Complementing Indonesian Development Paradigm

This article has been published in New Mandala https://www.newmandala.org/jokowi-development/ with some modifications from the editor.

About three weeks ago, Indonesian Minister of Finance, Sri Mulyani Indrawati, shared her detailed idea of the Indonesian development plan in the next five years. The main upcoming government agenda is human resources development as the key to achieving rapid economic growth, together with capital and technology. There are two main theoretical points that have been promoted by the Indonesian government. First is the new-growth theory and the second is the institutional approach.

New-Growth Theory

Advancing human capital through education improvement and the expansion of individual’s ideas is strongly associated with the new-growth theory of development. This theoretical idea is clearly reflected in the Minister of Finance’s explanation of high investment in the education and research sector.

Through the Indonesian Endowment Fund of Education (LPDP), the government has allocated Rp. 46 trillion for improving the quality of higher education graduates and the quality of research. There are approximately 20.255 current LPDP scholarship awardees around the world and the government opens opportunities for other 5.000 new awardees this year (Putra, 2019). These individuals are projected to improve country development, specifically in succeeding the demographic bonus in 2045.

Indonesia will have up to 64 percent working-age population (15–64) of estimated 297 million total Indonesian population between 2030–2045 (National Development Planning Agency, 2017). In answering this challenge, the Indonesian government focuses on two main issues, workforce and education. Specifically, providing the scholarship is one way to improve the accessibility, quality and relevance in the education sector.

In addition, the government would provide a college endowment fund to increase the universities’ qualities. The aim is to support universities in working towards a world-class level, so they would be able to support the human capital development of the country. In total, Rp. 505,8 trillion of education fund would be allocated from the state budget this year.

Another important mark of the new-growth theory is the shifting of employment structure from manufacturing to the service sector. This point is obviously shown on the rapid growth of start-up companies and the enthusiasm of the government to accommodate. Aside from its highly criticized precarity system, several start-ups have become the savior of Indonesian unemployment, empowering informal economy sectors and assisting the middle-class growth.

Consider the Gojek alone, this company has successfully empowered 1,7 million driver-partners, 125.000 merchants and 30.000 other services across 50 Indonesian cities (Setyowati and Aria, 2019). This number will likely increase due to its expansion and new 5 billion USD investments. Not to mention other start-ups, such as Grab, which provides similar services to Gojek. Additionally, there are a number of online marketplaces, such as Tokopedia, Shopee or Bukalapak. Tokopedia has partnered with more than 20.0000 merchants and improved the small-medium enterprises (SMEs) with its 148.500.000 monthly visitors (Asean Up, 2019).

President Joko Widodo’s priority on building the infrastructure during his first administration period was also a part of accelerating and promoting regional tourism to expand the service sector. In the creative economy sector, President Joko Widodo often invites the millennial public figures, usually YouTube content creators, to his office. In 2017, around 50 social media influencers across different content themes and platforms were invited to have a dinner with the president (Jordan, 2017). The president himself encourages creators to keep producing salable contents as well as inspires young generations for original ideas.

Institutionalism Approach

Bureaucratic obstacles have been familiarly known as one of the frustrating development hindrances. Accounting for capital and human resources as key factors in ensuring rapid economic growth, the basic question is what kind of institutional arrangements that would enable those two elements to perfectly work?

President Joko Widodo has been working on this issue since the first day in the office. His first administration period has highly focused on deregulation and de-bureaucratization aspects, especially for the investment matter. With its heroic slogan, “work, work, work!”, the government attempts to motivate the whole country, particularly state apparatus, to work hard and efficient in delivering the service.

During the first two years of President Joko Widodo administration, the government claims to have simplified 214 regulations and have accelerated the efficiency in issuing the investment permit within only three hours (Cabinet Secretary of Republic of Indonesia, 2016). There was a cooperative effort in releasing operation permits for motorcycle ride-hailing phone companies. While there is a regulation absence for motorcycle taxi drivers in Indonesian transportation law, this demonstrates the government enthusiasm in supporting capital investment through institutional agreement.

The discourse of creating a new Ministry of Digital and Creative Economy highlights the government’s willingness to keep improving its institutional capacity in ensuring the capital investment, particularly in the digital era. On the other hand, prioritizing the state budget through the utilization of endowment funds shows the government’s commitment in maximizing its institutions to ensure human resources development.

Considering the human resources development would require cross-sectoral partnership, the second administration period of President Joko Widodo will keep continuing its deregulation and de-bureaucratization agenda. Building state institutions to supportively work on capital investment and human resources development is a strong provision to achieve the development goals.

Capability Expansion: Complementing the Paradigm

It has been clear that the government is highly focused on strengthening its institutions and will enlarge their vision by focusing on human capital development. However, the human’s capability expansion as the fundamental aspect of development has been partially missing in these last five years.

The government has extensively worked on improving the well-being of society. Service delivery policies, such as Indonesian Health Card (KIS) and National Health Care Guarantee (JKN) in health sector, scholarship and Indonesian Smart Card (KIP) in education sector or Family Hope Program (PKH) in poverty alleviation sector can provide support. Those are parts of basic rights fulfilment as important starting points to widen human capabilities.

Nevertheless, human capability should not be seen through only the growth perspective. The basic rights to expand the human capabilities also include political rights, to express your own beliefs and views. The willingness to expand these social and political aspects of human capabilities has been prolongedly missing during President Joko Widodo administration.

A series of persecutions among society to minority groups or to people with different beliefs and different sexual orientations have priory been familiar to Indonesian. Not to mention the polarization during the presidential election which the effect can still be obviously seen nowadays among society. The latest was the racial abuse to Papuan students in East Java and the forced dissolution of the church congregation in Riau. Data from Commission for Missing Persons and Victims of Violence (Kontras) shows that during October 2016-June 2017 there were 64 persecution cases in the country, including prohibition, intimidation and forced dissolution (Gerintya, 2018).

President Joko Widodo has been widely criticized due to lack of willingness in human rights enforcement. A series of unsolved human rights issues in the past, as well as recent threats of social clashes, should be a harsh reminder to focus on the human capability aspects of development. This is essential in complementing both new-growth and institutional approach perspectives since the fulfilment of human capabilities should be as the means and as the end of the development itself. The goal is clear, not only to be a sovereign and prosperous country, but also an equitable one.

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