Malaysian-Indonesian Student Association

During my study in the US, I experienced many meaningful things, both academically and non-academically. I want to share some of my experiences related to my involvement in a cultural student organization at Georgia State University, MISA which stands for Malaysian-Indonesian Student Organization. MISA was initiated by one Malaysian student and one Indonesian student who both studied in Georgia State University. They wanted to create a joint organization because Indonesia and Malaysia are close to each other and both countries have some similarities in their culture.

I was attending the first unofficial meeting back in October 2012 and after getting know each other, we chose the e-board for the organization and I was chosen as a secretary of MISA. We defined the charter and agreed about the purpose of MISA is to unite Malaysian, Indonesian, South East Asian students and to invite people from all around the world by promoting Malaysian and Indonesian culture.

As a secretary, I was in charge in keeping accurate notes and times in every meeting. I also helped the president related to organize the account of attendance, membership status and meeting schedule. MISA is affiliated with International Student Association Council (ISAC) which supervises about 15 cultural student organizations. As a part of ISAC, we used to invite and to be invited in student cultural events from Indian Holi festival until Taste of Caribbean. We also had an opportunity to expand our friendship from people from around the world and get to know their culture.

MISA had several cultural events under ISAC. Our first event is “Get to Know Malaysia and Indonesia” which held on February 28^th 2013 in Dahlberg Hall, GSU. This event was basically contained of presentation about both countries that covered the country’s basic information, culture and travel. We also had a posters exhibition related to the history of both countries since the colonialism era until after independence. Other than that, there was a Balinese dance show from Sanggar Lestari Indonesia to entertain the attendees.

In our first event, all of MISA members had a great effort and solid teamwork to make our first event to be successful. We also got support from the Consulate of Republic Indonesia in Houston, Texas. The consul general, Al Busyra Basnur and his staffs were really supportive and thoughtful to give us donation in terms of food and brochures about Indonesian travel. Although there were some conflicts and technical issues throughout the preparation process, it turned out to be a great event with more than 100 people showed up in our event. It was an amazing start for MISA journey in the future.

Another experience that I will not forget when I joined MISA was performing Saman dance in several events. Saman dance is a traditional dance from Aceh, Indonesia. The dance is called as dance of thousand hands and is usually performed to celebrate important occasions. This dance is done by a group in one line and dancers perform while kneeling.

In our group, there was only me who has ever danced Saman. It’s been a while since the last time I danced though so we learned it together from Youtube. Fortunately, we also got some help from people in Sanggar Lestari Indonesia. In one quick session, two dancers from SLI taught us how to dance Saman. Our group which consisted about 8-10 Indonesian students used to practice together twice a week and became more intense as the D-day approaching. As the coordinator of the group, I used to schedule the practice sessions, assist some members who did not mastered the dance well enough, manage the costumes and music. We practiced hard to prepare the dance performance, it was not an easy task but I am glad that my friends are fast learners and all of our hard work paid off when we performed well on the stage.

Our first performance was a success; we got a big applause from the audiences who were from around the world. Since then, the next performances became easier to manage since we already knew about the basic so we just need to make a little adjustment and practice few times before performing. We have performed for Vietnamese Student Association’s event Culture Shock, GSU School of Public Health’s International Potluck, also Mr and Miss International Pageant.

As an organization, MISA also participated in several events such as Batik Making in Learning Asia, cultural exhibition in Student Organization fair and Spring Festival. At the end of the spring semester, MISA as an organization which less than one year old has received an award in ISAC banquet as association of the year due to our contributions. I was attending the banquet with the president of MISA and we were really surprised yet so happy and proud for our achievement.

Each May, each student organization in ISAC should have a new election for the new e-board so we chose five members to replace the first e-board. Although I was no longer become an e-board but I still participated and contributed as a member. On MISA Traditional Games which held on October 1^st, 2013 I became a host with one of my friend. In that event, we held five types of traditional games that usually played by people in our countries. The games are crackers eating contest, pencil in a bottle, gunny sack race, passing marbles and rubber rope skipping. At the end we also invited the attendees to dance Poco-Poco together with MISA members. We were so glad that everyone had fun and the winners also got prizes which are Indonesian or Malaysian traditional stuffs.

Indonesian people in Atlanta were also really helpful and supportive in most of every event that MISA participated. They lent us their traditional stuffs for the decoration such as Wayang puppet, Indonesian map made from batik, traditional music instruments and many more. We really appreciated their support. In most of our events, we usually provided Indonesian and Malaysian food such as beef rendang, chicken curry, roti cane, gado-gado, chicken satay, bakwan jagung, etc. It was amazing to see people from around the world to taste our authentic food and they liked it even some of them couldn’t bear the spiciness.

As an Indonesian student who studies abroad, involving in MISA enables me to share the culture of my country to the world since Georgia State University is a very diverse university. Personally as an e-board and also member of MISA, I can practice my organizational skill from coordinating things, working in a team to hold an event until deal with conflicts. I also had an opportunity to experience other various cultures and had many international friends. I feel that there is a beauty in diversity. When people from other countries respect and appreciate our culture, we have to appreciate our own culture more.

When Growth is Not Enough

The Central Statistics Agency recorded that Indonesia’s economy grew by 5.78% in 2013. Even though it was the slowest pace for the last four years, improvement has occurred in all economic sectors. The highest growth recorded in the transportation and communication sector, which stood at 10.19%, followed by finance, real estate and services sector which grew by 7.56%. Meanwhile the country’s GDP growth without oil and gas reached 6.25%, higher than the overall GDP growth.

The economic slowdown was not so bad; some argued that GDP growth of 5.78% can be categorized as high compare to 5.6%, the 2013 economic growth projection. However, we have to remember that economic growth should be seen by not only quantitatively but also qualitatively.

Unfortunately, GDP growth in 2013 was not a high quality growth because it was not supported by tradable sector (goods). Tradable sector consists of agriculture sector, mining and quarrying sector, and manufacturing sector. This leads to minimum worker’s employment absorption in the economy.

The high quality growth should create employment and reduce poverty. Otherwise, even high growth could lead to wider inequality. In 2013, most of Indonesia’s economy growth was supported by non-tradable sector (services) since the growth in that sector was above the GDP growth itself meanwhile the average of tradable sector growth was below the GDP growth.

Growth does not guarantee poverty reduction. The number of people living in poverty depends on the level of GDP per capita and the degree of inequality in society. Even countries with high level of GDP per capita will have poverty if they are characterized by extreme inequality.

Reducing poverty therefore requires either boosting GDP per capita or reducing inequality by redistributing resources towards the poor. In recent years, the emphasis in poverty reduction has switched away from redistribution and towards GDP growth. One thing to keep in mind is GDP growth can theoretically have various effects on poverty.

Whether economic growth will automatically reduce poverty depends on its relationship with inequality. If the benefits of GDP growth accrue only to the rich, then growth will increase inequality and leave poverty unaffected. It may even be possible that growth in modern sector of the economy leads to declines in traditional sectors where the poor are mainly based. In this case GDP growth produces widening inequality and higher level of poverty – low quality growth.

Alternatively, if GDP growth does not affect inequality, then everyone enjoys the same proportional increase and poverty falls. But the most efficient way to reduce poverty is through pro-poor growth. This kind of growth is GDP growth that reduces inequality so that more of the benefits accrue to the poor leading to a faster in poverty.

To conclude, we should not judge Indonesia’s economy growth solely from the number whether it is high or low but also from the quality itself. Boosting GDP growth is important but how the growth affects inequality and poverty also matters to make Indonesia’s economy better.

The Effect of Financial Liberalization on Various Crises

In the last few decades, countries tended to liberalize their financial system. Loosening credit controls and interest rate controls, reducing entry barriers and reserve requirements, privatizing the banking sector, promoting foreign investment, in general countries have moved to the financial liberalization era.

Financial liberalization refers to the deregulation of domestic financial markets and the liberalization of the capital account. Commonly, financial liberalization is viewed to promote economic growth because it strengthens financial development. However, in contrast, some studies find that financial liberalization induces excessive risk-taking behavior, increases macroeconomic volatility and leads to more frequent crises.

Based on a study of 53 countries from Demirguc-Kunt and Detragiache in 1998, 78% of financial crises occurred in the period of liberalization. The study shows that when a country liberalizes its interest rate, it is more likely that country experiences a banking crisis.

This fact motivates me to closely analyze the relationship between financial liberalization and financial crises. I also want to contribute to the literature in this area by not only focusing on banking crisis but also adding some other types of crises such as debt crisis, inflation crisis, currency crisis and stock market crash. Since the countries that experienced these crises consist of both developing and developed countries, I want to find out whether the effect is the same for developing and developed countries.

The dataset which consist of 35 countries data from 1973-2005 is estimated by the linear probability model combined with fixed effect and IV probit model. I use the dummy variable for various crises as dependent variable and the financial liberalization index as the main explanatory variable. The financial liberalization uses seven different dimensions of financial sector policy that affect the financial liberalization process. The following seven dimensions are credit controls and excessively reserve requirements, interest rate controls, entry barriers, state ownership in the banking sector, capital account restrictions, prudential regulations and supervision of the banking sector, and securities market policy.

After done with the regression, I can say that financial liberalization affects various financial crises differently.

Banking Crisis

For banking crisis, the effects of financial liberalization in both developing and developed countries are statistically significant for all period lags. The signs of the coefficients are positive, meaning that when a country is more financially liberal the probability of getting into a banking crisis increases. This result confirms the previous study from Demirguc-Kunt and Detragiache that banking crises are more likely to occur in a liberalized financial system.

In general, one year lag has the highest effect among the others and continues to decrease until five years lag. It means that financial liberalization has the greatest effect on crises when the lags between them are short and smaller effects in the longer period partly because financial liberalization stimulates institutional reforms.

In particular, we can compare marginal effect of financial liberalization on banking crisis between developing and developed countries. In all five years period of lag, the developing countries have a higher risk getting into banking crisis rather than developed countries. It can be explained when a country liberalizes its financial system by reducing regulations in the banking and financial sector and allows international capital to move more freely, it can lead to excessive risky profit taking actions by bank management and investors which makes the bank sector more fragile.

Debt Crisis

Similar with the result from banking crisis, the effects of financial liberalization on the probability of a debt crisis are highly significant for all countries in all five years period of lags. Financial liberalization increases the probability of the occurrence of debt crises in both developing and developing countries but the effect is bigger in developing countries.

A possible explanation regarding this result is when a country is more financially liberalized, people in that country can not only borrow from domestic sector but also from abroad. It leads to overborrowing and overlending that may increase the possibility of illiquidity and insolvency of the debts. Previous studies also have similar results, financial liberalization increases the probability of a debt crisis because financial liberalization allows more liquidity to enter an economy and it increases speculative financing significantly thus increasing the chance for default. When the outflow of international capital becomes more likely, the crises grows faster.

Inflation Crisis

Different with two previous crises, the effects of financial liberalization inflation crisis in developing countries have a negative sign which means that liberalization can decrease the probability of hyperinflation in developing countries. It may be explained because when developing countries open their countries to the international financial market, they do not have to depend on printing money (which can cause inflation) when they want to raise their revenue since they can borrow from the international capital market. However, the effect is different for developed countries. Financial liberalization increases the probability of inflation crisis in those countries. In general, the effects are statistically significant except for the four years lag in developing countries and five years lag in developed countries.

Currency Crisis

In currency crisis, the effect of financial liberalization is significant only on developing countries and the result shows that it decreases the probability of currency crisis. It means that when people increase the liberalization of their financial system, the likelihood of a country experiencing a big depreciation decreases. Somehow it contrasts with the explanation that developing countries usually peg their currency and because of bank rushes that may happen because of political events, they cannot defend their peg, float their currency and experience a huge depreciation.

Stock Market Crash

In the case of stock market crash, the effect of financial liberalization is not significant in developing countries in all period of lags. On the other hand, the regression from developed countries show contrast result. Financial liberalization significantly increases the probability of developed countries in all period lags. A possible reason why financial liberalization has a really contrasting effect between developing and developed countries is simply because stock markets in developed countries are well developed compared to developing countries that may not have an established stock market.

When developed countries liberalize their financial system, regulation over banking and financial institutions including the stock market is reduced. It encourages the investors to utilize profit taking actions even more. In addition to that, when there are free capital flows into and out of the countries without proper regulations, there will be hot money and short term investment from abroad. The risk for the country will be high because foreign investors can pull out their money easily and leave the countries with a crash in their stock market.