Indonesia Compare to Asean Country

Topics: Economy, Southeast Asia, Economics Pages: 7 (2063 words) Published: December 16, 2010

Study Meeting on Expansion and Development of the
Service Industry in Asia
APO Project No. 08-RP-38-GE-STM-B

17-20 June, 2008
Seoul, Republic of Korea

Submitted By:
Kenedi Nababan and Romi Prasetio – Indonesia

Kenedi NababanRomi Prasetio
Arco Backend AgencyBank Sinarmas
Hongkong and Shanghai Bank CorporationBank Sinarmas KC. Sukabumi, Jl. A. Yani No 235 Wisma HSBC JL Asia Afrika No. 116Ruko No. 3 Sukabumi
Bandung 40112Telephone :62-266-229377
Telephone :62-22-4233022Fax :62-226-229366
Fax :62-22-4230182E-mail : E-mail :

I. Composition of Services Industry in Indonesia :
II. Banking and Finance sector
a. Bank
b. Insurance
c. Other financial institution
III. Infrastructure of Health Sector
a. Hospital
b. Medical Clinic
c. Puskesmas (rural region)
IV. Tourism
a. Hotel
b. Restaurant
V. Construction
a. Highways
b. Bridges
c. Public Services
VI. Transportation and Freight
a. Air transportation
b. Sea Transportation
c. Land Transportasion ( bus, railways)
VII. Communication
a. Fixed Line
b. Cellular Telecommunications

II. Service Industry Influence to economic Growth
An economic growth in Indonesia contain several of main sector, first agriculture (16,8%), services (2.1%), financing (1%), trade and tourism (0,9%) and electricity (0,6%). Service industry can give composition of national income for the period 1997-2007 20%-22%, tradable sector 30%-31% and tax 40%-45%.

III. Growth and influences to the National Vocations
In Indonesia, telecommunication is highest sector that can achieve average 20% per year of growth, but influence to the vocation only 2% per year. It is inversely proportional with agriculture, while this sector achieve 3% of growth but can give an influence 42% to the vocation. In general sectoral contribution of workforce in Indonesia during the periode after crisis in 1998, service sector given a better influence rather than manufacture.

IV. Problems and Prospects
Investment, infrastructure and unbalance development between east Indonesia with west Indonesia are the main problem in Indonesia. Telecommunication, tourism and transportation are potential prospect in service sector in Indonesia. V. Government Policies

Many policies has been done by the government, such as facilitate the extraneous investment in Indonesia, FDI growing around 5% per year. And to develop east Indonesia, the government  specifically has been chosen a ministry to make development  in East Indonesia. Other side, the central government gives discretion to local government to make development in their own state, with divide 80% income for local government and 20% for central government. The government taxes income, in 40% its to funding the public service sector so the service sector could be better. Indonesia is in need of structural reforms. Most important in this respect are improving the country’s business climate and infrastructure. Infrastructure is poor and the cause for high transaction costs, making the country less competitive. The country’s business climate is also less than optimal. The administration is aware of these weaknesses and is making efforts to address them. However, the House of Representatives systematically blocks reform measures from being implemented. Draft laws on tax and investment have been blocked this year and labour market reforms have been abandoned due to strong union opposition. We expect that the renewed support for the President by the largest party in the House of Representatives will reduce resistance to reforms. Privatisation has been halted for the large part in 2006,...

References: Arifa, A and Azmat Gani and MD Clements, 2003. “ An Empirical Investigation of The Spillover Effects of Service and Manufacturing Sectors in Asean
Countries,” Asia-Pasific Development Journal, vol 10 no 2. Arndt, H.W., 1989. “Trade in services,” ASEAN Economic Bulletin, vol. 6, No. 1, pp. 1-7.
Gani, A. and M.D. Clemes, 2002. “Services and economic growth in ASEAN economies,” ASEAN Economic Bulletin, vol. 19, No. 2, pp. 155-169.
Gani, A. and P. van Diermen, 2001. “Some determinants of small firm ‘presence’ in Indonesia’s manufacturing sector,” Applied Economics Letters, vol. 8, No. 7, pp. 471-474.
Rabobank, 2007 Country Report Indonesia Economic Research Department Country Risk
Research May.
The World Bank, 2001. World Development Indicators CD-ROM 2001 (Washington, D.C., The World Bank).
, 2000. World Development Report 2000 (New York, Oxford University Press).
, 1994. The East Asian Miracle: Economic Growth and Public Policy , (New York, Oxford University Press).
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