How we as the young generation can leverage the momentum of APEC 2013 to make Indonesia competitiveness in Asia-Pacific Region?
*This Paper Published for the purpose of ABAC Writing Competition 2013*
Cek Details here http://abacindonesia-society.com/
“Strengthening Asia-Pacific Regional Food Security Through Investments in Indonesia’s Agricultural Sector:
The Proposal of Universities-SMEs Cooperation”
The APEC next meeting in Bali will be very delighful oppurtunity for the forum because almost 1200 CEO across the globe and 21 World Leaders gathering to adress the main theme of APEC 2013: Resilient of Asia-Pacific as the Engine of Global Growth. Despite the APEC represents 3 Million people, 55% of Global GDP and 45% of Global trade, many homework that the APEC itself should resolve, particularly related to the food security problems.
Food Security remains an important issue for the livelihood of APEC members. Highly volatile food prices and inadequate supply of food hurts farmers and consumers. The hike up of food prices in 2009 has gave the world leaders a lesson to learn that the food prices could also be problems on the future. It is threathening the future of sustainable growth that the world would like to achieve. The food security problems also does not only contains with problems in economic dimensions, but also contains with problems in social and cultural dimensions. One of the major problems of why food market prices volatility and flux is the trade imbalances of global food market. Protectionism policy of major food exporters countries such as the US, EU and Japan has made significant influence toward the food market competitiveness.
For Indonesia, food security also considered as the main priority that our countries should resolve. It can be shown by Indonesia’s priorities according to Presidential Regulation Law on the National Medium Term Development Plan (RPJMN 2010-2014). Therefore, there should be an alignment between Indonesia priorities toward food security with regional priorities, particularly in the APEC.
Indonesia has a potential to develop its agricultural sectors to strengthen their exports commodities by increasing their competitiveness. Currently, Indonesia’s agricultural sectors contributed 14% to Indonesia’s GDP and absorbed 40% of employment (OECD, 2012). Unfortunately, Indonesia’s agricultural sector is less competitive rather than it is expected. Based on Ministry of Trade, Agricultural sectors in 2012 contributed a relatively small account of Indonesia’s export compared to Industries and Oil-Gas Commodities (Perdagangan, 2013). Besides, Indonesia’s investment toward agricultural sectors is relatively small compared to other sectors. The lack source of investment to agriculture was indicated causes the lack of productivity.
The same case also with APBN allocation to support agricultural sector. In despite of Indonesia has a potential to be competitive in agricultural sector, Indonesia government has only allocated 1,3% of APBN or account 17,8 Billion Rupiah (Faiq, 2012). Accordingly, Indonesia cannot get benefits from agricultural sectors because two things, first there is no political willingness of government to enhance it and second, Indonesia’s infrastructure are lack and inadequate. For the first cases, it can be seen through APBN Allocation and several regulation that harming Indonesia farmers and thus decreasing their productivity and cause alteration of land production to another land functioning. Based on Head of National Food Security Association (BKPN –Badan Ketahanan Pangan Nasional), over 50% of the agricultural land production transfered to another function in Java Island (Shaleh, 2013). Another cases also occured in Bali that agricultural land production less 750 Ha every year (Sutika, 2013). For the second cases, Based on World Economic Forum – global competitiveness report 2010-2011, Indonesia’s infrastructure quality ranked 90 in the world if we compared with indicator such as roads, railway, air transports, electric supply and ports (Bappenas, 2011).
Within the APEC, there are only a few sectors where government still want to shelter producers from international competition or international investment (Elek, 2012). Almost majority of APEC governments protect their agricultural commodities. It means that high protection of agricultural commodities seems not going to change until 2020, in which free and open trade and investment, inspired from Bogor Goals. Based on this propositions, therefore, the Indonesia standings in APEC should encourage the members to discuss the problems of food security in terms of Asia-Pacific cooperation. The openness of investment to agricultural sector could bring possibilities to resolve the food security problems and Indonesia has a chance to do Bogor 1994 success happening again in Bali 2013.
Indonesia should encourage the APEC to do more in order to foster innovation, especially by encouraging investment to agricultural sectors which also will encourage the spirit entreprenueralism among microenterprises and SMEs. If we traced with the population distribution in Indonesia, therefore we will find that the population distribution in Indonesia concentrated to the Java Island, dwelled with 160 million people from total population of 240 million (BPS, 2013). Inequality of population distribution has caused that competitiveness of Indonesia decrease because skilled human resources concentrated in Java. The point is, by encourage and promote investment to Indonesia’s agricultural sectors, Indonesia could dismantle their problems toward unemployment on agricultural sector. The more important problems is, that the productive age of Indonesia young generation choose to work in another field instead in agricultural sectors because its prospect is biased. The change in young generation behavior tends to work in industries are not wrong or false, but should be noted that the job availability on those sectors are limited while the entrepreunalism spirit among young generation still classified low, accounted for 400.000 thousands entrepreuner or 0,24% from total population in 2012 (Anas, 2012).
However, Based on Indonesia Development Masterplan (MP3EI), Indonesia planned to use Java Island as manufacturing based economy to service based economy (Indonesia, 2011). From this point that the essence of competitiveness could be achieved with equality in the distribution of population where the highly skilled human resources work to manufacturing and service while the agricultural sector also works with low labour intensive in other part of Indonesia, such as Sulawesi. The advantages are the employment can support the growth. Moreover, Indonesia is predicted will be benefited with high and productive labor force until 2020 (Demography Bonus).
Financing the Agricultural sectors through investment should be considered to elevate Indonesia productivity on this sectors. Specifically, agricultural sector according to Indonesia’s President statement, which are rice, corn, soy bean and sugar (Rini, 2010). Those priorities can be achieved with the synergy between government and bussiness sectors. In other words, Indonesia specialised their food commodities to be competitive in international trade. But, Indonesia’s should to overcome its lack of capital to develop agricultural sectors. See from problems that have been mentioned, the high probabilities are with promote and facilitate investment, particularly from the private sectors.
APEC Bussines Advisory Council (ABAC) and Indonesia Young Generation
ABAC has been engaged in food security efforts since 1999 when APEC Leaders endorsed a plan for a unified food system (Secretariat, 2013). By conducting this comprehensive unified food system, the objective that would like to achieve are sustainable, equitable and stable food system in Asia-Pasific region. Therefore, ABAC recommends the creation of Policy Partnership on Food Security (PPFS) and succeeded to conduct the first meeting, then enacted Kazan Declaration in which commited to several issues regarding to food security such as increasing the agricultural production and productivity, facilitating trade and developing food market, and also enhancing food safety (APEC, 2012).
Momentum of the APEC CEO Summit in Bali next month should address the issue of financing for agricultural sectors. In order to absorb the private investment, Indonesia government should ensure that stable climate investment, clear regulation and political stability will be the priorities for those investment to agricultural sectors.
As a young generation, limited accsess of financing to SMEs has made Indonesia agricultural SMEs less competitive and affected young generation to start their bussines particularly in agricultural sectors (Yulisman, 2013). Moreover, 40% of Indonesian young generation is potential to be an entrepreuner.
The main problems of why young generation hard to start their bussiness are, because they lack of capital and they affraid to start bussiness alone. One sort of ideas (In Scheme 1) that would elevate young generation desire to be an entrepreuner is build the SMEs with affiliation to their universities through consolidation with one students association within universites. Student association which consist of several students elected by their univerisites will run agricultural SMEs. Thus, capital reason which restrained them to start bussines can be faced. Their universities will guarantee the sustainable SMEs their established by maintaining relations with the private sectors. Although Indonesia government limited their investment to agricultural sector, (moreover if it controlled to young generation) private sectors could conduct relations with those elected universities to develop the SMEs as their CSR (Corporate Social Responsibility) to public. Terms and condition of this sort of relation will be regulated by the agreement between universities and private sectors. All of the SMEs can be diversified to spesific issues area, but noted here that the main importance for Indonesia potential is thorugh agricultural sectors. The capital will be used by the students to run the first time of production of SMEs until the SMEs profitable. If the SMEs were well established, the sustainability of SMEs will be the responsibility of Universities and Students with Cooperation (Koperasi) Principles under the supervision of Private Sectors. The students cannot maintain their presence if they have already graduated from its university. For the profit management, the student and private sectors will share it as a shareholder mechanism just as applied in a company.
Scheme 1. Private Sectors – University Partnership
The production of those agricultural SMEs directed to assist needs of population who lived in remote areas accross Asia-Pacific. Therefore, rather than it merely will be seemed like profit-oriented SMEs, this sort of SMEs apparently one of endeavour to ensure food security in the region.
There are several advantage if government can persuade private sectors to do this scheme of relation in order to build Affiliated Univerities – SMEs support by the private sectors. First, they will build entrepreuner climate within the students. Second, the innovation ideas of bussines could be appeared since the students run their SMEs with small risks caused helped with Private Sectors investments and trained with experts. Third, it also will open a job availability and reduce tthe unemployment. Fourth, diversification of agricultural products of each SMEs will increase production. Beyond the models, the government willingness through regulation should also taking in place. This model requires regulation that manage this sort of relations. For instance, the government should provide and ease the permission of those SMEs. But in particularly, the regulation to manage the relation between government, private sectors and universities.
To conclude, investment in Indonesia’s agriculture through the presence of affiliated-universities SMEs would strengthening the global food security through Asia-Pacific Region. But, there will be a lot of obstacles constrain it. Therefore, through APEC CEO Summit in Bali this October, this sort of scheme mechanism can also be considered as alternative way in overcome food security problems. Even though Policy Partnership on Food Security (PPFS) established to discuss several key points, particularly to focus on infrastructure development and enhancing openness on market and trade (Secretariat, 2013), but the new ideas who cut the edge of borders and pragmatic is needed to tackle this issues.
The proposed ideas above comprises inclusivity of young generation as part of Asia-Pacific Food System framework to tackle issues of Food Security. There should be progress toward this issues in Bali this year because this issues are multi-faceted which cannot be solved overnight. Involvement of universities and students as young generation in Asia-Pasific might probably help if it scrutinised within negotiations and recommendations of ABAC and proposed it to Economic Leaders, thus discussed at APEC CEO Summit this year. Indonesia in this context as a leader of APEC 2013, have a chance to bring this issues to high level talks. Moreover, Indonesia has it capacities.