Global growth slows
Given the looming risk of secular stagnation in many advanced economies, the emerging economies definitely feel the impact of the shift and should think of ways to overcome the problem. The slowing of global growth in advanced economies is largely owed to the adverse effect on productivity growth of years of underinvestment in human and physical capital. In addition to this, the structural reforms that these economies need to boost their potential growth are implemented too slowly.
Indonesia has already felt some of the impact of this shift and even though corporations are still profitable, they face a much more challenging environment of rising costs, slowing exports and regulatory uncertainty.
“The talk in town among investors and businessmen is the slowing down of the economy,” said Anderson Tanoto, a member of the board of trustees at the Tanoto Foundation and a scion of the Royal Golden Eagle business empire.”The days of easy 6 percent growth are no longer a right and it’s now a privilege the country must work very hard for.”
Engaging human capital
Anderson Tanoto was speaking at the signing ceremony of a program between the Tanoto Foundation and the Wharton School’s Global Initiatives. The program aims to promote greater education cooperation between the Wharton School and top Indonesian universities. The program will facilitate visits by faculty from Wharton to teach at Indonesian universities; provide scholarships and fellowships for Indonesians to study at Wharton; and fund research on Southeast Asia at Wharton.
The long-term goal of the program, Tanoto noted, is to raise Indonesia’s human capital so the country can compete in a fast- changing global economic environment.
Wharton, said Professor Harbir Singh, vice dean of the Global Initiatives program, has always excelled in leadership and hopes to help spark innovative ideas at Indonesian institutions of higher learning. “Good ideas can come from anywhere and our goal is to take those ideas to fruition.”Innovation and research are the primary pillars that will enable Indonesia to rise up the value chain and produce higher-end products to offset the country’s overreliance on commodity exports, noted Fauzi Ichsan, chief economist at Standard Chartered Bank Indonesia.
Given this scenario, Indonesia must put its economic house in order fast. The government needs to accelerate reforms, build more infrastructures and improve the investment climate”. To do this, one of the most crucial factors is the human capital behind the nation. There must be a structured programme to groom leaders and entrepreneurs who are able to carry the burden of the nation’s economy. The grooming of the next generation is also crucial to ensure the continuity of innovation and creativity breakthroughs. This is why Tanoto Foundation believes that they have a responsibility to play in building up the next generation of entrepreneurs through education and partnership with existing successful institutions to bring out the potential in the young people of Indonesia.