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Indonesia INFRASTRUCTURE AND SERVICES
The services sector in Indonesia in the early 1990s was
a
heterogenous mix of modern government-operated utilities
such as
gas and electricity, sophisticated and well-paid private
services
such as finance and insurance, and millions of
self-employed
traders earning a marginal living in what is often called
the
informal sector. While there was little threat of
privatizing the
often inefficient government monopolies, the deregulation
trend in
the late 1980s encouraged more private participation in
many
services formerly reserved exclusively for the public
sector. For
example, a private airline--Sempati Air Services--was
permitted for
the first time to provide international jet service in
competition
with the government-owned airline, Garuda Indonesia, and
the
massive state-owned National Electric Company (PLN) began
negotiations to purchase electricity from privately owned
generators.
In an archipelagic setting, transportation
infrastructure is
crucial to a modern integrated economy. The effort to
boost non-oil
exports also demanded more efficient transportation both
among
islands and to international ports. Repelita V (FY
1989-93)
increased transportation investment to almost 20 percent
of
development expenditures from around 12 percent in
Repelita IV. An
extensive reform of shipping regulations increased
competition and
access to Indonesia's ports.
Services provided 26 million jobs, about 35 percent of
the
employed work force in 1989
(see Employment and Income
, this ch.).
Growth in service employment was over 4 percent per year
during the
1970s and 1980s, faster than total labor force growth,
which
averaged about 3 percent per year. One of the fastest
growing
sources of employment in services was the government civil
service,
which grew at a rate of almost 6 percent per year in these
two
decades. By 1990 there were 3.8 million civil servants
employed in
all levels of government and in public institutions such
as schools
and hospitals. (This number excluded employees of state
enterprises.) Government civil servants were typically
more
educated than average. In 1990 over 16 percent of civil
servants
had some university education, compared with about 1
percent for
the labor force as a whole.
Employment in trade or commerce was the largest source
of
employment in the service sector, accounting for almost 11
million
workers in 1989. This number included about half of all
women
employed in nonagricultural occupations. A wide range of
enterprises were involved in commerce, from large
incorporated
firms to unincorporated establishments operating without
fixed
premises. However, the unincorporated establishments were
much more
numerous and probably accounted for about 90 percent of
employment
in trade. These ubiquitous small-scale traders, usually
selfemployed or employing only family labor, could be found
plying
their wares in the colorful village pasar (market)
and in
urban streets.
Petty traders made up the majority of the informal
sector
(small establishments outside the agricultural sector that
employed
only unpaid family labor). By this definition, about 17
million
workers (around 23 percent of the labor force) in 1989
were
employed in the informal sector in activities that usually
required
little skill or capital. Most informal activities provided
household consumption services, like the popular kaki
lima
(five-leg) food stalls found throughout Javanese cities,
so named
for the three-legged food stall together with the two legs
of the
attendant. The informal sector also accounted for an
important
share of industrial employment
(see Small-scale Industry
, this ch.)
The government had an ambivalent attitude toward the
informal
sector. On one hand, the sector was recognized as an
important
source of employment that should be supported as part of
the
overall effort to promote pribumi economic
development.
Throughout the 1970s and 1980s, a variety of credit and
training
programs were geared to informal services and industry,
although
success was often tenuous because of the large and diverse
target
population. On the other hand, many policies, often on a
municipal
level, thwarted informal sector activities. For example,
repeated
efforts were made to centralize petty traders and food
stalls into
government-provided facilities in less-desirable locations
with
high rents. The once common becak (pedicab) was
restricted
to small side streets in many urban areas to reduce
traffic
congestion. In Jakarta, the becak was to be phased
out
entirely by denying new licenses after 1985.
Specific programs designed to assist the informal
sector may
have been less important than general, unrestricted
economic
growth. In spite of its symbolic "backwardness," the
becak,
like many informal activities, offered a vital service to
urban
dwellers at a low cost. The benefits of increasing
manufacturing
employment in the 1990s, which should have increased
incomes of
factory workers who had a high demand for inexpensive
informal
services, possibly offered the best program to assist this
sector.
The extensive investment in transportation infrastructure
during
the 1970s and 1980s, which facilitated urban-rural
migration and
eased rural travel, already enabled many rural households
to
supplement their income with informal employment in more
prosperous
urban areas
(see Agriculture
, this ch.).
Data as of November 1992
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