Sunday, July 29, 2012

About Our Tempe #657

Apparently for some people it doesn't make sense that while most of Indonesians love to eat tempe, the country keeps importing soybean, its main raw material, since 1970s.

Yet, our friend Haryo Aswicahyono (@Aswicahyono) shows that our love for tempe is actually quite feeble. Our soybean and its related product consumption is only about 2.5 percent of total food consumption. But, if you insist, let's assume that tempe is a must dish most Indonesian households need to consume, why we import soybean?

That's probably a wrong question to ask. Tempe is widely available on our dining table (in other words, affordable for many of us) because we can import (cheaper) soybean, rather than produce them domestically -- not to mention that soybean itself originally is not a tropical crop.

Regardless you like it or not, our love for tempe can grow thanks to imported cheap soybean. 

Monday, July 23, 2012

Readings on Indonesian Economy

Prompted by a discussion with a friend who is interested in Indonesian economy and by my recent task of reviewing a new book on the same subject, below is a list of a must-read (relatively recent) books I recommend to understand the (contemporary) Indonesian economy. Of course this list is just a fraction of the literature out there, including the many individual articles and papers in journals. But for undergraduate students (e.g those taking "Perekonomian Indonesia" - Indonesian Economy - course in FEUI, these are nice first reads I would suggest). My co-baristas and I will try updating the list.

  • Basri, M. Chatib and P. van der Eng (Editors). 2004. Business in Indonesia: New Challenges, Old Problems. Singapore: Institute of Southeast Asian Studies.
  • Booth, Anne. 1998. The Indonesian Economy in the Nineteenth and Twentieth Centuries: A History of Missed Opportunities. London: Macmillan.
  • Dick, Howard, Vincent J.H. Rouben, J. Thomas Lindblad, and Thee Kian Wie (Editors). 2002. The Emergence of a National Economy: An Economic History of Indonesia, 1800-2000. Leiden: KITLV Press.
  • Hill, Hal. 1996. The Indonesian Economy Since 1966: Southeast Asia's Emerging Giant. Cambridge: Cambridge University Press [Second, Updated Version: Hill, Hal. 2000. The Indonesian Economy. London: Cambridge University Press].
  • Manning, Chris and Sudarno Sumarto (Editors). 2011. Employment, Living Standards and Poverty in Contemporary Indonesia. Singapore: Institute of Southeast Asian Studies.
  • Pangestu, Mari. 1996. Economic Reform, Deregulations, and Privatizations: The Indonesian Experience. Jakarta: Center for Strategic and International Studies.
  • Reid, Anthony (Editor). 2012. Indonesia Rising: The Repositioning of Asia's Third Giant. Singapore: Institute of Southeast Asian Studies.
  • Thee, Kian Wie. 2003 (Editor). Recollections: The Indonesian Economy, 1950s-1990s. Singapore: Institute of Southeast Asian Studies. 
  • Thee, Kian Wie. 2012. Indonesia's Economy Since Independence. Singapore: Institute of Southeast Asian Studies.

Friday, July 20, 2012

Marhaban, ya inflation

As always the case, prices are hiking up as the fasting month is coming. In the month of Ramadhan, muslims restrain from eating and drinking from dawn till dusk. One would expect a drop in demand for food and beverages.

But this is never the case. Instead, prices soar in response to a jump in demand. Because actually most people want better or even more extravagant meal to break the fast. Furthermore, events like "buka bersama" (breaking the fast together - usually with rich variety of food, in restaurants or otherwise) are pervasive. Some people have twice in one evening. Nearing the end of the fasting month, not only food's prices are high, but those of clothes also rise. Because people want new, fancier dress in the Lebaran Day. Then there is "mudik" (homecoming, special in Ramadhan for its massive flow of people - and money), where migrant workers go visit their hometown, bringing presents and usually, some good dose of cash. Some even buy new motorbikes, ship them with train, and have happy time in their villages.

Now, with these information, how do we not expect higher inflation?

But people and the media always blame the government for not being able to halt the soaring prices in this particular time. As a result, the government officials always appear in defensive mode. Some come up with funny arguments ("stop eating chilies", "we will punish sellers who raise prices too much", etc).

In fact, hiking prices are good in the above situation. They need to go up to respond to the large increase in quantities demanded. Otherwise, the filter effect of price is dead: we will see even more extravagant fiestas in the holy month - not that it's a bad thing.

So if any, the government should do something on the supply side, not on the demand side. And that's not by punishing the sellers who now see opportunity to reap extra profits. No. But by improving the logistics and infrastructure condition of the country. That is, keep working on tackling the most constraining factors in our economy. Yes, that's more like longer term program to address the economy as a whole, rather than a short term solution to the Ramadhan-led inflation. But why should it be the latter?

Saturday, July 14, 2012

Two New Members

Hi all. Been away for a while. But partly because I'm out looking for nice and sweet things to decorate the cafe. Why? Because we're welcoming two pretty babies: Agatha (Aco's daughter, born May 7th) and Sekar (Rizal's daughter, born July 9th).

Wednesday, July 11, 2012

You wanna study violin? You'd better buy an expensive violin

One of my most favorite musical instruments to hear - not to play, I can't - is violin. I admire this guy Ngatmin from Kudus, Central Java who produces hand-made violins and sells them at IDR 1-2 million a piece (Kompas, 11/7). He also sounds very confident: "Our quality is better [than competition from China]. I guarantee you that. We'll also keep the handmade process, instead of turning into machinery. Because we know our products will still be sought for. We'll not lose our market".

So it is at odds that Kompas suggested to "block importation, for local producers need protection". They reported that Chinese massly-produced violins sell here at IDR 500-750 a piece. Again, a Ngatmin's violin, a better violin that is, sell at a higher price. So what's the problem? As Ngatmin himself says, the qualities are different. Isn't it just so natural that the one with higher quality is more expensive?

Kompas also wrote that those who purchase violins in bulk prefer Chinese made to local ones. Supposedly these are for schools or music training centers. I don't see any reason to complain. In fact, I hope more and more Indonesian kids (including the not-so-rich who can only afford Chinese violins) can play violin. Later, some of them who are serious and talented will sure buy the better one: Ngatmin's violin.

Saturday, July 07, 2012

On Our Development Economics

Last week, I had a lunch with an economist who has published some articles in leading journals of the profession using Indonesia as data source. It was a nice conversation on various things Indonesia from what a Professor title really means (no easy answer on this) to why there are so few Indonesian economists to who's who in Indonesian economists (small) circle.

Then he asked this: "How do you guys teach Development Economics?"

It took me probably four or five seconds of awkward silence -- the time for me to recall syllabus of my undergrad's Development Economics and some more recent courses related to Development Economics in the Department that I knew, and reconcile them with syllabus of the same courses in classes in his Department or other Department in another side of the river that I am also familiar with.

I had to do some jujitsu to make our current state of Development Economics not look too terribly lagged behind, only to, in the end, admit that we in Indonesian universities badly need an upgrade and update on the issue.

I think the current Development Economics no longer so much discuss structural transformation or long run growth or inequality from macro perspective, but moves toward on how to make marginal improvement for effectiveness of (credible) public policies at micro level. The contemporary Development Economics also makes extensive use of now more widely available micro data and/or feasible experiment/surveys equipped with now much better (microeconometrics) tools.

And this is perhaps what Department of Economics in Indonesian universities need to catch up with.