Indonesia looks to well-being, health and balance for their growth

All around the world we see today a dichotomy between wealth and poverty.  Nowhere is that scarily abject than in the so called third world economies. Historically we have all followed an American devised system of statistical measure, “GDP” Gross Domestic Product. GDP is fine when you all share in the benefit, although arguably when you tour America you could say that GDP as a measure of wealth has failed even in the US, 1 in 8 live in poverty across this great nation.

Asia does however, have a handicap which Indonesia is not immune to. Much of the economy is controlled by family conglomerates, too few of these exist. Therefore, polarizing wealth into too few hands, which of course makes the government job to assist fledgling companies more difficult.

That aside Indonesia have opened the doors to eCommerce, the digital economy as a way to encourage a paradigm shift. To some extent this is wishful thinking but all credit to them they are at the beginning of a sincere initiative.

I have for a long period argued that you can not have a system that polarizes 80% of the world's wealth, and have that system determine well-being when the money is sitting with 20% of the population. The absurdity is more acute as you reach the top 2% or 3%. It is this dichotomy that will, over what is now a short period unwind society. My guess with Brexit, Italian elections, Jaunes Gilet (yellow vest), Trump's America this is all a polite wake up call to the elites in our political class that enough is enough. Whether they are yet listening that's not so obvious.

However, one area, for me a little surprising but most welcome nonetheless is the “World Economic Forum”. Here they have discussed, debated and formed the same conclusions, the system of GDP is archaic and replaced it with an Inclusive Development Index “IDI”. This index considers well-being, life expectancy, unemployment, median income, poverty, inequality, household savings, carbon emissions plus a myriad of other issues that encompasses us all. You could argue whilst our western politicians fiddle as Rome burns, line their pockets, protect their various expense scams other more dynamic areas have embraced this revolutionary index, Indonesia being one such area. 

In Asia, Australia and New Zealand rank highest, followed by South Korea and Israel, which rank in the top twenty. The next tier of emerging Asian countries is making substantial strides in most categories of inclusive development, including Azerbaijan, Malaysia, Kazakhstan, Turkey, Thailand, China, Iran, Vietnam, Indonesia, and the Philippines. We should be mindful that Asia is also home to countries in the bottom tier such as Afghanistan, Pakistan, India, Bangladesh, Cambodia, Laos, and Yemen. The Asia development bank have taken a step further and published their Social Protection Index. “SPI”. This index shows South Asia, Southeast and Central Asia are lacking their Eastern Asia neighbours with their subsistence programmes. But as with the economic wave example Asia will develop together through assisting each other, I have confidence the West could learn from the East when it comes to inclusive growth. Whether, the west is open to rocking the elites’ gravy train the jury is out.

If you look to the World Economic Forum website there is a PDF file which can be downloaded, this will give more depth to the points reference IDI that I have raised above:

“The Inclusive Development Index (IDI) is an annual assessment of 103 countries’ economic performance that measures how countries perform on eleven dimensions of economic progress in addition to GDP. It has 3 pillars; growth and development; inclusion and; intergenerational equity – sustainable stewardship of natural and financial resources.

The IDI is a project of the World Economic Forum’s System Initiative on the Future of Economic Progress, which aims to inform and enable sustained and inclusive economic progress through deepened public-private cooperation through thought leadership and analysis, strategic dialogue and concrete cooperation, including by accelerating social impact through corporate action.”

Bedtime reading...

All around the world we see today a dichotomy between wealth and poverty.  Nowhere is that scarily abject than in the so called third world economies. Historically we have all followed an American devised system of statistical measure, “GDP” Gross Domestic Product. GDP is fine when you all share in the benefit, although arguably when you tour America you could say that GDP as a measure of wealth has failed even in the US, 1 in 8 live in poverty across this great nation.

Asia does however, have a handicap which Indonesia is not immune to. Much of the economy is controlled by family conglomerates, too few of these exist. Therefore, polarizing wealth into too few hands, which of course makes the government job to assist fledgling companies more difficult.

That aside Indonesia have opened the doors to eCommerce, the digital economy as a way to encourage a paradigm shift. To some extent this is wishful thinking but all credit to them they are at the beginning of a sincere initiative.

I have for a long period argued that you can not have a system that polarizes 80% of the world's wealth, and have that system determine well-being when the money is sitting with 20% of the population. The absurdity is more acute as you reach the top 2% or 3%. It is this dichotomy that will, over what is now a short period unwind society. My guess with Brexit, Italian elections, Jaunes Gilet (yellow vest), Trump's America this is all a polite wake up call to the elites in our political class that enough is enough. Whether they are yet listening that's not so obvious.

However, one area, for me a little surprising but most welcome nonetheless is the “World Economic Forum”. Here they have discussed, debated and formed the same conclusions, the system of GDP is archaic and replaced it with an Inclusive Development Index “IDI”. This index considers well-being, life expectancy, unemployment, median income, poverty, inequality, household savings, carbon emissions plus a myriad of other issues that encompasses us all. You could argue whilst our western politicians fiddle as Rome burns, line their pockets, protect their various expense scams other more dynamic areas have embraced this revolutionary index, Indonesia being one such area. 

In Asia, Australia and New Zealand rank highest, followed by South Korea and Israel, which rank in the top twenty. The next tier of emerging Asian countries is making substantial strides in most categories of inclusive development, including Azerbaijan, Malaysia, Kazakhstan, Turkey, Thailand, China, Iran, Vietnam, Indonesia, and the Philippines. We should be mindful that Asia is also home to countries in the bottom tier such as Afghanistan, Pakistan, India, Bangladesh, Cambodia, Laos, and Yemen. The Asia development bank have taken a step further and published their Social Protection Index. “SPI”. This index shows South Asia, Southeast and Central Asia are lacking their Eastern Asia neighbours with their subsistence programmes. But as with the economic wave example Asia will develop together through assisting each other, I have confidence the West could learn from the East when it comes to inclusive growth. Whether, the west is open to rocking the elites’ gravy train the jury is out.

If you look to the World Economic Forum website there is a PDF file which can be downloaded, this will give more depth to the points reference IDI that I have raised above:

“The Inclusive Development Index (IDI) is an annual assessment of 103 countries’ economic performance that measures how countries perform on eleven dimensions of economic progress in addition to GDP. It has 3 pillars; growth and development; inclusion and; intergenerational equity – sustainable stewardship of natural and financial resources.

The IDI is a project of the World Economic Forum’s System Initiative on the Future of Economic Progress, which aims to inform and enable sustained and inclusive economic progress through deepened public-private cooperation through thought leadership and analysis, strategic dialogue and concrete cooperation, including by accelerating social impact through corporate action.”

Bedtime reading...

The 3rd Asian Economic Wave Is Upon Us.

The 3rd Asian wave is upon us. First came Japan, Korea, Taiwan, 2nd came Hong Kong, Singapore and China, 3rd is South East Asia. What makes the 3rd so special is it will run longer, as I explain below.  It is through the success of the first and the 2nd wave that the third will be more substantive.

1. The first and the second have, like the west an ageing population with the median age above 40. Conversely, the South East Asian countries the median age is below thirty. Therefore, India, Thailand, Vietnam and Indonesia have greater access to efficient cost effective labour.

2. Asia 1st and 2nd have not gone away nor have they declined quite the reverse, the older generation have shifted from being wealth generators to consumers. Therefore, need products and services but in a cost effective way.  It is due to this that these countries are investing in the South East Asian nations.  As I said in a previous note; the average China daily rate in manufacturing is $30 in Indonesia it is $10.

Whilst South East Asia will have a wave of its own it will be fuelled in addition by the newly formed demands driven by a wealthy Asian population to their North. Consider this during Japan and South Korea’s rise in the 1970s their combined population extended to 150M.  China during their years around 1Billion.  The 3rd wave has a combined population of 2.5Billion.

If you add the West Asia region Turkey, Saudi and Iran then you add another 300 Million.  Asia in total has some 5 Billion people. This wave will be longer, larger than any wave preceding.  More to the point since Japan and Korea kicked this off, for five decades they have invested throughout this region in total, they invested in China and the tiger economies. Indeed, as China and the tiger economies came on stream they too reciprocated, established networks, investment and diplomacy that will ensure the continuation of Asia's Factory for the world status, it will and is just shifting to the south.

Indonesia already have established economic zones, trading estates, science parks, free ports, Infrastructure, airports, ports, rail, roads and a thriving digital economy. Indonesia has been listed as one of the world’s top 10 manufacturers by the United Nations Industrial Development Organization (UNIDO).

According to UNIDO’s 2016 International Yearbook of Industrial Statistics, Indonesia’s manufacturing industry accounts for almost a quarter of the country’s GDP. The country has a solid footing with a stable government. We are in an election year and Jokowi has prioritised stabilty which, for this year he is right to do so.

• "The UNIDO report shows that Indonesia has climbed into the top ten list," Shadia Hajarabi, UNIDO’s representative in Indonesia.
• "Indonesia is at the bottom of the list, but it surpasses England and Canada," Shyam Upadhyaya, a statistician at UNIDO, said. He added that the list was based on total volume of production. China is at the top of the list, followed by the US, Germany, Korea and India. "Indonesia has become an important industrial country," he added.

To compare; China and India have had higher economic growth compared to Indonesia. But, in recent years, economic conditions in those countries have fluctuated, resulting in economic slowdowns. Indonesia's economy has been relatively stable compared to other countries in the region.

The Indonesian government had succeeded in maintaining the inflation rate at 4.5 percent and had lifted 25 million people out of poverty. In 2010, there were 50 million people living in poverty, now almost half.  Not only does Indonesia benefit from other Asian countries, from their greater spending power, they can rely on the domestic market to boost economic growth, which means exports are not so critical.

If they can maintain these indicators, it could produce even higher growth.

What you are now seeing is that each generation becomes wealthier than the last just as we saw in the west.

According to the HSBC’s former chairman Stuart Gulliver, “The American dream of the 20th century is becoming the Asian dream of the 21st: A house, a car, a smartphone, travel, banking services, health care the prospect of unfettered upward social mobility for many more families.”

With greater domestic production of goods and services, weaker currencies, low commodity prices, controlled inflation, and rising intraregional trade, Asians increasingly buy things in their own currencies at much lower prices than Westerners pay in US dollars or euros. Asians can have a good life without being rich in American terms. Indeed, most Asians are not going to catch up to Western per capita incomes. China’s per capita income is comparable to that of Russia or Brazil, not the United States or Britain. But that’s not the point. Asian societies are focused on maintaining high employment, keeping the cost of living manageable, and promoting access to basic services.

Western critics convinced themselves that slower growth would bring down the Chinese regime, but Xi has rightly pivoted the national narrative toward quality growth.

Indonesia through its vast archipelago, substantial resources and sizeable population is poised for even greater economic fortunes.

The 3rd Asian wave is upon us. First came Japan, Korea, Taiwan, 2nd came Hong Kong, Singapore and China, 3rd is South East Asia. What makes the 3rd so special is it will run longer, as I explain below.  It is through the success of the first and the 2nd wave that the third will be more substantive.

1. The first and the second have, like the west an ageing population with the median age above 40. Conversely, the South East Asian countries the median age is below thirty. Therefore, India, Thailand, Vietnam and Indonesia have greater access to efficient cost effective labour.

2. Asia 1st and 2nd have not gone away nor have they declined quite the reverse, the older generation have shifted from being wealth generators to consumers. Therefore, need products and services but in a cost effective way.  It is due to this that these countries are investing in the South East Asian nations.  As I said in a previous note; the average China daily rate in manufacturing is $30 in Indonesia it is $10.

Whilst South East Asia will have a wave of its own it will be fuelled in addition by the newly formed demands driven by a wealthy Asian population to their North. Consider this during Japan and South Korea’s rise in the 1970s their combined population extended to 150M.  China during their years around 1Billion.  The 3rd wave has a combined population of 2.5Billion.

If you add the West Asia region Turkey, Saudi and Iran then you add another 300 Million.  Asia in total has some 5 Billion people. This wave will be longer, larger than any wave preceding.  More to the point since Japan and Korea kicked this off, for five decades they have invested throughout this region in total, they invested in China and the tiger economies. Indeed, as China and the tiger economies came on stream they too reciprocated, established networks, investment and diplomacy that will ensure the continuation of Asia's Factory for the world status, it will and is just shifting to the south.

Indonesia already have established economic zones, trading estates, science parks, free ports, Infrastructure, airports, ports, rail, roads and a thriving digital economy. Indonesia has been listed as one of the world’s top 10 manufacturers by the United Nations Industrial Development Organization (UNIDO).

According to UNIDO’s 2016 International Yearbook of Industrial Statistics, Indonesia’s manufacturing industry accounts for almost a quarter of the country’s GDP. The country has a solid footing with a stable government. We are in an election year and Jokowi has prioritised stabilty which, for this year he is right to do so.

• "The UNIDO report shows that Indonesia has climbed into the top ten list," Shadia Hajarabi, UNIDO’s representative in Indonesia.
• "Indonesia is at the bottom of the list, but it surpasses England and Canada," Shyam Upadhyaya, a statistician at UNIDO, said. He added that the list was based on total volume of production. China is at the top of the list, followed by the US, Germany, Korea and India. "Indonesia has become an important industrial country," he added.

To compare; China and India have had higher economic growth compared to Indonesia. But, in recent years, economic conditions in those countries have fluctuated, resulting in economic slowdowns. Indonesia's economy has been relatively stable compared to other countries in the region.

The Indonesian government had succeeded in maintaining the inflation rate at 4.5 percent and had lifted 25 million people out of poverty. In 2010, there were 50 million people living in poverty, now almost half.  Not only does Indonesia benefit from other Asian countries, from their greater spending power, they can rely on the domestic market to boost economic growth, which means exports are not so critical.

If they can maintain these indicators, it could produce even higher growth.

What you are now seeing is that each generation becomes wealthier than the last just as we saw in the west.

According to the HSBC’s former chairman Stuart Gulliver, “The American dream of the 20th century is becoming the Asian dream of the 21st: A house, a car, a smartphone, travel, banking services, health care the prospect of unfettered upward social mobility for many more families.”

With greater domestic production of goods and services, weaker currencies, low commodity prices, controlled inflation, and rising intraregional trade, Asians increasingly buy things in their own currencies at much lower prices than Westerners pay in US dollars or euros. Asians can have a good life without being rich in American terms. Indeed, most Asians are not going to catch up to Western per capita incomes. China’s per capita income is comparable to that of Russia or Brazil, not the United States or Britain. But that’s not the point. Asian societies are focused on maintaining high employment, keeping the cost of living manageable, and promoting access to basic services.

Western critics convinced themselves that slower growth would bring down the Chinese regime, but Xi has rightly pivoted the national narrative toward quality growth.

Indonesia through its vast archipelago, substantial resources and sizeable population is poised for even greater economic fortunes.