Indonesias Role in Winning the

ASEAN Economic Community (AEC)

Indonesia Statistics Conference and Olympiad
UII Yogyakarta, 18 September 2016

Trizar Rizqiawan

Presentation Organisation
1.
2.
3.
4.
5.

What is ASEAN Economic Community?

Where is Indonesia standing within ASEAN?
What the Government of Indonesia has done so far to
support domestic competitiveness?
What Indonesia has to win AEC?
What Indonesia(n) has to prepare to compete?

1. What is ASEAN Economic Community?

AEC Blueprint was signed in November 2007.
Establishment of the AEC was on 31 December 2015.
Single Market and
Production Base

Free flow of
goods
Free flow of
services
Free flow of
investments
Freer flow of
capital
Free flow of
skilled labour

Competitive
Economic Region
Competition
Policy
Consumer
Protection
Intellectual
Property Rights
(IPR)
Infrastructure
Development
Taxation
E-commerce

Equitable Economic
Development

Integration into the

Global Economy

SME
Development
Initiative for
ASEAN
Integration

Coherent
Approach
towards External
Economic
Relations
Enhance
participation in
global supply
networks

1.1. Single Market Production Base

Free flow of
goods

ASEAN Free Trade Area (AFTA) removal of tariffs, integrating

customs procedure, and information flows, , ASEAN single window,
harmonising standards, responsive Rules of Origin on production
process.

Free flow of
service

No restriction to ASEAN services suppliers, liberalisation on air

transport, e-ASEAN, healthcare, tourism, logistics and later on
financial service sector

Free flow of
investment

ASEAN Investment Area encourages manufacturing, agriculture,

fishery, forestry , mining and quarrying, plus all services incidental to
these sectors to be open, protection for investors, harmonise
investment rules, promote ASEAN as single investment area and
production network, investment liberation.

Freer flow of
capital

ASEAN capital market development and integration on procedures,

tax, language and law, allowing greater capital mobility.

Free flow of
skilled labour

Visas and employment passes for professionals are managed by

ASEAN, mobility for students and university staffs, develop
competencies.

1.2. Competitive Economic Region

Set up competition policy, establish a

forum for discussing and coordinating
competition policies, support fair
competition.

Consumer Protection ASEAN

Coordinating Committee on Consumer
Protection (ACCCP), information sharing
and exchange, training stakeholders
about consumer protection.

Intellectual Property Rights (IPR) filing

system, enforce IPR protection, promote
regional cooperation on traditional
knowledge, genetic resources and
cultural traditional expressions.

Infrastructure Development aims to

link all ASEAN members and to link
ASEAN to other Asian countries.
ASEAN open sky, ASEAN Highway
Network, ASEAN ICT infrastructure.

Taxation Network of bilateral

agreements on avoidance of double
taxation.

E-commerce policy and legal

infrastructure, on-line trading within
ASEAN, harmonising legal aspect with
domestic law.

1.2. Equitable Economic Development

SME Development

ASEAN Policy Blueprint for SME Development (APBSD) 2004-2014

and ASEAN Strategic Action Plan for SME Development 2016-2025
(SAP-SMED).
Accelerate SME development and promote networking of SMEs in
ASEAN in terms of production and distributions.
Facilitate SMEs with better access to information, market, human
resource development and skills, finance and technology.
Strengthen ASEAN SMEs to withstand global economic volatility.
Increase contribution of ASEAN SMEs to the regional economy.

Initiative for ASEAN Integration

This initiative is to accommodate less developed countries in ASEAN so that AECs benefits
are shared and enjoyed by all members.
Narrows gap between ASEAN and other part of the world with priority on infrastructure,
human resources, ICT, energy, investment climate, tourism and poverty reduction.
Strengthen capacity of government officials to develop economic and social policies that
would mitigate the effects of integration.
Garner sufficient support from partners such as World Bank and Asian Development Bank.

1.3. Integration to the Global Economy

Coherent Approach towards

External Economic Relation

Enhanced participation in global

supply networks

ASEAN centrality in economic

relations, FTA negotiations and
comprehensive economic partnership
agreement.
Review FTA/CEP commitments vis-vis ASEANs internal integration
commitment.
Enhance coordination on external
relations.

Adopt international best practices

and standards in production and
distribution.
Upgrade industrial capability and
productivity for those less developed
members.

2. Where is Indonesia standing within

ASEAN?
The World Economic ForumGlobal Competitiveness Index
takes account several factors
such as:

Factor-driven: institutions,
infrastructure, macroeconomic
environment, health and primary
education.
Efficiency-driven: higher
education and training, goods
market efficiency, labor market
efficiency, financial market
development, technological
readiness, market size.
Innovation-driven: Business
sophistication and innovation.

Country
Current Rank Previous Rank Score
Brunei Darussalam
26*
28*
4.94*
Cambodia
90
95
3.94
Indonesia
37
34
4.52
Lao PDR
83
93
4.00
Malaysia
18
20
5.23
Myanmar
131
134
3.32
Philippines
47
52
4.39
Singapore
2
2
5.68
Thailand
32
31
4.64
Viet Nam
56
68
4.30
*: not updated

Indonesia down 3 levels while other

ASEAN countries up 4 levels on
average !!

2. Where is Indonesia standing within

ASEAN?

Source: World Economic Forum Global Competitiveness Index 2015-2016 Report

2. Where is Indonesia standing within

ASEAN?
Country

Population

Brunei Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Viet Nam

420,000
15,540,000
255,460,000
7,030,000
31,120,000
51,850,000
101,420,000
5,520,000
68,840,000
91,580,000

GDP 2015 GDP Growth Inflation Interest Trade Balance

(USD billion)
2015
(July 2016) rates (USD million)
15.49
-0.50%
-1.10%
5.50%
141.49
18.05
7%
2.80%
3.00%
(26.46)
861.90
4.80%
3.20%
6.50%
900.20
12.33
7%
1.62%
4.50%
(594.00)
296.22
2.10%
1.60%
3.39%
805.34
64.87
8.70%
11.41%
10.00%
(639.40)
292.00
5.80%
1.40%
3.00%
(2,021.00)
292.70
2%
-0.70%
3,870.00
395.30
2.80%
-0.90%
1.50%
1,965.50
193.60
6.70%
2.39%
9%
100.00

various sources: Bloomberg, IMF, World Bank and tradingeconomics.com

ASEAN is very diverse, even in terms of macroeconomic conditions. Thus, integration will take
time longer than expected.
Equal economic development and domestic interests put high tension on the effectiveness of
ASEAN integration. Equality or integration first?
Currency war might happen.
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2. Where is Indonesia standing within

ASEAN?
Country

Literacy
Life
Infant Mortality Maternal Mortality Rate Unemployment
Rate (2013) Expectancy (2012)
Rate (2012)
per 100k live births (2013)
Rate (2013)
Brunei Darussalam 97.20%
78.10%
9.30%
27
Cambodia
80.70%
33%
170
0.30%
Indonesia
94.10%
69.90%
27.90%
190
6.20%
Lao PDR
79.00%
66.10%
52%
220
Malaysia
94.20%
74.40%
6.60%
29
3.10%
Myanmar
95.10%
67.10%
26.00%
200
4.00%
Philippines
120
6.40%
Singapore
96.50%
82.10%
2%
3
2.90%
Thailand
74.20%
6.80%
26
0.70%
Viet Nam
94.80%
73.00%
15.40%
49
3.60%

Road Length
km (2012)
2,909
51,422
504,184
43,600
182,699
151,298
31,359
3,430
231,620
326,000

Area
(km2)
5,765
181,035
1,905,000
236,800
330,803
676,578
300,000
719
513,120
331,210

various sources: ASEAN Statistical Yearbook 2014

Interconnection within Indonesia is still lagging to those other ASEAN countries. Indonesias ratio of road
length to area is only 0,26, compare it to:

Vietnam 0,98
Malaysia 0,55
Thailand 0,45

Indonesias life expectancy is in the bottom three!

Health sector should be improved for Cambodia, Indonesia, Lao PDR, Myanmar and Philippines. ASEAN has
to prepare comprehensive healthcare industry to tackle this problem in order to compete with other
developed countries.
Will the AEC reduce or increase the number of unemployed?
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3. What the Government of Indonesia has

done to support domestic competitiveness?
The current government
cut 54% of energy
subsidies in 2015 (IDR
186 trn)
Tax on repatriation and
declaration of assets in order to
increase tax revenues and utilise
Indonesians wealth to grow
domestic economy

Distributed to rural areas for:

Poverty reduction, public facility and
infrastructure for healthcare, education, food
security and residences, economic activities,
renewable energy and environmental
conservation IDR47 trn
Reform the Maritime
and Fisheries sector
by enforcing law on
IUU Fishing and
stimulate industry

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3. What the Government of Indonesia has

done to support domestic competitiveness?
Deregulation

De-bureaucracy
simplifying permits,
single window

3-hours investment
permit for min IDR
100bio or 1000 labours

Lower price: Gas, Fuel

and Electricity

KUR rate decreased

from 22% to 12% and
increase accessibility

Simplification on land
acquisition permits and
certification

8 Special Economic
Zones (KEK) tax
holiday, customs,
permits, infrastructure

Providing water to
people with
sustainability and justice

One Map Policy

Oil Refineries to
accommodate domestic
interests

Incentives for air craft

maintenance industry

Revision on Negative
Investment List

Incentives on financial,
permits, tax, electricity,
export import for SME

Paperless import
permits for pharmacy
raw materials

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3. What the Government of Indonesia has

done to support domestic competitiveness?

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Education

Health

Institutions

Infrastructure

Economic Census
2016

3. What the Government of Indonesia has

done to support domestic competitiveness??

15

Economic potentials: region, type and business entity

Benchmarking: GDP/ Regional GDP, labours, etc
Providing sampling frame for other economic surveys: prices survey,
production survey, distribution survey, services survey, etc
Database and benchmark on Updating Integrated Business Register
(IBR)
Business characteristics based on size
Business characteristics (uniqueness): franchise, e-commerce/online
business, multilevel marketing, etc.
Business competitiveness mapping
Business prospect and investment planning

4. What Indonesia has to win AEC?

Indonesia lies on the equator which benefits us for a whole year of sun light. Perfect location for agriculture!
17,504 islands and long coastline of 104,000 km (Bakosurtanal, 2006), total area of the Indonesia ocean is approximately 3,544
km2 (70% of total territory). Fisheries heaven!
With abundance resources, islands and culture; Tourism is one of the best asset that Indonesia (9 mio tourists in 2014) has
and is still underdeveloped comparing to other ASEAN countries such as Malaysia (27mio), Thailand (24mio) or Singapore
(15mio).
Indonesia is supposedly dominating the Shipping and Logistics industry due to its geo position.
Despite the vast area Indonesia sits on, it is politically stable and relatively remote from South China Sea which is in
conflict involving China.

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4. What Indonesia has to win AEC?

Indonesia has the biggest population
in ASEAN which implies: Biggest
Market and Biggest Labours
Provider.
The strong demand due to
Indonesias market size creates a very
strong industry in the consumer
sector (Unilever value grew 176% in
the last 5-yr) as well as textile and
automotive.
The bell-shaped population profile
means that economy is and will be
supported by young productive
labours.
Source: https://populationpyramid.net/indonesia/2016/

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4. What Indonesia has to win AEC?

Indonesias Energy Security: Oil and Gas (Kemen ESDM, 2014)

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4. What Indonesia has to win AEC?

Indonesias Energy Security: Coal (Kemen ESDM, 2014)

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4. What Indonesia has to win AEC?

Indonesias Energy Security: Other sources (Kemen

ESDM, 2014)

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5. What Indonesia(n) has to prepare to

compete?
Language and Technology skills
Character
Efficiency and Effectiveness
Leadership and Networking
Higher Formal Education
Awareness
Specialisation
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5. What Indonesia(n) has to prepare to

compete?
19th century:
Large data sets,
simple questions
Relies on census
Are there more
females than
males?
Is the murder rate
rising?

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20th century:
Small data sets,
simple questions
Relies on smallscale statistics
Optimal inference
Is treatment A
better than
treatment B?

21st century:
Large data sets,
complex questions
Volume,Variety
and Velocity
It still hardly
answers why
questions
What are people
doing?
Who they are
doing it with?
Where and when
they do it?

Terima Kasih

Trizar Rizqiawan
E: trizarrizq@gmail.com
M: +62 82113144 190
WA: +44 7542 339 502

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