Lembaga Penyelidikan Ekonomi Dan Masyarakat FEB UI, Katalog Penelitian Lembaga Penelitian FEB UI – Juli 2017

1.    Estimating the Demand for Social Infrastructure Investment in Indonesia
Client  : JICA
Period  : April–July 2017

This is an ongoing project funded by Japan International Cooperation Agency (JICA). The study aims to provide an estimation of investment demand for Indonesia’s social infrastructure until 2030 at the national level. It will be the first study to estimate the investment needs in social infrastructure, which covers education, health, housing, and government.  It will also provide policy recommendation for Indonesia to fill the projected gap of social infrastructure investment by two approaches. The first is macro approach adapted from Fay and Yepes’ framework (2003). This study relies on the historical, provincial relationship between social infrastructure stocks and key provincial economic indicators. Based on this relation, this study forecasts the social infrastructure needs in order to meet the dynamics of economic growth and demographic trend during 2016–2030. The second is micro approach which calculates the needs based on projected number of population.

The preliminary results show that Indonesia needs USD 452.1–465.2 billion to fulfill its social infrastructure needs over 2016–2030, accounting for 2.32–2.34% of annual projected GDP. In total, annual investment demand accounts for approximately 18% of government expenditure. Lack of investment on social infrastructure will have a future consequence on national competitiveness. In total, annual investment demand accounts for approximately 80% of subsidy and 24% of tax revenue. It is also important to consider the financing issues in anticipation of economic growth and population dynamics, which involve private investment and multilevel financing across government levels.

2.   Indonesia and the Global Value Chain: The Utilization of Trans-Pacific Partnership
Period  : April–July 2017

In October 26th 2015 the President of Republic of Indonesia, H.E. Joko Widodo, in his official bilateral meeting with the President of the United States of America, H.E. Barack Obama, stated that Indonesia ‘intended to join’ the Trans-Pacific Partnership (TPP). Indonesia is the country chair for the Trade Negotiating Committee (TNC) of the Regional Comprehensive Economic Partnership (RCEP). It has the largest economic and population size in Southeast Asia, is a founding member of the Association of Southeast Asian Nations (ASEAN) with a forecasted rising economic growth, and one of the most promising emerging countries in Southeast Asia. Its intention to join the TPP is therefore interesting to observe and makes an appealing research material. Under the research institute network for TPP, LPEM FEB UI collaborates with CSIS Indonesia to analyze the motivations underlying Indonesia’s interest in the Trans-Pacific cooperation. It is interesting to note that during the TPP initial process, Indonesia was decided to be an outsider and focused only on regional economic integration process, especially the ASEAN Economic Community (AEC).

LPEM takes the value chains as one of the three themes of the TPP study. The perspectives of trade and networks are adopted in the value chain approach. First, this study estimated the trade diversion and trade creation impact on Indonesia’s exports and imports. Second, this study produced a basic estimation of the global value chains (GVCs) in the scenarios of Indonesia joining and not joining the TPP. It employed and modified several methods to calculate these scenarios. The study then combined the trade diversion and trade creation calculations to explore which Indonesian products could potentially be affected by the TPP in both “in” and “out” scenarios. Using trade impact evaluation and global value chains analyses, this study found that the net cost of being outsider is higher than that of joining as a member of the TPP.

  1. The Survey to Assess Broadband Network Potentials for Connectivity in Indonesia
Client  : LIRNE Asia
Period : March–August 2017

Funded by LIRNE Asia, the ongoing project aims to discover the used capacity of internet users at household level in 34 provinces of Indonesia. Using LPEM’s list of villages in Indonesia, the study involves 1200 households from various income levels obtained from Susenas 2015 data by systematic random sampling. This method enabled the village samples to be relatively equally distributed, allowing selected villages to represent the population. The survey employed Computer Assisted Personal Interviewing (CAPI) to reduce non-sampling errors in data measurement.

4.   Mapping Persons with Disabilities in Indonesian Labor    Market
Client  : ILO
Period  :  June–August 2016

The empowerment of Persons with Disabilities (PWD) has recently attracted the attention of the Indonesian government and NGOs. Several initiatives have been made to improve PWD’s lives and comprehend their rights, including in economic activities. This study aims to map PWD in Indonesian labor market. Specifically, it analyzes the characteristics of employed and unemployed PWD. The study explores the 2016 Labor Force Survey (Sakernas) data as well as other latest data sources. The results show that PWD prevalence in the eastern parts of Indonesia is higher than that in the western regions. It was also found that PWD faces disadvantages in labor participation, paid employment rate, and wage level compared to Persons Without Disabilities (PWOD). Summary of this study can be viewed on  http://www.lpem.org/menuju-pasar-kerja-yang-inklusif-bagi-penyandang-disabilitas-di-indonesia/

1.    Mapping of Medical Device Market in Indonesia
Client  : Directorate General of Pharmacy and Medical Devices, Ministry of Health of Republic of Indonesia
Period  : July–November 2016

This is a collaboration research conducted in 2016 between LPEM FEB UI with Directorate General of Pharmacy and Medical Devices, Ministry of Health of Republic of Indonesia. The study aims to map the market potentials for medical devices in Indonesia in order to form the right policies to support the development of medical device market. According to the E-Purchasing and E-Tendering system, production of medical devices in Indonesia amounted to IDR 16.9 trillion in 2016 with rubber gloves being the most widely produced. Meanwhile, total needs for medical devices in 2016 reached IDR 20.8 trillion. It is estimated that the needs for medical devices will keep growing as the National Health Insurance program is being implemented.  Today, medical devices products in Indonesia are still dominated by imported goods with a total import of IDR 17.9 trillion versus total export of IDR 9.06 trillion in 2015.

This condition calls for appropriate strategies to develop the medical device market, such as by providing fiscal incentives in the form of conditional tax reduction for medical device manufacturers that meet certain criteria, or products purchasing guaranteed by the government for manufacturers of innovative medical devices with certain criteria. Additionally, human resource capacity involved in the manufacturing of medical devices should be improved. These strategies require not only the efforts of the Ministry of Health, but also cooperation of related institutions, such as the Ministry of Finance, Ministry of Trade, Ministry of Industry, and BKPM.

2.   Economic Impact of Jakarta Flood on Society
Client  : ANU
Period  : March 2017–January 2018

Funded by the Australian National University (ANU), LPEM FEB UI researchers engage in an ongoing survey as part of impact assessment of Jakarta flood. As the population of Jakarta has long suffered from annual flood, this study is an attempt to shed some light on how flood affects the welfare of society. A provincial representative survey involving 500 people was made and the data were analyzed through descriptive and inferential statistics. The results revealed that flood has led to direct economic losses, as well as affect indirect economic activities such as school and work. Low-income households were found to be suffering more than other income classes.

3.   Green Knowledge Capture and Dissemination on Green Budgeting
Client  : MCA
Period  : September 2015–September 2017

LPEM FEB UI receives a two-year grant from the Millennium Challenge Account (MCA) on Green Budgeting comprising four provinces: NTB, NTT, Jambi, and West Sulawesi. Green Knowledge Capture and Dissemination on Green Budgeting aims to internalize considerations over greenhouse gas emission into local planning and budgeting and improve the programming, financial planning, and budgeting practices at subnational level. The project identifies green budgeting practices to further initiate the practices at provincial level and endorse green budgeting implementation through deep study, observations, focus group discussions, capacity building, and construction of indicators to measure the performance of green budgeting at subnational level.

4.   Study of Ideal Funding Model for Regional-Owned Enterprises (BUMD) in Managing Indonesia Participating Interest (IPI)
Client  : Risk Management and Tax Division, SKK Migas
Period  : September–December 2016

This study aims to formulate an ideal funding model for Regional-Owned Enterprises (BUMD) in managing the 10% Participating Interest (PI) while taking into account the main criterion and initial objective of the PI: improving people’s welfare in the region. Additionally, the funding scheme must also meet several provisions, such as no foreign involvement, no ownership pledging, and no ownership sharing. The study concludes that in the implementation, PI takeover by the government is not without its problems, which include 1) limited financial capacity of the region preventing it from financing the PI for oil-and-gas BUMD, especially PI funding for new working area for oil and gas; and 2) incomplete (not detailed and unclear) regulation for establishing the 10% PI. This study offers three alternative financing schemes for PI, i.e., capital participation, loan, and ownership sharing.

The first alternative is in the form of capital participation (between producing regency/city and province, as well as between provinces by including several regions)—this option is easy to perform provided there is a strong commitment from the regions (e.g., PT BSP in Riau). This option is highly feasible to implement if the PI offered is for old wells. The second alternative takes the form of loan, including loan from KKKS, central government, and loan to banking institution (consortium of BPD, consortium of BUMN, and national private bank). Loans to KKKS are ideal if the Working Area is a new well that requires substantial cost. Loan to central government (PT SMI) is relatively smaller, although where possible PT SMI can potentially provide loans according to business customs depending on the level of risk. Loans to banks (regional banks, state banks, national private banks), especially where the PI is a long-established Working Area with proven production, are relatively easier to perform and come with clear risk and relatively quick process if they are conducted B2B. The problem is when banks require/ask for collateral when providing loans, as it is widely known that BUMD are prohibited from providing collateral in the form of PI. As the third alternative, sharing of ownership can be performed by BUMD from different regions, BUMD and BUMN, and BUMD and private sector. By sharing the ownership, participating parties also share the risks faced in the business. It is an alternative when the previous options are impossible to perform. The variety of options also allow BUMD to keep learning to manage the company in a good and professional manner in order to reach autonomy in oil and gas industry without putting aside the philosophical purpose of PI.

5.   Feasibility Study on the Establishment of Sovereign Wealth Fund (SWF) in Indonesia
 Client  : UNDP Indonesia
Period  : April – September 2016

This study aims to identify and map the feasibility of establishing SWF at the sub-national, provincial, and regency/city levels, based on the fiscal capacity and capability of each region. Furthermore, this study also includes analysis from the regulatory aspects and assessment of the options of institutional form for SWF that can be established by the regional government within the appropriate institutional framework used in Indonesia. At the end, the case study in Bojonegoro is to be presented as an example of the best practice of a regional government that sought the establishment of a SWF.

In an effort to optimize the positive impact of the existence of natural resources, the establishment of SWF by regions, provinces and districts / cities can be one solution to avoid the “curse” of the existence of natural resources in addition to optimizing its utilization, especially for future generations. The results of calculation and evaluation simulation of surplus, most regions possess a structural surplus and few of them have a surplus cycle. This means that most of the areas that can be considered as feasible should establish the SWF with the purpose of saving or investment. Among the options of the SWF fund management form, the current form of reserve fund can be considered as the appropriate institutional form in managing the fund that can meet the current regulatory framework as well as fulfilling the objective of SWF for saving. However, this type of fund causes the use of this fund should take into account the main objectives of the SWF itself, especially the principle of perpetuity of this type of funds so that the arrangements in terms of utilization should be considerably strict.

6.    United States-Indonesia Partnership for South-South and Triangular Cooperation (SSTC) Component 1 (USIP 1)
Client  : USAID/Indonesia, National Coordination Team for Indonesia SSTC
Period  : March 2016 – March 2020

LPEM FEB UI is trusted to serve as the contractor for the United States-Indonesia Partnership for South-South and Triangular Cooperation Component 1 (USIP 1), a partnership between the governments of Indonesia and United States to strengthen Government of Indonesia (GOI)’s capacity in providing development cooperation that is strategic, effective, and results-delivering in third countries. The initiative coincides with increasing GOI’s commitment in SSTC, spearheaded by the National Coordination Team (NCT) which comprises the Ministry of Foreign Affairs, Ministry of National Development Planning/Bappenas, Ministry of Finance, and Ministry of State Secretariat. The current partnership with USAID goes hand in hand with GOI’s SSTC grand design phase 2015-2019 which aims for the strengthening and expansion of SSTC by enhancing the involvement of all stakeholders, including the private sector, NGOs, and universities.

LPEM as the USIP 1 Center supports NCT’s activities in 2016-2020. During the period, USIP 1 Center will bridge the coordination both internally among ministries in the NCT as well as with other stakeholders; enhance the sustainability and scope of SSTC pilot projects; and capture and adapt the lesson-learned of SSTC activities through collaboration with relevant partners. These objectives are translated into various kinds of programs, e.g., consultation on SSTC policy and institutional framework, support for SSTC programs to third countries, and capacity building for the NCT and SSTC implementing institutions.

One of USIP 1 flagship programs is development of Country Partnership Strategy (CPS), a document that will guide the provision of Indonesia’s development assistance to a given country. In May this year, LPEM’s USIP 1 team conducted a preliminary visit to Timor-Leste as part of CPS development for the country, which will be followed by a full-fledged needs assessment mission in September or October and the writing of the strategy in the coming years.