15 focuses is no focus

According to an official at the Coordinating Ministry for Economic Affairs, GOI has decided 15 sectors as the priority in infrastructure development within the next five years (Bisnis Indonesia, 17/9).

Fifteen?

More cushy cushion needed

The government declares they need an extra Rp 3 to 5 trillion emegency reserve in the 2010 budget to anticipate threatening world oil price. That would add to the currently allocated Rp 5.6 trillion.

As known, the state budget has assumed an oil price of USD 60 per barrel. Now the price stands around USD 70 already. And might even increase in the near future, considering the world economic recovery.

Now the budget also assumes that every USD 1 increase beyond the assumed USD 60 would add Rp 0.1 trillion to the deficit. Now, if Indonesian Crude Price (ICP) is USD 65 per barrel (usually it is USD 5 below the world oil price quoted in US market) then there is an increase of USD 5 trillion on top of the assumed price. According to the elasticity assumption, it should add Rp 0.5 trillion to the deficit. But, why ask Rp 3 to 5 trillion?

Stepping up the ladder

According to the IFC's Doing Business 2010, Indonesia is the most reformist country in East Asia and Pacific with regard to business regulation as observed in the latest IFC's survey. As a consequence, Indonesia's ranking is up to 122 from 129.

Congratulations.

The P in GDP stands for 'production', remember?

Joseph Stiglitz questions if statistics "are giving us the right signals" (Project Syndicate/Jakarta Post, 9/9). In the article that reads like advertisement of the chairman of the newly established Commission on the Measurement of Economic Performance and Social Progress, Stiglitz rightly says that GDP is not apt to reflect people well being.

Of course. It's just a measure of production. Yet, that's the best we have now -- for again, measuring production.

We already started "green GDP" here and there, taking account of natural resource depletion and environmental degradation. Despite the rough proxies used, it's a good way to remind us that the business-as-usual production might be harmful to the environment.

But many people push it even more to measure happiness (or in general, well-being). So far I'm skeptical. Production is measurable. So is green production. But happiness? It might be measurable on individual basis, or at least household. You might even come out with measures like aggregare willingness to pay to proxy demand for something (including intangible goods) at community level. But pushing it to grand scale like national GDP will encounter serious aggregation problem.

One of those happiness measures found that the most happy people live in Bhutan. I, for one, don't want to live in Bhutan.

Bye to monopoly, PLN

The Jakarta Post today (9/9) reports, "Legislature unplugs PLN's monopoly on electricity".

Great.

The mix feeling on Hatoyama's approach to the environment

The Japanese new premier Hatoyama is environmentally ambiguous. He promises rather progressive emission cut. But he will also cut gasoline tax. Worse yet, he will scrap toll way charges. Of course all this might change as he's not even sworn in yet.

Hopefully Japanese people's expectation for changes turns out good. Otherwise, it's just a regime change but with even more populist, short-sighted policies.

It's the magnitude, for crying outloud!

First, a disclaimer. Exegesis wanted to shy away from the Bank Century debacle, simply because we had no idea what went on, rightly or wrongly. But then the President took over that Privilege of Shyaway (The Jakarta Post, 3/9). He seems not to bother with this kind of issue, unlike those of Manohara or Prita.

So here's my take (figures and numbers aside). When a crisis struck, you deal with it with a non-normal treatment. Yes, you still need a system; but that system is only for emergency situation, hence a short term handling. When the situation is back to normal, you are also back to normal approach. You don't keep rebooting a computer when you only have a minor hiccup. When a bank is about to go astray, and with it it would take many others down, you're in a crisis situation. You need to make a quick decision. Calling all those House people for a late night consultation meeting is a waste of time.

But then you are using taxpayers money. No matter how urgent the situation is, you should keep remembering that it is not your money you're using to fight the fire. So make no mistake. Pour the water sufficiently, not overwhelmingly.

Now you're in difficult situation. Was it, the situation, systemic? Yes, no doubt. Were taxpayers money misappropriated? That one remains to be proven.

Of course it's the foreigners' fault

Kompas today runs an article on the first page titled "BI to be Watchful to Banks' Foreign Individual Owners" (BI agar Hati-hati kepada Pemilik Individu Asing, Kompas 3/9)). Knowing Kompas, I'm not surprised by its xenophobic tone. But I was curious who they quoted that statement from. So I read through. Twice. There are two quotes. And no one says so.

It is true that the two major shareholders of the failing Bank Century are Pakistanis with British nationalities. But jumping into a news article with astrong title leading to an impression that all foreign owners are bad guys is a journalistic folly. We still remember that more than ten years ago, when banks money were drained out, it was Indonesians who stole the money and ran away. But no news was titled "Be Careful with Indonesian Shareholders".

If we're efficient we might seem suspicious

A Bappenas official reportedly says that government spending on infrastructure this year could accomplish 90-95% of the allocated budget (Bisnis Indonesia, 2/9). That would be quite an achievement considering the previous records. But why not 100%? He says "It's tricky. Because people would think there is misappropriation involved".

Scratching your head? Me, too.

Upcoming gig: Asian Econ Panel Meeting

Asian Economic Panel Meeting
Keio University, Tokyo, September 6-7, 2009

The Global Financial Crisis?
Wing Thye Woo, Warwick McKibbin, Yonghyup Oh, Anwar Nasution

The Political Business Cycle in Japan and Instability of Budget Deficits
Naoyuki Yoshino, Tetsuro Mizoguchi, Renee Fry, Ryuhei Wakasugi

Taxing Pirates: Is It Worth It?
Desiree Desierto, Young Joon Park, Iris Claus

Unconventional Policies of Central Banks: Restoring Market Function
and Confidence
Kiyohiko Nishimura

Crisis Management: Difference between Japan and the USA
Yosuke Kawakami

Technology Development and Employment in China
Fredrik Sjoholm, Nannan Lundin, Changwen Zhao, Bhanupong Nidhiprabha, Wei Zhang

The Different Impacts of US and Japanese FDI on Trade Patterns
Kwong-Chiu Fung, Alan Siu, Arianto Patunru, Prema-chandra Athukorala

The Impacts of Globalization on Employment and Poverty Reduction in
India: The Case of Emerging Big Shopping Malls and Retailers
Kaliappa Kaliraja, Kanhaiya Singh, Shoko Negishi, Yuenpao Woo, Maria Bautista

How Integrated are the East Asia Economies: A Comparison of Integration Indices
Yuenpao Woo, Bo Chen, Chia Siow Yue, Fukunari Kimura, Harry Wu

Experimental Economic Approaches on Trade Negotiations
Han Kyoung Sung, Shigeyuki Abe, Alan Siu

Avoiding Another Subprime-Type Crisis in Financial Markets
Makoto Yano, Chalongphob Sussangkarn, Doo Yong Yang