business sector as a pillar of Indonesian labor absorber, conducted
through sectoral policies and cooperation with local governments.
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4. To build the physical infrastructure that can facilitate the traffic flow of goods and
informations, and to encourage industrialization programs that could attract spin-off
industries (Domestic Investment, FDI, and global companies) to invest in Indonesia.
5. To expand domestic demand outside the consumer goods, and also exploit the regional
market.
6. To expand and enhance the creative and tourism industries as very large potential sources
of Indonesia's economy.
7. The development of special economic zones such as in Batam, Bintan, Karimun,
Suramadu, Sabang and various other special zones.
5th Priority: Programs of Action on Basic Infrastructure Development
1.
2.
3.
In order to support the participation of the private sector and state-owned enterprises
in infrastructure development, the government can issue the risk guarantee policy on a
selective manner based on objective, sound, measured, transparent, fair and accountable
criteria.
4.
The provision of services and access to clean water at affordable prices to all the
society, especially low-income people.
5.
6.
7.
8.
In order to overcome the natural disasters of floods in various areas, the management
of rivers and water catchment areas will continue to be carried out, inter alia through the
development of the Bengawan Solo River Basin, and the Jakarta Flood Canal.
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1.
2.
To improve the quality of inputs either with the support of research and development
of top-grade seeds, and counseling on the precise and accurate use of seeds with
manageable risks.
3.
To improve the supply and fertilizer subsidy policies, in order to avoid shortages,
smuggling, and use of subsidized fertilizers by unintended parties.
4.
5.
To strengthen and empower farmers, fishermen, fish pond farmers, and maintain the
purchasing power and exchange rates of farmers by maintaining the stability of
commodity prices that could provide benefits to the farmers but not burden low-income
consumers.
6.
To improve the mastery of science and technology to enhance the bargaining power
and competitive advantage of the agricultural sector in regional and world markets,
especially in predominant and largest commodities in Asia and the world such as CPO,
cinnamon, and others.
7.
8.
Provision of transparent information about market prices of crops that accurate and up
to date for farmers and fishermen, the price and availability of fertilizer, weather and the
outbreak early warning so that farmers can be more intelligent in determining actions.
Reorganize the executive and legislative relations so that they can perform the
function of legislation, oversight and budgetary functions of an effective and balanced and
formed a system which can be launched in a dignified purpose of the state.
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2.
3.
4.
Developing the substance of democracy, namely the essential values such as freedom,
law enforcement, justice and sense of responsibility.
2.
Strengthen the performance and supervision of police and prosecutors through the
police and judiciary reform, improved police performance and prosecutors in the region,
both through the program a quick win or a thorough and comprehensive structural repairs
to the police and judiciary.
3.
4.
Setting polices rights, reporting regulations, and rules of law enforcement services.
5.
Support the improvement of administration and budget in the Supreme Court and
courts below.
6.
Strengthening the micro, small and medium enterprises to expand credit access for
SMEs, including and especially through the People's Business Credit (KUR), the creation
and education for entrepreneurs (entrepreneurs) in the rate of new small and medium
enterprises in rural areas, supporting innovation and creativity of the community and
employers in creating a product, package, market and maintain continuity in healthy
competition.
2.
3.
Accelerating the development of lagging regions and the outer border and remote
areas with adequate budgetary provision for infrastructure development and the outermost
checkpoint.
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4.
Reducing the gender gap by improving the policy bias to women and gender
mainstreaming in development strategies (instead of that maybe you can use this:
eliminating gender inequality in development strategies).
2.
3.
Invites the entire community, households and businesses to actively protecting the
environment to ensure sustainable economic growth.
2.
3.
Provide incentives to the arts and sciences to develop the quality of art and culture
and preserving the local culture and national heritage, modern and traditional.
In conclusion, by targeting to establish its vision and mission, Indonesia has been
starting to be improved and developed The Eleven Programs of Priority Action, the
purpose is to ensure the investors or entrepreneurs that Indonesia started becoming one
of the most potential countries in investment, trade and business, other than that,
Indonesia also will be more safety in doing International Business (Investment and
Trade) and more predictable.
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According to Kelly and Olds (l999), argued that globalization had fostered by Asian
Financial Crisis which globalization implied the loss of the ability to effectively regulate
national economies and the declined influence of societies over their own destinies. They
stated that the roots of the crisis could be viewed not as a reflection of domestic regulatory
imperfections, but it is viewed as a consequence of the level of globalization. While,
according to Bello (1997), argued that the revelation of Asian economies to global capital
flows would left them susceptible to the intricacies of the international financial system.
On the other hand, others argued that Indonesia and those other successful East
Asian economies had not deregulated and liberalized, they would not have established
such a phenomenal progress both in economic as well social terms in the decade before the
crisis. Changes in technological had spurred by information technology which it had been
one benefits of globalization. For example, it had been found in India where much back
office work (such as data processing) is implemented on the Internet for large Western
firms, thus through globalization, it had brought higher value jobs to the economy.
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presence of Foreign Direct Investment (FDI) is often used to capture the impact of
globalization on firms (Kuncoro, 2007). Therefore, in establishing global market,
globalization is treated as an exogenous factor which the possibility that firms learn through
Research and Development (R&D) become more productive.
Globalization has been treated as exogenous factor where firms or corporations can
learns through Research and Development (R&D) to become more productive, thus they will
be able to enter the global export market. By lowering protection or trade barriers and
maintaining openness will have positive impact on Research and Development (R&D).
However, although in fact that trade barriers are trending downward but many hurdles remain
continue to inhibit the flows of trade and investment. Moreover, the corruption and
inefficiency of national customs and ports are the most significant problems in Indonesia. In
the other hand, nowadays by implementing the national single window policy and the
establishment of Corruption Eradication Committee (KPK) has been reducing corruption
issues and bureaucratic inefficiency. But in order to improve the efficiency of ports would
require substantial investment which it cannot be done only by the private sector alone.
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of democracy and regional empowerment through the amended constitution, a new day had
dawned for SMEs in Indonesia. SMEs development was being accorded much greater
attention by the successive new governments of the post-1998 era. Global markets were open
to those enterprises that were efficient, creative and competitive.
Conclusion
Globalization should be welcomed by emerging or developing market countries. The
reason is because it offers an opportunity to break down the climacteric advantages that
enjoyed by the developed countries. For example, the abolishment of capital controls in the
developed countries means that citizens and corporations of the developed countries can now
invest in developing markets economies. Moreover, trade liberalization reflects emerging
market countries advantages in the factors of production (such as abundant land and labor)
can be exploited. Thus, emerging markets will be much gain benefits from globalization if it
is managed appropriately in order to respond a rapid changing business environment in the
globalization, so that firms or corporations now have to compete domestically and
internationally to adjust with changing market demand immediately, thus, for this reason they
need to be innovate.
In addition, to succeed in promoting SMEs development, Indonesia has recently
experienced basic changes in political governance, regional empowerment, and economic
structures and had advanced the welfare of weak economic group, and the newly launched
programs to allow for the achievement of favorable and non discriminative investment
climate, then also promote the production, distribution and service sectors in a global context.
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Indonesia
78
46
48
62
14
Indonesia
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The fundamental issue here is what motivates people, wanting to be the best
(masculine) or liking what you do (feminine).
Based on Table.1 above shows that Indonesia has less Masculine (46%) so that although
Indonesia status and visible symbols of success are important but it is not always material to
motivate people. In conclusion, in feminine countries like Indonesia, the society is
focused on working in order to live, managers attempt for consensus, people value
equality, solidarity and quality in their working lives.
Uncertainty avoidance
Indonesia has a low preference for avoiding uncertainty (48%), it means that there is
a strong preference to take a risk in Indonesia toward the Javanese culture of separation of
internal self from external self. For example, when a person is feeling upset, it is habitual for
the Indonesian not to show negative emotion or anger externally. They will keep smiling and
be polite, no matter how angry they are inside. The purpose is to maintain work place and
relationship harmony which is very important in Indonesia. In conclusion, Indonesias
uncertainty avoidance is to maintain the appearance of harmony in the workplace; an
intermediary removes the uncertainty associated with a confrontation.
Long Term Orientation
This dimension refers to how every society has to maintain several links with its own
past while dealing with the challenges of the present and future, and societies priorities these
two existential goals differently. Indonesia has a higher Long Term Orientation (62%)
indicates that it has a pragmatic culture whereby people believe that truth depends very much
on situation, context and time. In conclusion, the societies show an ability to adapt
traditions easily to changed conditions, a strong propensity to save and invests,
thriftiness, and perseverance in achieving results.
Conclusion
Due to Indonesians Power Distance is higher whereby the control is directed by the
managers or boss, it will drive employees to work together as a team, help each other and
share ideas to others in order to achieve companys goals so that Indonesia has also a higher
Collectivism.
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Other than that, to maintain their working/job (work place) in order to live and
maintain relationship harmony with boss and colleagues, Indonesian will tend to work hard
and risk-taker, so that Indonesia will deal with challenges in the present and future to achieve
their goals. This example reflects low Masculinity and low Uncertainty Avoidance but
High Term Orientation.
Therefore, these characteristics can drive entrepreneurs or investors to understand
Indonesian culture and ethics so that they are able to adapt with local culture.
AS
The pillar of Indonesia economic strength is given by its wealth of natural resources
and one of the major driving forces behind the countrys economic growth is its domestic
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consumption. In the other hand, nowadays Indonesias economy is facing a biggest challenge
which is poverty rate whereby around 53% of the inhabitants earn less than US$2 a day. In
addition, Indonesia has lack of infrastructure development, except in Jakarta and Bali.
However, during the global financial crisis (2007-2008) which compared to the other G20
members such as India and China, Indonesia had recorded higher economic growth.
In order to attract investor or entrepreneur to invest in Indonesia, the government of
Indonesia has committed to improve the investment climate by providing legal certainty and
guarantee incentives to foreign investors to invest in Indonesia which has been getting a very
positive response. Based on Law No. 25 of 2007 on Investment, the government committed
to providing legal certainty to investors and to guarantee equal treatment in foreign
investment companies operating in Indonesia.
However, the government as a regulator provides certain limitations to foreign
investors (negative list) as a form of protection to the economic potential of Indonesia. The
law of Indonesia required foreign investors to use the experience of local entrepreneurs
(domestic partner) as a shareholder or partner established a joint venture with the local
entrepreneurs (Joint Venture Company).
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Asian Development Bank. In 2009, the Indonesian government also established PT.
Sarana Multi Infrastuktur to promote private public partnerships and accelerate
development.
Foreign investors are finally starting interested with major projects recently
announced by Chinese and Indian companies to develop coal mine railroads and new
airports. In 2010, the Indonesian government announced its intention to offer a
number of key projects to investors through a private public partnership scheme.
The government is starting with the following five:
1. A railway connecting Soekarno-Hatta International Airport to Manggarai in South
Jakarta (C$718 million);
2. Tanah Ampo Cruise Terminal in Bali (C$29 million);
3. Medan-Kualanamu toll road in North Sumatra (C$464 million);
4. Umbulan water plant in Pasuruan, East Java, (C$195 million); and
5. 3,000 megawatt coal-fired power plant in Central Java (C$2.9 billion).
As part of its Private Public Partnership (PPP) infrastructure program, the
government has been also planning six special economic corridors such in Sumatra, Java,
Kalimantan, Sulawesi, Bali and Papua-Maluku. A master plan for these programs are still
being developed, but the corridors are each expected to focus on a particular industry,
include infrastructure development to support those industry clusters, and eventually may
offer tax and other financial incentives similar to those found in bonded zones. Japanese,
Indian and South Korean investors had by spring 2011 expressed interest in funding these
initiatives.
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The government has resolved one of the major issues that had discouraged foreign
investors in power or electricity sector. In the previous, Indonesia had rejected to provide
guarantees for power generation projects built by the private sector, but because of pressure
to meet the strong demand for power supply, the government had agreed to provide
guarantees through PT. Penjaminan lnfrastruktur Indonesia (Indonesia Infrastructure
Guarantee Fund) for land acquisition, construction, operation, fuel supply and sale of the
output to PT PLN, for projects under the accelerated program in 2011.
Mining Sector
Indonesia is the largest exporter of thermal coal and is rich with mineral
deposits including coal, gold, tin, nickel, copper, and bauxite in the world. Other than
that, Indonesia is ranked as the top 10 (ten) globally for its minable reserves of gold,
copper, tin and nickel ore, and in the top 20 (twenty) for coal reserves.
The investors who remain active in Indonesia mining sector are Vale Inca, Freeport
Me Moran Copper & Gold Inc, Newmont Gold Company, and Australia's Rio Tinto.
Besides that, investors from China and India are also increasingly investing Indonesia's coal
and thermal coal assets. The Indonesian government had been forecasting investment in the
mining sector to hit US$7.4 billion in 2010-2014.
Technology and Telecommunications Sector
Indonesia's information and communication technology industry has expanded very
fast in since the mobile communication sector was opened to the private sector in 1995.
The number of cell phone subscribers had growth 8.9% year-on-year to 178.4 million in
the first half of 2010 (Indonesians often have more than one cellular phone), putting the
country behind only Japan, China and South Korea in Asia in terms of subscriber growth.
Internet usage is also expanding rapidly and had experienced reaching 30
million in 2009 (a 50 percent increase from 2007), with most Indonesians accessing
the internet from their mobile phones. Indonesia has become one of the biggest
markets in the world for social media, with the second largest population in the
world on Facebook and more Blackberry users than any other country in Asia. Fixed
line growth has been leapfrogged by fixed wireless and mobile technologies.
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The rapid growth has attracted a number of foreign investors to the country,
including Singapore Telecommunication Ltd (Sing Tel) and Singapore Technology
Telemedia (STT) from Singapore, Telekom Malaysia and Maxis Communication Bhd
from Malaysia, Qtel from Qatar, and Hutchison CP Telecommunication, a Thai-Hong
Kong joint venture.
In conclusion, though the Indonesian government acknowledges, Indonesia needs
foreign investment in this sector, the growth of foreign ownership in telecoms has caused
concern as the industry is viewed as being of strategic interest to the Indonesian people.
Manufacturing and Agriculture Sector
The Indonesian government is also trying to attract more investors to its
manufacturing and agriculture sectors.
Manufacturing has become of the one country's biggest contributors to the
nation's GDP in sectors ranging from textiles to automotive parts. Many
multinational enterprises have set up operations in Indonesia, including giants such
as automaker Toyota and pharmaceutical manufacturer Sanofi Aventis. Citing the
country's relatively low labor costs compared with the rest of Southeast Asia and the
large domestic market, the government has been attracting investors in sectors such
as electronics manufacturing.
The Investment Coordinating Board (BKPM) has also been promoting
Indonesias palm oil and rubber industries. Indonesia is the world's second largest
producer of rubber and largest exporter of crude palm oil. With strong international
and domestic demand for both commodities, the government is seeking investors to
expand production. While low labor costs, rising demand and investment incentives make
it more attractive sector for foreign investment.
Tourism Sector:
Denpasar (Bali)
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spectacular
mountain
Picture 3
Ramayana Dance
PictureYogyakarta
4 Borobudur
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Yogyakarta
(or
Jogjakarta)
is
one
of
Mataram
Kingdom
and
nowadays
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2. Prambanan temple. Many people supposed the one which has Hindu cultural is only in
Bali, but in fact there is the most spectacular of cultural performances in Yogyakarta, it is
the Ramayana ballet. Ramayana ballet refers to dozens of dancers and musician that
elaborated costumes and explosive pyrotechnics as reflecting the story of the Ramayana
whereby it is an ancient Hindu epic poem. Prambanan (known locally as Roro Jonggrang)
is the largest Hindu temple in South East Asia, it has a beautiful and graceful temple that
has made it as a magnificent spectacle and an icon of Indonesias cultural heritage.
Prambanan temple located nearby the Buddhist Borobudur temple and both of the temples
(Buddhism and Hinduism) lived peacefully next to one another. The Prambanan temples
were built in the 9th century which for the biggest temple is dedicated to Shiva (the
destroyer), and another two smaller ones which sit on its right and left are dedicated to
Brahma (the creator) and Wisnhu (the sustainer). Because of the grandeur, complexity,
and integrated architectural concept, those make Prambanan become a truly amazing
structure and as a unique cultural and architectural marvel, Prambanan was declared a
World Heritage site in 1991 by UNESCO.
In addition, there are about 70,000
Picture 5
Prambanan
transportations,
numerous
food
Wisata).
The
people
of
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Papua (Jayapura)
Papua is a land of contrasts with some of the most impassable jungles in the world
and snowcapped mountain peaks towering over glacial lakes. Papua is the largest and eastern
most provinces in Indonesia and covers the western half of the worlds 2 nd (second) largest
island.
Papua has a land of exceptional natural grandeur with gorgeous beaches, huge
stretches of marshlands, cool grassy meadows and powerful rivers carving gorges through
dense forests. The provincial capital of Jayapura is situated on hills which
overlook
the sea,
Picture
6
Bayit as a
and is accessible by boat and plane. Sea food being one of the Cenderawasih
specialties makes
National Park
heaven for visitors who love fish and sea food dishes. Freshly baked or grilled fish taste
wonderful especially when consumed while watching the sunset. People allergic to sea food
need not worry because visitors can also consume traditional food like papeda or ayam
lalapan (fried chicken with chili).
1. Cenderawasih Bay National Park known as Teluk Cenderawasih (Playground of the
Spotted Whale Shark). The large Cendrawasih Bay National Park in the north of the
island of Papua, includes Indonesias largest marine national park, and is one of the best
dive-sites in the archipelago. Teluk Cenderawasih is the playground of one of the worlds
largest animals: the spotted whaleshark or rhincodon typus.
Scientist Dr. Gerald Allen calls the Cendrawasih Bay: The Galapagos of Indonesias
Reefs.
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The local government trains 20 students to become dive guides and to develop
facilities in Kwatisore to serve more tourists. Comprising land and coastal areas, islands,
coral reefs and pristine seas, the Cendrawasih Park covers a total area of 1,453,500
hectares. The Cendrawasih Bay Park combines coral reef ecosystems with mangrove,
islands and terrestrial tropical forest ecosystems. Here are colonies of black coral, blue
coral and soft coral. The Park is famous for the 209 fish species that make this Park their
habitat, among which are the butterfly fish, the damselfish and parrotfish, and, of course
the Whale Shark, while mollusks found here include the trumpet triton, the great clam and
the cone shell.
2. The Wamena Highlands (The other Ultimate Trekkers Rendezvous). Wamena is
known as the starting point to a remarkable journey, prior to visiting the villages
beyond the mists. At 1,600 meters above sea level, Wamena is the highest ground in
Papua where furnished tourism facilities can still be found. Beyond this point, one has
to expect less, and get more of the unexpected. Reality can be more compelling than
even the best information on the internet. Visitors will able to stand on a peak
surrounded by a lush green valley, screened from the world by fuzzy peaks, while
down below in the canyon flows an ever rushing river.
The beautiful Baliem valley was discovered by coincidence in an expedition spearheaded by
Richard Archbold in 1938. The town of Wamena is surrounded by agricultural tribes, as
Picture 7 The Wamena Highlands
recorded in travelers journals as early as the 19th and early 20th century. The presence of a
mummy, sitting in a folding position found in a nearby village, is evidence of the longtime
agricultural practices in the Baliem valley.
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3. Raja Ampat. Raja Ampat is an archipelago which consisting 1600 islandmostly every
holiday Raja Ampat is for goers dream, especially for divers and snorkelers. These
uninhabited islands hiding exceptional underwater biodiversity and scenery whereby the
scenery is simply superb, white sandy beaches, hidden lagoon, and lush jungle ready to be
explored. Raja Ampat can be translated as Four Kings, it derived from local legend and
the facts it has four biggest islands, namely Misool, Waiego, Salawati, and Batanta. By
plane from Jakarta it will take about 6 hours of flight.
In Tomolol, visitors are able to find amazing cave paintings and mementos from
Papua ancestors. If visitors are searching for more modern mementos, can go to Waigeo,
Dutch and Japanesse are building bunkers as protection and defense during World War II.
Raja Ampat is the famous island for its underwater experience, the sea is habited by
1.320 reef fish species and have more than 75% known coral in the world. When visitors
are diving, manta rays, tuna, sea dugong, and turtle will accompany them exploring
colorful reef. It is a remarkable diving experience you wont find in other world.
Picture 8
Raja Ampat
Picture 9
Raja Ampat Underwater-Reef
Picture 10
Raja Ampat
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With the assumed growth rate of 5%, then the global market value for fashion was
predicted to be around 16.8% in 2006. According to the Minister of Commerce, Mari Elka
Pangestu, the growth of Indonesia's creative economy reached 7.3% in 2006, higher
than the growth of national economy of 5.6%. The amount of contribution to GDP
reached IDR46 trillion (constant price), with the average percentage of creative industry
contribution exceeding 44%. The seven largest contributors are fashion, with its
contribution reaching 29.85%; handicrafts, with its contribution reaching 18.38%;
advertising, with contribution reaching 18.38%; TV and Radio; Architecture; Music; and
Publishing and Printing (Togar M. Simatupang).
Based on the potential of domestic fashion industry above, we may definitely make
use of the available global market opportunity, of the whole portion of fashion market value,
it just contributes 16.8% of the entire sector, then the opportunity for Indonesias fashion
industry to penetrate the global market remains wide open. If we compare the existing
contribution value of the fashion industry to GDP, i.e. 13.7 trillion (29.85%), then if
utilized and undertaken optimally, domestic fashion industry may be able to dominate
more than 80% of the global market. Indonesia's fashion industry is one of the appealing
industries. In addition, the booming factory outlets in Indonesia also indicate a subsector that
has a strong foundation in Indonesia. They have quite surprising revenues, some even capable
of gaining US$75-100 thousand/month.
Textile Sector:
Yogyakarta is the famous as a centre of traditional textile production, particularly
batik. The distinctive batik of Yogya uses the basic colors of brown, indigo and white with in
geometric designs. Many young artists of Yogya have also embraced the modern art of batikpainting.
The most famous of handicrafts in Yogya is its Javanese batik. Many factories
produce traditional hand-drawn batik tulis as well as the cheaper stamped batik cap.
Visitors can buy material and organise a tailor to create a custom made batik design but there
is also no shortage of ready to wear batik clothing on sale. In many factories visitors are
welcome to view batik being made in the back of showrooms. Everything from batik shirts,
accessories, tablecloths, pillowcases and sarongs are on sale. One of the best known regions
for finding batik is at Tirtodipuran Street in the South.
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much closed and protected. Then, it changed significantly when Soeharto came to power. The
new government liberalized trade along with investment, dismantled import licensing,
introduced new export bonus and simplified export-import procedure under a major trade
policy package. The government also eliminated capital controls that become an important
moment in Indonesias capital account policy (Aswicahyono and Feridhanusetyawan, 2003).
In the mid 1980s, Indonesia made the first major trade reforms. The government
lowered tariff ceiling to 60% (percent), reduced the number of tariff level from 25 to 11 and
converted several import licenses into tariff equivalents (DFAT, 2000). The simple average
tariff was reduced from 27% (percent) in 1986 to 20% (percent) in 1991. The other reforms
abolished import monopolies, simplified customs and outsourced substantial customs
responsibilities. Next, the simple average tariff rate remained steady and trade liberalization
slowed in the early 1990s.
The government applied the national car scheme and increased tariffs on 3 (three)
some chemical products. Then, during the crisis 1997, the simple average tariff rate on
agricultural and industrial goods was stable at around 13% (percent). Indonesian government
decided not to close their selves off to the rest of the world and even accelerated trade
liberalization under the International Monetary Fund (IMF) programs. The government also
committed to removing all import licenses, eliminated non-tariff measures and introduced
competition on agricultural products. However, Kim (2004) reveals that protections were
increased in the some areas. The coverage of import prohibitions was increased from 7 to 27
tariff lines, while the coverage of import licensing was increased from 27 to 1,027 lines
between 2001 and 2003. Trade liberalization improved substantially in 1990s as a result of
international commitments under Australian Federation of Travel Agents (AFTA), APEC and
WTO. According to the Bogor Goals which is the result of APEC meeting in Bogor,
developed countries would have applied free and open trade and investment by 2010.
Meanwhile developing countries have to apply the same scheme by 2020. In 1995,
Indonesian government itself committed to a schedule of tariff reductions that anticipated a
maximum tariff rate of 10% (percent) by 2003. Currently, Indonesia adopts three
strategies of international trade, for instance supporting WTO agenda, promoting
efforts on regional economic integration, and enhancing bilateral trade and economic
cooperation.
Actually, the main problems in international trade occurred behind the border trade
rather than at the border trade, i.e. services sector deregulation, intellectual property right, etc.
There are four regional and multilateral agreements that are faced by Indonesia
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nowadays, namely AFTA, APEC, WTO and ASEAN-CHINA FTA. First, ASEAN
countries agreed to form a free trade area among its members which is known as AFTA
in 1992. Previously AFTA only consists of tariff reduction on some commodities including
agricultural product which is politically sensitive. ASEAN members who have 4 (four) tariff
above 20% have to reduce it up to 20% and reduce it again up to 0-5% by the next ten years.
Meanwhile, for ASEAN members who have a tariff below 20% have to reduce it up to 0-7%
by the next 7 years.
After that, agricultural products became the most complicated product to be
negotiated because it really affects Indonesian economy and Philippines economy. Next, all
members agreed that liberalization of agricultural product started on 2003 and finished by
2010. Even though, there were many significant improvements in AFTA implementation,
some ASEAN members still have no motivation to fully open their market. Second, APEC
was established in 1989 with the objective to tighten economic cooperation between west part
pacific countries and east part pacific countries. In the long term, APEC has an agenda to
establish free and open trade and investment in Asia-Pacific. There are three pillars that
support APEC, i.e. liberalization of trade and investment; facilitate trade and
investment; and cooperation in economy and technology. APEC encourages its members
to establish unilateral cooperation to the non-APEC countries member rather than to
establish regional cooperation among its members. Third, WTO is a multilateral
institution that was established on 1 January 1995 as a result of Uruguay Round. The
main characteristic of Uruguay Round is its capability to encourage liberalization of
agricultural product which is very sensitive among developing countries. Generally,
Indonesian commitment in WTO can be grouped into 6 main topics. One of the main topics is
the commitment on agriculture. Indonesia has agreed to reduce tariff as much as 10% for
each commodity or about 24% for overall commodities which was started since 1994 and
effective for ten years period. The regional free trade area that was signed by Indonesia
was ASEAN-China Free Trade Agreement (ACFTA). ACFTA was established on 4
November 2002 and would have been effective in the next ten years period. Tariff
reduction had started on 1 January 2005 until 2010 for ASEAN 6 (Brunei, Indonesia,
Malaysia, Philippine, Singapore, Thailand) and China. Meanwhile, for the new
members of ASEAN (Cambodia, Laos, Myanmar, and Vietnam), tariff reductions have
been starting on 1 January 2005 until 2015.
In conclusion, Indonesian trade and investment policy have transformed substantially
from a closed and protected regime to a more open one. Government has changed the strategy
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A company intending to lay off more than 10 employees must first obtain approval
from the Committee for Labor Dispute Settlement at the Department of Manpower.
Employees who are laid off are entitled to:
Severance pay equivalent to the number of years in service plus one multiplied by
their monthly salary;
Merit pay equivalent to two months salary for those with three to six years service;
Three months salary for those with six to nine years service, etc.;
Compensation for the cost to relocate to the location where the employee and his/her
family lived before employee accepted the job of transporting the worker and his/her
family to the place where they resided before the worker was recruited and accepted the
job;
Compensation for any housing allowance, medical and health care benefits, at a rate
of 15% of the severance pay and merit pay, for those who are eligible for such
compensation; and
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The maximum work period is 40 hours a week (8 hours a day for a 5-day work week or 7
hours per day for a 6-day work week. Workers are entitled to a number of other benefits,
including:
Paid annual leave, sick leave, leave for family occasions such as birth of a child or
death in the family and holidays (there are generally 13 paid public holidays each year)
Medical expenses
Insurance
Annual bonus of one month's pay, usually paid at Lebaran (the annual Moslem
festival)
Companies with more than 10 workers or a payroll of IDR 1 million (C$110) are
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A company may only hire foreigners for positions that the Government of Indonesia
has deemed open to non-lndonesians. Human resource supervisory or blue collar jobs in
most manufacturing operations are closed, for example. The company must show that no
appropriate local employee can be found, and even then, it is expected that the foreign
investor will train and develop the skills of an Indonesian employee to eventually replace
that foreign worker.
Employing an expatriate staff member can be a time consuming process. The
investor must submit a manpower plan to the Investment Coordinating Board, identifying
the employee's location and period of employment, the appointment of an Indonesian
employee who will shadow the expatriate staff member and a training plan for that local
employee. The company must also show that the skills being provided by the foreign
worker cannot be found locally. Once the employment plan is approved, the expatriate
employee can apply for his temporary stay permit card (KIT AS- valid for one year and
renewable) then the company must apply for its foreign worker employment permit (I MT A
-valid for one year and renewable), from the Ministry of Labour. The Ministry of Manpower
requires expatriates with work and residence permits to pay C$1200 a year to a manpower
training fund that is used to train Indonesian workers.
CONCLUSION
As positive impact from globalizationon innovation, technology to lead investment
and trade, might nowadays lots of investors and entrepreneurs are coming up to invest and
build business in Indonesia. Investors and entrepreneurs are also supported by Indonesians
high Power Distance and high Collectivism, it will drive employees to work together as a
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team, help each other and share ideas to others in order to achieve companys goals. To
maintain Indonesian working/job (work place) in order to live and maintain relationship
harmony with boss and colleagues, they will tend to work hard and risk-taker, so that
Indonesia will deal with challenges in the present and future to achieve their goals. This
example reflects low Masculinity and low Uncertainty Avoidance but High Term Orientation.
These characteristics can drive entrepreneurs or investors to understand Indonesian culture
and ethics so that they are able to adapt with local culture.
Indonesia is the richest natural resources in the world, it has many potential for
economic development. to succeed in promoting SMEs development, Indonesia had
advanced the welfare of weak economic group, and the newly launched programs to allow for
the achievement of favorable and non discriminative investment climate, then also promote
the production, distribution and service sectors in a global context. Indonesia provides
potential in several sectors for investors, including Infrastructure and Transportation, Oil, and
Gas, Electricity, Mining, Technology and Telecommunications, Manufacturing and
Agriculture (automotive product; palm oil and rubber plantations) and Tourism sector. Other
than that, Indonesia has potential in Fashion and Textile sector and in fact Indonesia has also
potential in Coffee sector such as Luwak Coffee and Aceh Coffee.
Beside the ASEAN Economic Community, Indonesia also faces the current and the
potential international relationship such as Asia-Pacific Economic Cooperation (APEC),
World Trade Organization (WTO), ASEAN-China Free Trade Agreement (ACFTA),
ASEAN+3 Free Trade Agreement (FTA), and some bilateral free trade agreements.
By knowing Indonesia potential sectors, Indonesia government is expecting to foreign
investors and young entrepreneurs to invest in Indonesia, or even by partnership joint
venture. The purpose in improving economic development through investment and trade is to
improve living standard in Indonesia to have better quality of life and to become developed
country.
REFERENCES
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at:
Indonesia.go.id.
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http://indonesia.go.id/en/indonesia-glance/vision-mission-and-strategy
[Accessed: 15 May 2015].
Indonesia, (2000) A historical Glimpse of Indonesia. [Online]. Available at:
Indonesia.com http://www.indo.com/indonesia/history.html [Accessed:
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Kuncoro, A. (2012) University of Indonesia. Globalization and Innovation in
Indonesia: Evidence from Micro-Data on Medium and Large
Manufacturing Establishment. Jakarta, Indonesia.
Kartasasmita, G. Globalization and the Economic Crisis: Indonesia Story.
Hartono, D. (2007) Regional Economic Integration and its Impacts on Growth,
Poverty and Income Distribution. Department of Economics Padjajaran.
The Hofstede Centre, (2015) Indonesia Cultural Dimension. [Online]. Availabe
at: http://geert-hofstede.com/indonesia.html [Accessed: 15 May 2015]
Wonderlful Indonesia, (2013) Bali: Simply the Worlds Best Island. [Online].
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[Accessed: 24 May 2015]
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Darwis, Y. (2013). Indonesias Creative Industry as an effort to increase
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