The Office of the Coordinating Economic Minister recently surprised the public with a plan to unify Indonesia’s time zones. Indonesian time zones which are currently divided into three regions, namely western (GMT+7), middle (GMT+8) and eastern (GMT+9), will be unified into one time zone following GMT+8.
The government expects the unification of the time zones will encourage efficiency in trade. The government also hopes that the unification can support economic activity in central and eastern parts that has been lagging behind western Indonesia. In addition, it is expected that the operational time of the Indonesia stock exchange can be alligned with Singapore, Malaysia and Hong Kong.
The secretariat of the Committee for Expansion and Acceleration of Indonesian Economic Growth (KP3EI) claims that the unification plan for Indonesia’s time zones will provide economic efficiencies of
Rp 500 billion (US$53 million) a day. The government plans to set the time zone unification for Oct. 28, to coincide with the anniversary of the Youth Pledge (Sumpah Pemuda). Quite apart from the KP3EI team and government’s hard work, we wonder if it is necessary to unify Indonesian time zones.
The world is divided into 24 time zones varying according to location. All times are usually associated with the time zone in Greenwich, UK called Greenwich Mean Time (GMT). The history of GMT as a benchmark stems from the desire to create a standard time that could be the basis for all countries to conduct trade. The UK, which at the time adopted a system of standard time for their own territories took the initiative to promote an international consensus for global time zones in 1884.
At the turn of this year, we were treated to a phenomenal event as Samoa experienced a change of time zone. Samoa for 119 years had the same time zone as the US (GMT-11) due to the history of the region. However Samoa is geographically closer to Australia and New Zealand. Trade is mostly done with these countries and being 21 hours behind Australia and New Zealand (GMT+8) led to various difficulties.
Therefore, the Samoan government decided to shift its time zone on Dec. 29, 2011 and made a historical leap by “jumping” from Dec. 29, 2011 to Dec. 31, 2011. This means that the date of Dec. 30, 2011 is “missing” from the history of Samoa.
Indonesia has also experienced shifting time zones based on economic considerations. In 1987, the government replaced Presidential Decree No. 243/1963 with Presidential Decree No. 41/1987.
Previously, Bali had been included in the western time zone (GMT+7) but through the new decree it converted to GMT+8. This was because GMT+7 wasted time for foreign tourists who stopped over in Bali and wanted to continue on to another destination in the GMT+8 time zone.
Economic considerations and business efficiency are often used as a reason for setting the time zone of a country. During the Japanese occupation, determining time zones shifted to the military domain when Japanese forces changed the time zone to GMT+9, following Tokyo’s time zone to simplify Japanese military operations in Indonesia.
Is it important for Indonesia to follow Samoa and rely on the economies of Singapore, Malaysia and Hong Kong? So far there is no empirical evidence that the Indonesian Stock Exchange depends on the stock exchanges in Singapore, Malaysia and Hong Kong. Even large countries like the United States, Canada, Brazil and Russia apply different time zones in their territory.
Economic efficiency does not depend on time zone differences, but from a variety of other variables such as infrastructure, transportation, bureaucracy and others. Based on the Global Competitiveness Report 2011-2012 of the World Economic Forum, Indonesia’s rank in 2011 was 46, a decrease of two places compared to 2010. Indonesia’s position is still inferior to its neighbors in ASEAN, such as Singapore (No. 2), Malaysia (No. 21), Brunei Darussalam (No. 28) and Thailand (No. 39). These ratings are based on three main assessments — basic requirements, efficiency enhancers and innovation and sophistication factors.
In the basic requirement category, Indonesia is ranked below Singapore, Brunei, Malaysia and Thailand. There are four pillars of the basic requirements: institutions, infrastructure, macroeconomic and health and basic education. Indonesia is ranked 71st in the institutions category, 76th in physical infrastructure, 23rd in macroeconomic and 64th in health and basic education. With regard to physical infrastructure, quality and port facilities Indonesia decreased to 103, down from the 96th position in previous years.
Observing these conditions, time zones are not a major problem faced by Indonesia. If the government wants to build the economy more efficiently, it would be better to fix the variables that are still weak.
It is feared that unifying the time zones is just a shortcut for the government to claim success in economic development and the implementation of the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI). Investment needed to encourage implementation of infrastructure development of MP3EI is approximately Rp 4,000 trillion, or four times the national budget. This amount is very large and certainly it is not practicable in the short term. The KP3EI’s statement that without time zone unification MP3EI cannot be achieved seems to support this suspicion (Kompas, May 26,).
It is certainly easier to change the clock on the wall than to solve economic problems comprehensively, isn’t it?
The writer works at the directorate at the Foreign Market Development, Maritime Affairs and Fisheries Ministry. The opinions expressed are personal.