Prof. Dr. Djisman Simandjuntak Rector of University of Prase1ya Mulya

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2 Prof. Dr. Djisman Simandjuntak Rector of University of Prase1ya Mulya Prof Dr. Djisman Simandjuntak is a Professor of Business Economics at Prase1ya Mulya School of Business and Economics in Prase1ya Mulya University as well as Rector of the University. He is also Chairman of the Board of Directors of Centre for Strategic and Interna1onal Studies (CSIS) Founda1on. He is co- founding Chairman of the Indonesian Ins1tute for Corporate Directorship (IICD) and was Chairman of the IICD Advisory Board for the period of Prof. Dr. Djisman Simandjuntak is Independent Commissioner at PT Indo Tambangraya Megah Tbk (a Thai Banpu Group of Company), Independent Commissioner at PT Asuransi MSIG Indonesia, President Commissioner at PT Indomarco Prismatama Tbk, and President Commissioner at PT Indoritel Makmur Internasional Tbk. He was Independent Commissioner at LippoBank from His other ac1vi1es include being the Chairman of the Indonesian Na1onal CommiWee for Pacific Economic Coopera1on (INCPEC), and Chairman of the Supervisory Board of the Regional Autonomy Watch. He was member of the Na1onal Economic Council (Komite Ekonomi Nasional/KEN) of Indonesia from ll 2014, and member of the Na1onal Team of Expert Advisors for the Interna1onal Trade Forum in the Indonesian Ministry of Trade from ll Prof. Djisman Simandjuntak obtained his Ph.D. degree in Economics from the Faculty of Economics and Social Sciences of the University of Cologne, Germany, in 1983 (majoring in Interna1onal Economics). He is a member of the Indonesian Economists Associa1on (ISEI / Ikatan Sarjana Ekonomi), the American Economic Associa1on, and the American Associa1on for the Advancement of Science. Prof. Dr. Djisman Simandjuntak is o_en invited to speak and write in na1onal as well as interna1onal forum.

3 POSSIBLE SOURCES OF RISKS Physical-Geographical Events: Tsunami, Volcanic eruption, Prolonged drought, prolonged wet season Heightened mobility and complexity Increasing scale and concentration Changing context and major uncertainties Shifting responsibilities Risk perception/risk literacy 7/20/16 Universitas Prase1ya Mulya DSS jul20 3

4 INDONESIA S BASIC FEATURES Geography: archipelago (water dotted with tens of thousands Of islands that are strewn with volcanoes) which is pushed Northwards by the Australian plate. Asian west of the Wallace Line but Australian east of it Demography: vast gene pool of layered ethnicity which includes Earliest migrants (Ur-Migrants) who arrived round 50KYA as well As more recent migrants of the last 5KYs. Young population relative to some other East Asian countries/economies. Experiencing the Peak of higher-education enrollment now-2030 Cultural rainbow: residues of Austronesian culture mixed with Hinduism, Buddhism and Abrahamic religions of Islam and Christianity, stone age style coexisting with cyber style Maturing democracy: decentralization bordering at fragmentaion, Political fragmentation (no majority), active NGOs, free press, historical Baggage, expected leadership role regionally, money politics Economy: soft style of socialism 7/20/16 Universitas Prase1ya Mulya DSS jul20 4

5 THE ECONOMY Ideology: large state-owned enterprise sector, lauded but very Limited co-operative, large and growing private sector which is Seen with residual ambiguity, fragile openness Stage of development: muddling through in the middle-income Trap. In long-term perspective suffers of Siciphean development Lost momentum in manufacturing around mid-1990s as China Catapulted into the world s super manufacturing centre. Not insignificant considering large population, dependence of Services competitiveness on equipments, and lessons from Earlier industrializers in East Asia Dependence on natural resources with their vulnerability to Super cycles of which a super downswing started in Super Downswing has repeatedly forced Indonesia to resort to Discontinuous policy. Multifarious phenomena of inequality: income, consumption, wealth, Access to healthcare, education and other elements of human capital 7/20/16 Universitas Prase1ya Mulya DSS jul20 5

6 THE ECONOMY, CONT. Commitment to macroeconomic stability: debt-to-gdp ceiling, Limits to new borrowing, inflation targeting, OJK (Financial Services Authority), trade roller coaster, floating exchange rate, lessons From and crises, limited fiscal space, unless The tax amnesty raises revenue strongly Eroded trade competitiveness and sign of reversal is not in sight Yet, partly because of misperception of domestic market being the Largest in Southeast Asia. Technology acquisition is weak as reflected in GERD, R&D workforce And IPRs. Indonesia relies heavily on diffusion of foreign technologies. STEM education is small relative social sciences and PISA s score is Very low. Massive government expenditure on education is changing The landscape. Gradualism rather than express train to developed stage. Pragmatism Rather than ideological 7/20/16 Universitas Prase1ya Mulya DSS jul20 6

7 RISK PROFILE MEDIUM-TERM Moderate and improving. But so is the Pace of development and transformation. Patient capital should find Indonesia An atractive part of the portofolio Moderate growth can also cumulate in Such a way as to escape obstacles that Are inherent in underdevelopment. The Express train has proved to be good for China and South Korea but is likely to Stumble in a country of great diversity Like Indonesia 7/20/16 Universitas Prase1ya Mulya DSS jul20 7

8 END OF PRESENTATION 7/20/16 Universitas Prase1ya Mulya DSS jul20 8