At the just-concluded World Economic Forum on East Asia in Manila, May 22-23, two Southeast  Asian countries stood out for their economic achievements and governance template—Indonesia and the Philippines.

The Indonesia is the more compelling and credible case study.

In the last five years, from 2009 to 2013, the Indonesian economy grew by an average of 5.88 percent.

During the same five-year period, the Philippine economy grew by an average of 5.28 percent.  The local economy would have grown much faster in those five years had not growth rate declined in 2011, the first full year of the BS Aquino administration, to 3.6 percent from 7.6 percent in 2010 (the last six months of President Arroyo and the first six months of BS Aquino).  Growth rate was halved simply because the Aquino administration refused to spend P147 billion of infra money thinking part if not all of it would be stolen.

What is remarkable about Indonesia’s robust economic growth is that it trickled down to the so-called bottom of the pyramid—the poor. And it created jobs.   Thus, in 13 years, Indonesia halved its poverty incidence, from 24 percent in 1999, to 12 percent by 2012.  Unemployment was also almost halved, from 11.2 percent in 2005 to 6.1 percent in 2012.

In the Philippines during the same period, unemployment worsened— to 7.3 percent—the highest in the Asean region and poverty remained stagnant, at almost 30 percent of the population—again, the highest in the five major Asean countries— Philippines, Indonesia, Malaysia, Thailand, and Singapore.

Yet, you cannot say our leaders are any less capable than the Indonesians.   Neither are the Indonesians more literate and talented than the Filipinos.

The difference is in focus and commitment—to the poor.

Under President Susilo Bambang Yodhoyono, the poor became the focus of government’s development strategy.

Yudhoyono says Indonesia’s  four-track strategy of “pro-growth, pro-poor, pro-jobs, pro-environment” over the past 10 years enabled the country to “stimulate growth, reduce inequity and alleviate people from poverty.”

Thus, the poor were given free rice, free health care, micro credit, and free university tuition.  SBY abolished tuition fees for the poor and calibrated tuition to one’s income.

Says the World Bank: “Thanks to strong government commitment, Indonesia will probably boast one of the largest numbers of college-goers in the world in years to come.” “Over the past five years, the labor force with tertiary and secondary levels of education has increased by more than one million and more than two million annually, respectively. If recent trends in enrollment continue, the number of Indonesians with tertiary education can more than double in the next decade.”

In our case, the state University of the Philippines could not renew a P6,000 loan of a poor but brilliant student.  The girl committed suicide.

As I gather, access to UP education remains severely restrictive.  It is not an absence of money.  The government is investment grade. It can borrow cheap or concessional money for infra and education.

Our own Bangko Sentral lent $1 billion to the bankrupt banks and governments of Europe at a mindboggling interest of 0.2 percent.  Our own commercial banks have parked P1.4 trillion of excess deposits with the BSP at another mindboggling interest of less than two percent.  That’s more than enough to educate all the 15 percent (15 million) of the population who are illiterate (including our rapacious politicians).

The Indonesian government invested heavily in infrastructure so that the poor have mass transport, cheap electricity, and fuel subsidies, while businessmen can do business.  From 2015 to 2017, the government has budgeted $26 billion for railroads, ports, telecom, and highways.   The $26 billion is on top of the $73 billion spent on infra during 2011 to 2013.

For seven years thus, Indonesia will be spending $100 billion on infra—that’s P4.5 trillion, the equivalent of the entire Philippine government budget for two years.   In those seven years, 2011 to 2017, the Philippines would be spending P700 billion—an average of P100 billion ($2.2 billion) per year.

The result of Indonesia’s reformasi?   A country that is today the tenth richest in the world, in terms of Gross Domestic Product, purchasing power parity or what the US dollar can buy in equivalent goods and services inside Indonesia—$2.22 trillion, behind UK’s $2.7 trillion and ahead of Italy’s $2.07 trillion.  This, says SBY, “is something unthinkable a generation ago”.

Half a generation ago, Indonesia was hobbled by bad governance, riots, mass poverty, mass illiteracy, runaway inflation, and a runaway currency.

Today, says SBY, “we have proved —to ourselves and to the world—that we do not have to choose between democracy and development, and that we can indeed have both political freedom and high economic growth at the same time.  We have achieved the often elusive connection between democracy and stability. We have broken the myth—the fear—that democracy will unravel national unity and instead demonstrated that democracy has made us more united.”

Indonesian Trade Minister Muhammad Lufti notes that Indonesians who earn  $3,000 to $3,500 have reached 140 million— three times the size of the middle class in the Philippines, five times that of Thailand, and six times that of Malaysia.  “A $3,000 to $5,000 per capita income means a second TV set and a first car in the household,” he says.   Japan car ownership is 582 per 1,000, Thailand 169, Indonesia 40 cars per 1,000.

“We are going to grow four times in car ownership just to reach the level of Thailand,” says Lufti. “Jakarta traffic will become much worse than it is today.”  As a result, he reports, Toyota, Honda, Mitsubishi and Daihatsu are doubling capacity In Indonesia; Suzuki more than double.   Daihatsu will produce more vehicles in Indonesia by 2017 than it has in Japan.

In the 1970s through 1990s, Japanese companies came to Indonesia to take advantage of its cheap labor.  “Today, they come to Indonesia for survival, to tap our robust middle class,” says Lufti.

The number of Indonesian air travellers has increased from 15 million 10 years ago to 90 million today.  This made Jakarta the world’s 10th largest airport (60 million passengersin 2013). As a result, Indonesia’s major carriers, Garuda and LionAir, have ordered 600 aircraft even if they have no airports to park them on.  Says Lufti: “nothing is easy in Indonesia, but again, nothing is impossible.”

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