Emil Salim: Covid-19 and Development

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Emil Salim: Covid-19 and Development

Nino Eka Putra ~ FEB UI Public Relations Officer

DEPOK, Monday (20/7/2020) ‚Äď Kompas daily published an opinion article written by FEB UI Professor Emeritus Emil Salim entitled Covid-19 and Development. Below is the article.

Covid-19 and development

With its five-year medium-term development plans, Indonesia needed 18 years (1968-1986) to establish itself as a lower-middle income economy. In a report released on 1 July 2020, the World Bank said  that Indonesia needed another 33 years (1986-2019) to transtion to an upper-middle economy with per capita income of $4,050 based on the 2019 benchmark.

To become a high income economy with per capita income of $12,535 and above, Indonesia will have to rely heavily on the quality of human resources and full-fledged government institutions to be able to ‚Äútake off.‚ÄĚ

Indonesia is a rich country with diverse land and marine resources straddling the equator. The slow pace of development and low per capita income were blamed on low human resources quality.

This is indicated by, first of all, the country‚Äôs low rankings for ‚Äúreading, mathematics and science‚ÄĚ in the Program for International Student Assessment (PISA) evaluation by the OECD. Indonesia ranked 62nd out of 70 participating countries (below Thailand and Vietnam), while Singapore ranked 1st (2015).

Second, Indonesia’s incremental capital output ratio (ICOR), at 6.30, which was higher than India (4.64) and Vietnam (4.31). This means Indonesian workers needed 50% higher capital investment unit to increase output unit compared to Indian and Vietnamese workers. This was due to the low productivity of Indonesian manpower.

The World Bank concluded (2015) that with the low education and manpower productivity, the majority of the Indonesian population doesn’t have the skills to compete in the Industry 2.0 era, let alone in the current Industry 4.0 era.

Indonesia has entered the demographic bonus phase, dominated by the age group 15-64 whose number will increase from 170.79 million (2015) to 193.71 million (2045). The majority of the productive age group could become the driving force for Indonesia to take off in 2045, provided that the human resources quality and productivity rates are higher than the current rates.

History shows that in general, Indonesian leaders reach their peak of productivity at the age of 40-50. Therefore, future leaders and development managers who will take the helm when the country takes off in 2045‚ÄĒor in the next 20 years‚ÄĒare those who are now in the 15-35 age group. For this reason, it is crucial to prioritize development on increasing the quality of human resources among the demographic dividend age group for 2020 onwards.

Unfortunately, the Covid-19 pandemic broke out just when Indonesia was about to enter the demographic bonus phase. To mitigate the pandemic, the government took various measures, such as (1) maintaining physical distance; (2) social distancing; (3) wearing face mask; (4) avoiding crowds; (5) work from home; and (6) distance learning. All of these measures are aimed at preventing transmissions while mitigating the impacts on the economic sector.

To deal with the Covid-19 pandemic, the government issued various large-scale social restriction policies and their derivative policies. As of early July, of the 514 regencies/cities, 402 regencies/cities were declared as ‚Äúhigh-medium-low‚ÄĚ risk regencies/cities and 112 regencies/cities did not pose high risk. Therefore, around 20% of regencies/cities in Indonesia can implement in-person learning while 80% (402 regencies/cities) have to implement ‚Äúdistance learning‚ÄĚ by utilizing digital technology.

Digital communication and electricity facilities, as well as improvements in teachers‚Äô capability in digital teaching, have to be built in these 402 regencies/cities. Due to limited government budget, while needs for ‚Äúdistance learning‚ÄĚ is very high, the development of supporting facilities, such as renewable energy and clean water facilities, has to be executed by local residents. Renewable energy includes tap water, solar, biogas from organic waste, etc.

Because renewable energy development is still dominated by state electricity company PLN, there is a need for an upgrade in renewable energy development institutions to support ‚Äúdistance learning‚ÄĚ facilities in hundreds of regencies/cities. The key change will be to make ‚Äútelecommunication, electricity and clean water‚ÄĚ part of basic needs in Covid-19 handling. This calls for an end to the commercialization of telecommunication, electricity and clean water and for the involvement of communities in energy, telecommunication and clean water development to make these facilities available in hundreds of villages/regencies/cities.

The spirit of ‚Äúnew normal‚ÄĚ, which is basically ‚Äúphysical distancing‚ÄĚ to prevent human-to-human transmission of the virus (especially those without symptoms), disrupts the nation‚Äôs character that is manifested in community (gemeinschaft) and the spirit of communalism as opposed to Western society (gesellschaft) and its spirit of individualism.

People are not yet able to fully adjust to the shift in character triggered by the spirit and implementation of ‚Äúphysical distancing.‚ÄĚ This has encouraged behavior that is based heavily on the values of communalism, especially those related to tradition, customs, religious rituals, death of family members, etc.

For villagers, traditional markets function as a place ‚Äúto gather and to communicate‚ÄĚ as a community. Therefore, digital communication devices are needed to substitute communication needs in a community so that they can ‚Äúmaintain communal life while keeping their social distance.‚ÄĚ

Creating a calm climate

Covid-19 has hurt economic activities and forced people to ‚Äúavoid crowds and to work remotely.‚ÄĚ Companies are forced to reduce activities and lay off employees or cut their salary/wage. All of these have created an abnormal situation in a ‚Äúnew normal‚ÄĚ that is full of anxiety.

In these difficult times, our political leaders should be actively promoting a ‚Äúnew normal‚ÄĚ that is soothing. The House of Representatives should prioritize bills that can alleviate people‚Äôs anxiety in facing the impacts of Covid-19. Avoid controversial ideas that can trigger disputes among political camps.

Covid-19 is not an ordinary disease; nobody knows when it will end. No effective vaccine has been found. That is why there is a need for a calm and responsible political situation and climate without any attempts at taking advantage of the current situation to ratify bills that benefit certain parties, such as the recent ratification of the Mineral and Coal Mining Law.

The House of Representatives and the Regional Representative Council should be serious in avoiding deliberations of bills that require a huge amount of state fund amid the tight budget to fight the Covid-19 pandemic and its impacts. It is crucial to use the already limited state budget for the education of the demographic bonus generation because a country only experiences a demographic bonus once.

If it fails to seize the opportunity to improve the quality of the younger generations who will be the pillars and leaders of this nation to realize the Indonesia Lepas Landas (take-off) 2045, the Republic of Indonesia will become a ‚Äúfailed state‚ÄĚ and recovering from it will be difficult. (hjtp)

Source:  Kompas Daily, Monday, 20 July 2020 edition, Page 6.

(lem)