Indonesia Services Dialogue Held the 2nd Policy Research Workshop

Jakarta, 1 August 2013

Indonesia Services Dialogue Held the 2nd Policy Research Workshop

Jakarta, August 1, 2013

Indonesia Services Dialogue (ISD) held the second Policy and Research Workshop last Thursday (25/7) in Jakarta. The workshop was attended by stakeholders from the Government, the research community and the private sector. The main agenda of the workshop is to discuss four policy research papers presented by researchers from Centre for Strategic and International Studies (CSIS).

Pricing practice in electricity services is among the issues discussed. Dr. Yose Rizal Damuri from CSIS explained that the current tariff structure in electricity services is not economically sustainable because it neglects cost-recovery and economic principles. Rizal further recommended that the Government needs to reintroduce automatic tariff adjustment by having two components of tariff: base tariff for certain period (say 2 years) and adjustment tariff to take account exchange rate fluctuation or fuel price shock (reviewed quarterly). In addition to that, tariff structure should also incorporate various features such as peak and off-peak time and geographical differences.

Another research by Dr. Haryo Aswicahyono from CSIS tried to explore trade and employment in services. In his research Haryo found that relatively deregulated industries such as air transport, non-banking finance and business services grew especially quickly while highly regulated ones such as sea transport had and banking grew much less quickly. He also recommended that lifting restrictions on foreign investment and skilled labor (eg. FDI in tertiary education) are necessary to promote growth in services. Greater domestic competition is also critical for lower cost delivery of services (eg. Airlines).

A research on the impediments to growth in movie industry raised a dynamic debate in the workshop. The researcher, Dr. Titik Anas from CSIS, highlighted the limited availability of movie theaters in Indonesia. She said that there is only 0,3394 screen per 100.000 inhabitants in Indonesia, slightly higher than Laos and Cambodia. Movie theaters are mainly in Jakarta, West Java and East Java. Titik also criticised that film making, film distribution (export, import and distribution) and viewing (movie theater) are closed for foreign investment for protection. Unfortunately there is only one big local player dominating these three areas of business. With practically no competition it is hard for improvements to happen.

The fourth research tried to measure efficiencies in seaports using Data Envelopment Analysis. Ten ports that were observed in this research are: Jakarta International Container Terminal (JICT), International Container Terminal of Tanjung Perak, Terminal Peti Kemas Semarang, Belawan International Container Terminal, Teluk Bayur Container Terminal, Makassar Container Terminal Batu Ampar, Singapore, Tanjung Pelepas (Johor, Malaysia), Laem Chabang (Thailand).

There were also updates on services activities in APEC and ASEAN presented by Sondang Anggraini from the Ministry of Trade as the Government Coordinator of ISD. Meanwhile David Parsons gave updates on ABAC agenda on services. (DP)