Monday, November 27, 2006

A letter to Mr President

Dear Mr SBY

It is has been quite a while since you officially be the president of Indonesia. During this three years, you already travel a lot to foreign countries. As far I know, you have already been in US, Cuba, Rusia, Japan, etc. You told us that during the visit you will promote Indonesia into foreign investor.

Let me ask several question : Do you know that firms is a rational economic agents. {Even in bouded rationality literature, firms always assume as a rational agent. this is not a kind of man-made-so-that-analysis-could-be easier assumption. firms have lots of resources so that they could analyze everything (most of things) before they make their investment decision}. Do you know that the higher-the wider the hierarchy of public servant In Indonesia, vertically and horizontally, the less productive they are?.Do you know that the corruption and bribary level is so high that the cost of doing bussiness in Indonesia is so high. (for your reference, you could see the research by Ari Kuncoro and Henderson in NBER). Do you know that any Doctorate Honouris-Causa you have do not make any difference to Indonesia economy.Do you know that how hard you are being a good guy in UN will not give any much effect on indonesia economy yet -silly-nasionalism-pride.Do you know that as long as the cost of doing bussiness in Indonesia is still high, there is no way will an investor go to Indonesia and invest here. Do you know that as long as the bussiness contract is not protected, then the firms will not sign any contracts in Indonesia.

No matter how hard your effort to go to foreign countries and persuade the firms there to invest in Indonesia, they will not go here for sure. Firms are not a charity organization. Going abroad for this reason, without any correction on Indonesia Bussiness climate, will not give any effect on their belief on Indonesia. Now, Mr Presiden, let me give you one suggestion. Please stay in Indonesia. Do your homework. Clean up all the mess. Going abroad for state visit has a huge opportunity cost. It is better for you to use the money you spent during the visit to somewhere else more productive.

Thank you very much for your attention

Best Regards

The Dreamer

1 comment:

Berly said...

I think on some points you are being too hard on SBY without adequate data.

Investment on Indonesia is actually up under his watch (just check BPKM data here. Indonesia rank in Corruption Perception Index has risen 7 position in 2006 from previous years.

Indonesia has risen 4 rank in the Doing Business Report Doing Business Report by World Bank, the most impressive is that in one year SBY administration managed to slash time taken to start business from 147 days to 97 days. It is still low compare to region’s average of 47 days but SBY still has 3 more years to go.

The big question is the return on investment to travel abroad. Few are easily calculable like his 2005 visit to Australia that resulted in doubling of number scholarship (APS) to study in Aussie. Some are quiet murky like the 2006 visit to Myanmar without follow up action force the junta to return to democracy. But most of other visits are in the middle.

So what we need is a set of criteria to determine what a successful visit is. How to value the bilateral relationship beside stream of incoming investment (discounted with present value)? Remember that Indonesia play significant part in the resolution Mindanao conflict in early 90s which is resulted from many visits.