Gustav F Papanek*

Gustav Papanek
Gustav Papanek
The government of Joko Widodo-Jusuf Kalla has two economic policy scenarios to choose from. First is “business as usual” scenario, which is basically continuing existing economic policy. Second is the scenario to seize an opportunity to achieve the double digit growth we all have been dreaming for.

The first scenario only provides the opportunity to create less than 1 million new jobs per year. This choice most likely will only bring forth 5 percent, or even less, national income growth per year. This is not proportional to the 2 million new labor force growing each year in Indonesia. It means that with this scenario, more than 1 million new workers will only be working in low income and low productivity jobs, and may even become unemployed.

The second scenario is different. Through this scenario, Indonesia has the opportunity to create 4 million good jobs each year. Economic growth will reach 10 percent by 2019, and 10 million poor households will shift to middle class families.

The second choice is an opportunity that will only come once in a century. This opportunity arises in part because of the economic situation occurring in China. The competitiveness of the country that has dominated the world manufacturing market in recent decades is beginning to decline. In the next five years, other countries – most of them are Asian countries – will overtake China’s manufactured export market.

Indonesia is in a good position to seize the labor intensive manufacturing market from China due to its abundant human resources. This country can take advantage of its demographic bonus, in the form of working age population boom, and surplus workers, which currently reach 20 million people.