Dutch Curse on Indonesia: Unemployment by Asian Development Bank (ADB) Loan Projects

Muhammad Amir  Ingratubun; Ardika Perdana  Fahly; Beny  Cahyadie; Nefo Indra  Nizara; Raden Ratih  Rantini

Muhammad Amir Ingratubun IPB University
Ardika Perdana Fahly
Beny Cahyadie
Nefo Indra Nizara
Raden Ratih Rantini

Keywords: disbursement delays, unemployment, money creation, negative impact, volatility

Abstract

The ADB takes more than five years to disburse the agreed-upon loan funds after the borrower signs the loan agreements, because of the conditionalities attached to such loans, compared with it only taking one day for commercial banks to release any agreed loans. During this five-year period, the funds stay in the bank and gain compounded interest, disfavoring Indonesia. Development studies have mostly overlooked these gains and their impacts. Knowing that ADB loans cause about 3% of Indonesia’s unemployment, we reviewed the delay’s impacts during a project’s implementation on unemployment involving 325 ADB loan projects, valued at over $33 billion, from 1969 to 2017. We used a non-econometric methodology by adopting the management principles of the project and portfolio. The results show that the ADB’s loans at 1% GDP initially helped Indonesia reduce its unemployment by 30%. However, because of the ADB’s standard implementation of five years, along with an extra two-year delay (seven years in total) we observed shorter unemployment reductions by half, but then reversed, increased and tripled joblessness. This is also causing Indonesia to suffer capital losses of $0.6 to $12 per $1 of loan money, which is equivalent to 4.98% of its GDP because of the delays in the disbursement of the funds. ADB loans have severe negative effects, with over 200% volatility because of the delays. Fixing this is simple but requires a paradigm shift.

Author Biographies

Muhammad Amir Ingratubun, IPB University

is a former development banker now working as principal consultant, portfolio manager at ING & Partners (Jakarta – Berlin) and researcher at the Regional and Rural Development Planning Department, Faculty of Economics and Management, IPB University, Bogor, Indonesia. He earned his Insinyur (BSc) (1992) in civil structural and hydropower engineering from Hasanuddin University, Indonesia. His MSc (1997) in Construction Management from the Reading University, UK and MSc. Eng., in energy conversion technology from the Bremerhaven University, Germany. He is currently completing his PhD at the IPB university, Indonesia. His research interests are sustainable infrastructure and energy, regional and rural planning, financing and banking. He has reviewed over 150 investment, loans, grants and technical assistance documents and publications. His most recent work (to be published) was jointly presented at the Western Social Science Association 63rd Annual Conference, USA, Apr 12 - 25, 2021. https://www.wssaweb.com/conference-overview.html. One of his current published work in ConScienS Conference, DOI: 10.5281/zenodo.4542164. He resides in Apartment Bona Vista, 02-062, Jl Lebak Bulus Raya 1, Lebak Bulus, Cilandak, Jakarta 12440, Indonesia, email: mingratubun@outlook.com and ingratubun_ma@apps.ipb.ac.id.

Ardika Perdana Fahly

is a civil servant currently serving at the Regional Personnel Agency of Riau Provincial Government. Prior to this he served as the staffer of Village and Community Empowerment Agency of Riau Provincial Government. He is a researcher at the Regional and Rural Development Planning Department, Faculty of Economics and Management, IPB University, Bogor, Indonesia. He obtained a bachelor (2013) and master (2015) degrees in public policy from the institute of government of the home affairs ministry. His research interests are government and governance, public administration and policy, regional and rural development planning. He is currently completing his PhD at the IPB university, Indonesia. His most recent work (to be published) was jointly presented at the Western Social Science Association 63rd Annual Conference, USA, Apr 12 - 25, 2021. https://www.wssaweb.com/conference-overview.html. His residence is Jl. Fajar Gg. Arwana No. 9, Payung Sekaki, Pekanbaru, Riau, Indonesia 28292, Cellphone: +62 852 7881 1155, email: ardika_perdana@apps.ipb.ac.id; ardikaperdana@gmail.com.

Beny Cahyadie

is a civil servant currently serving as the head of personnel planning department of the ministry of home affairs, Republic of Indonesia. He is a researcher at the Regional and Rural Development Planning Department, Faculty of Economics and Management, IPB University, Bogor, Indonesia. He obtained a bachelor (2004) and master (2008) degrees in public policy from the institute of government of the home affairs ministry. His research interests are government and governance, public administration and policy, regional and rural development planning. He is currently completing his PhD at the IPB university, Indonesia. His most recent work (to be published) was jointly presented at the Western Social Science Association 63rd Annual Conference, USA, Apr 12 - 25, 2021. https://www.wssaweb.com/conference-overview.html. His address is Jl Raya CIFOR, Perumahan Taman Firdaus, Bogor, West Java, Indonesia. Cellphone: +62 811 910 482, email: beny_cahyadie@apps.ipb.ac.id and benycahyadie1082@gmail.com.

Nefo Indra Nizara

is a former commercial banker and currently teaching at Pamulang University, Indonesia since 2016. He is a researcher at the Regional and Rural Development Planning Department, Faculty of Economics and Management, IPB University, Bogor, Indonesia. He obtained a bachelor (1989) in economics (Jogjakarta) and master (2011) degrees in Master of Business Administration (MBA) with concentration on Wealth Management and observation study on Role Project Management Office (PMO) (Jakarta) both from the University of Gajah Mada. His research interests are creative economy, business model and enterprise strategy, E-commerce start-up and IT-based industry developments. He is currently completing his PhD at the IPB university, Indonesia. His most recent work (to be published) was jointly presented at the Western Social Science Association 63rd Annual Conference, USA, Apr 12 - 25, 2021. https://www.wssaweb.com/conference-overview.html. He has several peer-reviewed publications at www.jurnalmandiri.com. His address is Vila Dago Blok F5/24, Pamulang, Tangerang Selatan, Banten, Indonesia 15418. Cellphone : 081385929762, email: nefo_h061180031@apps.ipb.ac.id and nefoindra@gmail.com.

Raden Ratih Rantini

is a regional and urban planner who is active both as consultant and lecturer. She has lectured at the Department of Urban and Regional Planning, Universitas Terbuka, Indonesia (2016 – 2019). Currently, she is teaching at the Department of Urban and Regional Planning, Universitas Pasundan from 2012 and working as an expert consultant for the Regional development at several Indonesian ministries and local governments. She is a researcher at the Regional and Rural Development Planning Department, Faculty of Economics and Management, IPB University, Bogor, Indonesia. She obtained Bachelor (2006) Degree in Urban and Regional Planning (ST), Department of Urban and Regional Planning, Faculty of Engineering, Universitas Pasundan, Bandung, West Java, Indonesia. A Master of Regional and City Planning (MT) in 2014 from the School of Architecture, Planning, and Policy Development, Institut Teknologi Bandung (ITB), Bandung, West Java, Indonesia. Her research interests are urban and regional planning and development, public policy, economic development, and sustainable infrastructure and tourism. She is currently completing her PhD at the IPB university, Indonesia. Her most recent work (to be published) was jointly presented at the Western Social Science Association 63rd Annual Conference, USA, Apr 12 - 25, 2021. https://www.wssaweb.com/conference-overview.html. She has several peer-reviewed publications one of which is at http://dx.doi.org/10.30999/jpkm.v9i1.410. She domiciles at Jl. Saturnus Selatan IV No. 27, Margahayu Raya, Bandung, Cellphone: +62 82217687848, email: rantini_rr@apps.ipb.ac.id and rrrantini@gmail.com.

References

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