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Jakarta Post

Economic populism too costly for Indonesia

  • Shinta Widjaja Kamdani

Jakarta   /   Mon, May 29 2017   /  12:45 am

Globalization is undoubtedly in a difficult phase. In the Western world, it is often seen as a force that destroys manufacturing jobs, while populists in emerging economies consider it a driver for premature de-industrialization.

In the post-Brexit world and the United States President Donald Trump era, localization policy such as “buy local” and “hire local” is on the rise. Indonesia should not fall into this narrow-minded economic populism and instead embrace and manage globalization if it is to revitalize its manufacturing sector in this new era.

The industrial sector is the largest employment creator in Indonesia, but it hasn’t been living up its greatest potential, yet. The problem with industrialization in Indonesia lies on three fronts.

First, Indonesia’s manufacturing base is relatively low and tends to shrink over time. In the early 2000s it co...