[Kajian Post] The Pursuit of Social Interest

Oleh: Dwinia Emil | Trainee Divisi Kajian Kanopi 2012 | Ilmu Ekonomi 2012

As I was reading on Parkin: Economics (2012) in preparation for midterm, I learned to differ between self and social interest. We as a homo economicus, typically make most of our daily choices in our self-interest. A woman may ask a salesman in a local department store to find her certain size of shoes she intends to buy. She asks for his help because she wants to buy the right-fitted item—trying to achieve her self interest—without thinking it because he needs an income. And when the salesman shows up with the shoes, he is not in purpose of doing her a favor, too. He is pursuing his self-interest and hoping for sales commission once he succeeds to sell the shoes to that particular woman. 

A country is, of course, not doing anything like that salesman. Instead of self-interest, it is a social interest that is being pursued. Social interest, although can be impossible to achieve, is any decision that is made for the benefit of the society as a whole. The problem is, is it possible for a country to organize the economic lives, so that when a third party makes choices that are in their self-interest, they promote social interest at the same time? That will always be questioned.

Say, a state of nation is responsible in building infrastructure (i.e. bridges, railways, roads) to improve the welfare of its people. That means to build services such as transportation in the landmass or ports to support their maritime facilities, there is the urge need to think of every aspects about how the construction might affect the communities around. We can learn from one case about PT Freeport Indonesia (PTFI). Currently, PTFI runs two separate power networks to operate the mine and lowland facilities. They also have significant power needs in the coming years and will be developing a potential cement plant up to 2016. As the project goes, the PLN power network that serves the local population became decidedly weak. This cause resentment by the local populace towards PTFI.1 This does not serve the social interest, indeed.

The problem in serving social interest is that, our growing country Indonesia often only have limited ability to finance its infrastructure development. Whereas the need to keep up with progress other countries are making had become highly important. Indonesia now and ever since, had private sector to take role and involve in this global competitiveness—to deal with the many business interest and also cope with local community. Before we continue on how these private sectors take portion in helping the infrastructure development, let ourselves be familiar with our nation’s most problematic factors compared to other ASEAN countries.

Three most problematic for doing business
(1)inflation, (2)restrictive labor regulations, (3)inadequately educated workforce
(1)access to financing, (2)policy instability, (3)corruption
(1)inefficient government bureaucracy, (2)access to financing, (3)policy instability
(1)inefficient government bureaucracy, (2)corruption, (3) Inadequate supply  of infrastructure
The Philippines
(1)inefficient government bureaucracy, (2)corruption, (3) Inadequate supply  of infrastructure
Viet Nam
(1)access to financing, (2)inflation, (3)policy instability

Source: ASEAN Connectivity in Indonesian Context page 19; Modified from World Economic Forum Global Competitiveness Report

So the lack attention of infrastructure development can mostly be seen in Eastern part of ASEAN, which are the Eastern part of Indonesia and also the Philippines (The Philippines and Indonesia are having similar problem as shown by the table). These Eastern areas are suffering the issue called Discrepancy, which means having differences between two things that should be the same in context of progress of connectivity (in contrast to the Western Areas of ASEAN). This will later be discussed in my next essay.

Back to the private sector, Indonesia has been engaged with private sector to solve the inadequate supply of infrastructure. Today, they work together based on a “fair go” principle.2 Government is to build physical connectivity infrastructure as part of the public goods. Companies are to build connectivity infrastructure to serve their business interest. So everything is just like in the 16th and 17th century, when VOC built roads, railways and shipping lines. Back then, most of services were to serve the business interest of the company rather than for the benefit of the public. Using the “fair go” principle, government and companies can build infrastructure together that serves both the interest of the public and the companies as well.

At the end, it is interesting to start on social interest issue by looking at individuals/businesses’ self-interest, and how they penetrate into the economic structure and become a permanent player as we can see now on many public-private partnership Projects such as Jakarta Monorail, Central Java Coal Fired System Power Plant, and the one worth USD25,000 million tendered—Sunda Strait Bridge.

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