Economic subjects | Economic policy » The Condition of Southern India and Its Relation with Indonesia

Source: http://www.doksinet THE CONDITION OF SOUTHERN INDIA AND ITS RELATION WITH INDONESIA : SOME POINTS FORWARD I. The Consulate General of Indonesia in Mumbai, India The Consulate of the Republic of Indonesia in Mumbai opened in January 1951. The office covers 7 states that fall under its accreditation which are: Maharashtra, Gujarat, Goa, Kerala, Tamil Nadu, Karnataka and Andhra Pradesh. Its presence is important owing to the fact that these states which are situated in the Southern and Western part of India considered to be the centres of Indian economy and Bombay (Mumbai - Maharashtra) being the dominant one. After five decades since its inception, Indonesian Consulate in Mumbai has become one of the surplus missions of Indonesia’s abroad in terms of revenues it receives from visa. For the purpose of comparing data, tangible revenues from visa and other consular fees last year was US$363,492. This figure has surpassed the office’s operational outlay for the same year.

This is not including intangible revenues resulted from non-oil and gas export. Moreover, several Indonesian companies or foreign companies operating in Indonesia have started to bag some projects in the oil industry and other related-works such as maintenance within Western region. A positive trend of trade and human flow between the two countries has shown an increase over the years. This, however, has much or less related to the state visit of Her Excellency Mdm Megawati Soekarnoputri to India (New Delhi, Hyderabad and Mumbai on 1-4 April 2002). A. The Potentials of Southern India A.1 Economy The Southern part of India is the centre of industry and economy of the country. Apart from the fact that this area is relatively fertile compared to the rest of India, it is also considered more developed with many centres of industries. Over the last decade, Southern India has turned up with scores of progress in the fields of industry especially information technology (IT) and biotechnology

that claims world recognition. Companies like Tata Technologies, Wipro and Infosys which have centers in South India have been able to function as the back office of many world companies. The IT sector itself has been able to grab outsourcing opportunities offered by the globalisation process in the developed economies where the latter could just focus on core business. This absorbs many IT specialists or non-IT specialists with a mere English plus computer literacy. It is clear that a focused educational system and many technical schools being set up in India have created the IT workforce. The success story of IT sector in South India has created a lot of young people to become real middle to upper class in India and the world. Azim Premji of Wipro with the net asset of US$8.9 billion last year became the richest man in India while Narayana Murthy of Infosys for this year become the fourth richest man in India with the net asset accumulated to US$3.8 billion Condition of Southern

India and its relation with Indonesia: Some points forward 1 Source: http://www.doksinet For Indonesia itself, the surge of this middle class number is seen to be an opportunity to boost the number of foreign tourists coming to Indonesia. This new middle class people surely need holiday Although the flow of Indian tourists coming to Indonesia accounted only for small fractions but the trend has been one of the most stable foreign tourists arrivals to Indonesia. Tabel: Number of Tourists Coming to Indonesia Country of Residence wise (1997-2001) The IT industry is followed by the same success in the pharmaceutical industry with a very high competitive advantage in the medicine products compare to the same from other countries in terms of price. Indian drug manufacturers are able to produce medicines with a very best price far lower than the price offered by their competitors from other countries. Several factors have been noticed accounted for this: availability of raw materials,

technology to process the medicines has Condition of Southern India and its relation with Indonesia: Some points forward 2 Source: http://www.doksinet matured which has been supported by strong R&D and comparatively loose policy in this sector. Rs. 1 Crore = 10 juta US$1 = ±Rs46,5 – 470 If we look at the index of Revealed Competitive Advantage (RCA) below, Indian produced medicines are far more competitive than the same from Indonesia. A.2 Socio-culture In the social front, for the last several years this region of South India has shown an incredible progress in terms of human resources and technology. Being aware of the clear correlation between the standard Condition of Southern India and its relation with Indonesia: Some points forward 3 Source: http://www.doksinet of education and the country’s competitiveness vis a vis other countries, a focus has been in the forefront of India Government. We noticed that there have been many progress in the field of high

technology created by new research in IT and computer, biotechnology, pharmacy and healthcare, chemistry, physics and nano technology, nuclear, automotive, agriculture and airspace. For Indonesia itself, excellent educational and governmental institutions driving the India’s advancement in technology could become partners especially in IT and biotechnology. B. Trade and Investment between Indonesia-India Trade relation between the two especially Indonesia and the region has been developed since long time back although the correct trade value could not be acquired because the value in trade is registered and accounted nationally. However, the figure obtained from the Ministry of Industry and Trade of Indonesia, last year Indonesia could bag an export value to India of US$248.0207 or an increase of 2353% (from US$1.053,939,5 to US$1,301960,2) By the same year there were also 21 foreign direct investments from India. Since Januari until April this year, investment from India accounted

for 7 projects with the value up of US$1,7 million or ranked 9 in terms of project and 19 in terms of project value from 31 countries 31 registered (minus CIS countries) countries investing in Indonesia. By the same year, import value of Indonesia from India increased 7,45% (from US$486.258,6 to US$ 522490,8) Of course, not all the above figures resulted from the Southern region of India but Mumbai and the Southern states are surely the centres of capital of India. Condition of Southern India and its relation with Indonesia: Some points forward 4 Source: http://www.doksinet II. SOME POINTS FORWARD Examining the condition of the Southern Indian region, several points forward could be mapped: 1. Cooperation in the field of higher education The excellent progress that India has been attaining in the field of education cannot be separated from its national education system that aims to produce excellent output of education. Indian Government has the vision of attaining the level of

developed country from its present Condition of Southern India and its relation with Indonesia: Some points forward 5 Source: http://www.doksinet status by the year of 2050. The downturn in steel (Tata conglomerate) and textile industries (Birla and others) should not be wailed. The winners of the 21 Century are those ones who cut the above the knowledge economy. We shall be dependent much not on muscle but information technology (IT) and biotechnology. It is true that the number of educational institutions of a country shall not automatically prove the higher progress of its technology, but the number of new inventions in the field of science shall be a better proof that indicates the success of India’s national education system. This creates an impact on increase of Indian economy in the form of IT and its related services export value where according to Nasscom (National Association of Software and Service Companies) has reached US$10 billion in the period of 2002-2003. In the

long run, progresses in IT and biotechnology, which are exactly suitable for the present knowledge economy, shall firmly position India in its process to attain the vision to become a developed nation in the future. Indonesia should take the opportunity being offered by excellent Indian educational institutions for cooperative purposes. The Indian counterpart to be partnered could be assessed by the output they produce that respond to the global economic trend in the era of the present knowledge-economy. Some of the higher educational and also research institutions have relatively possessed maturity compared to the their counterparts in Indonesia. The ‘open policy’ in the field of technology, manufacturing and other sciences in India is very much conducive for both countries cooperation in education. Moreover, from the point of educational fees India offers much cheaper compared to Western countries for the same degrees. Other factor could Indonesia benefit from is that India is

now in the process of gaining Washington Accord accreditation which could give a more mobility access to outputs of Indian technical schools should it get the Accord. For the last one year we have recorded some of the remarkable new inventions done by the excellent institutions in India. The list we attach herein. 2. Investment/cooperation in pharmaceutical industry For Indonesia, there is big opportunity for developing its pharmaceutical industry. Taking into account of the strength of Indian pharmaceutical industry supported by the development in the sunrise biotechnology industry in India and the rich biodiversity Indonesia posses, Indonesia should attract more Indian players to invest in Indonesia. Although the trend suggests the import has been declining, direct investment from India in this sector could create a more efficient drugs prices in Indonesian market. Thus, in the end will spur a more competitive environment among players that could lead to the creation of more

inventions in the Indonesian pharmacy. 3. Cooperation in developing mutual benefit for film industry Number of films produced in India has been remarkable which is around Condition of Southern India and its relation with Indonesia: Some points forward 6 Source: http://www.doksinet 800 per year. However, rapid development of media industry and bargaining position that comes into the artist advantages, a condition has been more and more compelling to the film industry to be more stringent in budget. This pushes Indian filmmakers into finding comparatively cheaper locations for filming. Indonesia could tap this opportunity by offering its place with many beautiful locations suitable for making Indian type of films. Adding more to this, many of studios related to entertainment industry in Java could be partnered with Indian filmmakers for post production filming process. Several events held every year in India covering the entertainment industry should be noticed well by Indonesia. The

Ministry of Culture and Tourism Affairs of Indonesia should have to be able to organize different sections that make up the whole entertainment industry in Indonesia into one delegation for the above events. 4. Other important sector for further talks Indonesia should better consider reopening its direct flight to India. With more and more middle class people emerge in India especially in the South region resulting in more Indian people looking for holiday outside the country, a chance to grab some share in the aviation industry to tap Indian people flying to Southeast Asia is convincing. Number of flights from foreign airlines operating in India are mounting with many of them have consistent load factor of more than 60 percent. The Indian carriers even bag more numbers with 90 percent or maximum load factor. With the mounting number of interactions resulted from trade and economy between the two countries’ people, reopening of talks between the concerned authorities should be

initiated soon. Condition of Southern India and its relation with Indonesia: Some points forward 7