High Cost Economy
In Indonesia
Competitiveness is determined by many factors,
including external and internal factors. External
factors closely related to competitiveness and comparative advantages
of other countries who became Indonesia's
competitors. For example, X
products made in China that have very cheap
prices and huge production scale is
difficult to rivaled by Indonesia, making Indonesia
the low competitiveness of the product X when compared with
China. In addition to external factors, there
are also internal factors that determine the
competitiveness of the product, especially
with regard to domestic factors,
including human resources / employment, investment, production costs, and technology.
These internal factors
that require improvement
and repair via a comprehensive
government policy.
Low competitiveness of Indonesian products in international trade, which
are influenced by internal factors of the domestic
economy can be attributed to the high cost or high cost economy that
still exist in
the national economy. There are several
aspects that lead to high cost economy in Indonesia,
among other labor problems, problems of
credit interest rate / high borrowing costs, bureaucracy / politics is not the least costly, and
infrastructure issues. Five aspects
will be discussed further to analyze the causes
of high cost economy in
Indonesia, which impact on the weak
competitiveness of domestic products compared with products
made in China.
1.
Labor Issues
Problems of labor / labor is one of the causes of high cost economy in Indonesia. This also led to the competitiveness of Indonesian children's products made it difficult to compete with similar products made in China. Widjanarko Tjokroadosumarto, Toys Indonesian Employers Association chairman (APMI) revealed differences in the treatment of the workers there, which led to the high cost economy. Workers in China earn better facilities than workers in Indonesia. [Iii] Despite only receiving a salary of $ 100, laborers in China generally do not need to rent a house because the local government worker who rented bungalow is available at a cheap price. Another case with workers in Indonesia are 30% of the salary used for the cost of the contract.
Problems of labor / labor is one of the causes of high cost economy in Indonesia. This also led to the competitiveness of Indonesian children's products made it difficult to compete with similar products made in China. Widjanarko Tjokroadosumarto, Toys Indonesian Employers Association chairman (APMI) revealed differences in the treatment of the workers there, which led to the high cost economy. Workers in China earn better facilities than workers in Indonesia. [Iii] Despite only receiving a salary of $ 100, laborers in China generally do not need to rent a house because the local government worker who rented bungalow is available at a cheap price. Another case with workers in Indonesia are 30% of the salary used for the cost of the contract.
2.
Bureaucratic problems
Bureaucracy and political factors believed to be one of the main causes of high cost economy in Indonesia. Bureaucratic costs, both official and unofficial in some areas can reach 20% of the cost of production. The high cost of the bureaucracy will ultimately lead to the price of output produced Indonesia became more expensive when compared with products made in China. Furthermore, the cost of high cost economy due to the bureaucratic costs will also make the cost of Indonesia's exports are higher than its competitors, including China.
Bureaucracy and political factors believed to be one of the main causes of high cost economy in Indonesia. Bureaucratic costs, both official and unofficial in some areas can reach 20% of the cost of production. The high cost of the bureaucracy will ultimately lead to the price of output produced Indonesia became more expensive when compared with products made in China. Furthermore, the cost of high cost economy due to the bureaucratic costs will also make the cost of Indonesia's exports are higher than its competitors, including China.
3.
Interest Rate Credit Problems
Unlike the interest rate in China is relatively low in order to support the growth of their industry, mortgage interest rates are still high in Indonesia. This has implications for the interest rate on the higher costs of loan that must be borne by the company to obtain financing.
Furthermore, interest rates People's Business Credit (KUR), which is the most potent source of funding for the SME sector in Indonesia is people lending rates second highest in the world, after Myanmar. [V] As, ideally lending rate which is applied to the development of the sector SMEs should be in the single digits or a maximum level of 10%. In fact, the current interest rate for micro KUR in Indonesia over Rp 20 million for loans down by 22%. Meanwhile, retail KUR interest rates for loans of Rp 20 million to Rp 500 million, amounting to 14%. Meanwhile, lending rates in China and Thailand ranged only at the level of 4-8%. Therefore, industrial products China and Thailand have higher competitiveness than Indonesian products.
Unlike the interest rate in China is relatively low in order to support the growth of their industry, mortgage interest rates are still high in Indonesia. This has implications for the interest rate on the higher costs of loan that must be borne by the company to obtain financing.
Furthermore, interest rates People's Business Credit (KUR), which is the most potent source of funding for the SME sector in Indonesia is people lending rates second highest in the world, after Myanmar. [V] As, ideally lending rate which is applied to the development of the sector SMEs should be in the single digits or a maximum level of 10%. In fact, the current interest rate for micro KUR in Indonesia over Rp 20 million for loans down by 22%. Meanwhile, retail KUR interest rates for loans of Rp 20 million to Rp 500 million, amounting to 14%. Meanwhile, lending rates in China and Thailand ranged only at the level of 4-8%. Therefore, industrial products China and Thailand have higher competitiveness than Indonesian products.
4.
Infrastructure problems
Infrastructure problems in Indonesia is not optimal quality of road infrastructure, as there are many. lane roads damaged in the economy, limited access of the center - the central area of production to marketing, as well as to urban outlets and the existing highway is not optimal support regional development. Declining quality of existing road infrastructure in economic lines, especially in the East Cross northern coast of Java and Sumatra, which caused excessive charge and dimensions, as well as limited maintenance funds. This resulted in vehicle operating costs and the costs of moving goods become expensive and competitive levels decreased.
Infrastructure problems in Indonesia is not optimal quality of road infrastructure, as there are many. lane roads damaged in the economy, limited access of the center - the central area of production to marketing, as well as to urban outlets and the existing highway is not optimal support regional development. Declining quality of existing road infrastructure in economic lines, especially in the East Cross northern coast of Java and Sumatra, which caused excessive charge and dimensions, as well as limited maintenance funds. This resulted in vehicle operating costs and the costs of moving goods become expensive and competitive levels decreased.
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