Globalization is inevitable, change is unavoidable. Humanity is facing a challenge caused by human itself. In the company, the biggest cost is for salary of the people. In the country, the biggest cost is to feed the people, the cost of hungry people is to make a food, to create a job, the create a wealth. People nowadays, expect too many things, compare what people expect in the past. People want better internet connection, people want better food, people want better job. People become smarter, people become more independent, people become difficult to manage.
That’s why, in ASEAN perspective, we don’t have Leader like Soeharto (b 1921) 32 years of President (1966-1998), Lee Kuan Yew (b 1923) 30 years of PM (1959-1990) and Mahathir Mohamad (b 1925) 22 years of PM (1981-2003) anymore. Which when only separated by 20-30 years, the new era could not create the same things like what the past did. Imagine people like Habibie (b 1936), Wiranto (b 1947), SBY (b 1949), Prabowo (b 1951), Jokowi (b 1961), Ahok (b 1966)
What we are facing today?
Globalization: Integration of the Market (People), Company (Production) and Country (Political/Economy), a process driven by Trade and Investment and aided by Technology.
Is it too late?
China begin economic transformation in 1978, India in 1991. The results? what we are seeing now is a product of 20-30 years ago. Why Obama can be elected in 2008 is product of Martin Luther King in 1960s, almost 50 years ago.
If things can not be avoided and never try to avoid it.
Although Sukarno was adept at language and rhetoric he was a miserable failure at economic policy
Why is China ahead of India? One answer is that India has paid inadequate attention to the lessons of Asian economic development, which gives a crucial role to the rapid expansion of human capability as a part of pursuing fast economic growth. A critical part of that strategy has been the use of public revenue, itself expanded by economic growth, to remove huge deficiencies in social, educational and health services, and to meet the growing demands of social and physical infrastructure, while making public services more accountable and efficiently organized.
Amartya Sen, Indian Economist (21/06/13)
I have opinions about risk, especially for technology, project and operation.
USD GDP: 16,244b USD (Rank 1)
Japan GDP: 5,960b USD (Rank 3)
UK GDP: 2,471b USD (Rank 6)
Indonesia GDP: 878b USD (Rank 16)
Argentina GDP: 477b USD (Rank 26)
Shell Revenue: 476b USD (Rank 4), Income: 16b USD
Exxon Revenue: 470b USD, Income: 30b USD, Employee: 200k
Toyota Revenue: 249b USD (Rank 12)
Malaysia GDP: 304b USD (Rank 34)
Pertamina: 70b USD (Income: 2.7b USD)
Luxemburg GDP: 55b USD, Population: 500k
Deloitte: 34b USD, Employee: 200k
Accenture: 31b USD, Employee: 300k
- http://en.wikipedia.org/wiki/Chinese_economic_reform (1978)
- http://en.wikipedia.org/wiki/Economic_liberalisation_in_India (1991)
- http://www.globalurban.org/GUD%20Singapore%20MES%20Report.pdf (SG Economic Transformatio)
- Transformation Index
Early 2000s, outsourcing is a scary word. Everything in technology is done in India. Call centre, programmer, and all intelectual things. Company in Indonesia also acting the same. Spin off is everywhere, Astra Graphia formed from Astra International, focussed on IT. Accenture jargon is on Outsourcing.
In 2010s, China surpassed Japan as second largest company. Everything is build in China. And, we thought at that time, quality of everything made from China is not good. But, in 2014, now we found that China surpassed US as world largest economy.
Conclusion: Winner takes all
Between 1998-2004, no one care about politics (or everyone seems to care too much about politics). Reform, Economic Crisis, Islamic Movement. Everything feels that SOE will fail, Indonesia will disintegrate, which on the other side, there is a hope for better future. But nothing happens.
During 2004-2009, SBY lead. Obama also lead, win in 2004 and 2012 election. We hope both of this man able to make a changes. However the strongest, at least according to forbes is Putin 2012 & 2014
Conclusion: No one can predict the future
World Class Leader: Most powerful Leader, Brand, Company (Most Innovative, Most Profit)
In 2005, I have a chance to visit one of biggest company in Indonesia -state own of course- Pertamina. Where at that time I heard about the ‘world class’ jargon, announced almost everywhere, in the meeting, in the presentation, slide, baliho etc.
Rich vs Poor: Its not fair. And will always not fair.
WEF (World Economic Forum) – Global Competitiveness Index (GCI), Global Enabling Trade Report
You should have basic requirements ( 1. Institution, 2. Infrastructure (Port, Railroad, Electricity), 3. Macroeconomic, 4. Health & Education)
You should have Efficiency Enhancer (5. Higher Education & Training, 6. Market efficiency, 7. Labor Market efficiency, 8. Financial Market development, 9. Technological readiness, 10. Market size)
You should have Innovation & Sophistication (11. Business sophistication factors, 12. R&D Innovation)
Protectionism & Subsidy is everywhere (Tariff, Import Quotas, Administrative Barries, Anti Dumping, Subsidies, Exchange Rate, Patent, Immigration, Subsidy (Agricultural, Energy))
Henry Charles Carey (1851)
Free Trade / Kapitalism / Post Mercantilism (Adam Smith & David Ricardo)
JM Keynes on World Bank, IMF, WTO
Bretton Woods Conference (1944): World Bank, IMF, WTO
- Capacity: 35GW (80% is in Java Island, Java Island Capacity/Peak: 27GW/23GW)
- Annual Generation/Consumption: 172TWh/156TWh
- Electrification Ratio: 73% (Java Island Electrification ~100%)
- Electricity Source: 48% Coal, 22% Gas, 12% Oil, Hydro 11/7%
- Electricity Subsidy: 4% from National Budget (noted Oil Subsidy 14%)
- Electricity Provider: 85% State Own Company
- Consumer: 41% Residential, 35% Industry, 18% Commercial
- Subsidy Rate: 28.3% (3% of GDP)
- Subsidy Benefit: 40% to the richest
- Supply and Demand. The demand of energy is always increasing, while the supply is limited, increasing population. (Economic Issues)
- Price of electricity, price is increasing, therefore need a subsidy. Impact to government budget (Policy Issues)
- Dependency on Fossil Fuel, Renewables is very small ~10% (Tech Issues)
- Distribution, 80% power plant in Java (Politic Issues, Regional Autonomy)
- National issues (energy security, green/clean energy awareness, industry, investment, image/branding)
Additional: Data availability & reliability Issues: the data seems inaccurate, don’t expect detail level, of course calculation might be wrong. Even IEA said that to have accurate data is difficult
Prof. Harwin Saptoadi (Guru Besar UGM 2011, FT Energy)
Prof. Iwa Garniwa (Guru Besar UI 2009, FT Energy)
- The famous Danish physicist Niels Bohr once humorously observed, “Predictions are very difficult, especially about the future.” http://www.resilience.org/stories/2013-05-19/will-the-international-energy-agency-s-oil-forecast-be-wrong-again
Short Answer: No (direct answer, literally, by using simple logic)
Optimist Answer: Yes, we are rich in culture, natural resources, a country of peace.
Normative Answer: On progress, we are going to developing countries stage now.
Opportunist Answer: I can be very rich in Indonesia, I can be very happy in Indonesia
Realist Answer: We are unique, different.
I started to realize that there are a million effort performed on how we can have a better world (just like EY campaign, Build a Better World). There are thousand smart guy, research body, people took Phd in Economic, Energy, Social. And it’s been a 2-3 hundred years of research, interconnectly, peer reviewed-ly. Which I can not believe, how humanity can absorb that vast amount of knowledge. Yet, some of basic problem for example unemployment, education, public health, infrastructure is difficult to be solved.
We need a strong government. Well if government revenue as percentage of GDP is only 12% (26% US, 39% UK, 15% Malaysia, 17% India)
Norway for example, EU largest oil producer. Oil provide 23% of GDP, and 30% of government revenue. Indonesia Oil is 8% of GDP, 20% of total export, 24% state revenue. Lifting? Norway 1.8 bopd (2013), 3.4 bopd (2001). Indonesia 0.8 bopd (2014), no longer OPEC country. Norway was discover Oil in North Sea in late 1969. Wait, Norway population is 5 mil, Indonesia is 250 mil. Rusia (16% of GDP, and 52% State Revenue, 70% total Export)
Trading (Export/Import Composition, Partner)
20% Oil, 17% Mining, 60% Manufactur Industry (23% Palm, 14% Rubber, Textile 13%)
UK Trading Partner (12% US, 11% Germany, 4% China)
US Trading Partner (13% Canada, 11% Mexico, 9% China, 5% Japan, 5% Germany, 3% UK)
Japan Trading Partner (19% China, 18% US, 8% Korea, 5% Thailand, 3% Indonesia)
Indonesia Trading Partner (15% Japan, 12% China, 9% Singapore, 8% US)
Export as %of GDP 31% UK, 24% Indonesia, 14% US, 82% Malaysia
Gross national expenditure (% of GDP)
- Export as percentage of GDP
What is energy?
Energy is ability to do work. So if we would like to do something, then we need an energy. If we want to work, we need to have breakfast first, we need to eat. Food is type of energy. If we want to go to somewhere we need an energy, if we travel by car, the car need an energy. Without energy, we are not able to do anything.
Historically, Food is type of energy, just like horse also type of energy. However in current practice, the word of energy would refer to production of energy (34% Oil, 25% Gas, 30% Coal, 5% Nuclear and 8% RE). And can be also refer to consumption of energy by usage (40% power plant electricity, 20% transport, 40% non electricity/transport e.g plant machinery) or by sector (such as: 12% Commercial, 51% Industry, 18% Residential and 20% for Transportation)
Ok, I got this, so Energy (Oil, Gas, Coal) is important, but how come electricity is important?
Like I mention before, 40% energy that we produce is to create electricity. If we say, that we cannot live without energy, that’s mean we cannot live without electricity. The second most important is for transportation which accounted for 20%. The rest is other then electricity generation/transport e.g you need electric to perform iron wielding or you need energy to run conveyor belt in factory.
So, if my parents, live in village, without any electricity and did not use fuel for transport, how much energy does he consume?
Well, maybe he still need an energy, let say to cook a food using biomass (wood/coal bricket). Or maybe he need to burn wood for heating during winter.
Ok, if I dont need electricty what could happened?
Well, assuming you still have that 20% for transportation. And then, you need to cover all your 80% need energy manually. For example, you can use your hand to clean the house, without need an vacuum cleaner. You can eat raw e.g fruit/vegetables. And lighting, if you able to manage lighting by using kerosene, that’s OK.
Well, I was born in 1980s, and do you know that at that time. We did not need that much energy compare for today. We only need a kerosene. To go to someplace, we can use public transport. But in 1990s everything changes, suddenly we need refrigerator and gas stove. Then in 2000s, we need Air Conditioning (AC) system. And suddenly everybody has a 2-3 motor cycle in their house. Well it’s because human to greedy.
Yeah you right, only within 20 years, everything changes so fast. It’s unplanned, market and people naturally change the energy consumption habit. And now, if we heard people campaign on energy saving do you think it will be work?
Ok, How about population
Yes, another problem. I remember in 1980 my teacher once said its around 150 mil, Indonesia population. And in 1980 become 180 mil, in 1990 become 200 mil. So simple, in 2030 will be 300 mil. Using this growth, then the oil will be run out faster than its prediction by 46 years.
Lets finish this conversation. I just start working in 2004, so its been 10 years now. 100 years ago is where the World War I begin, and there are a lot of think that you can not imagine or think will happened in tommorow. My deadline is next 2034, so I still have a 20 years, to understand this. All the economist are wrong.
Interesting, give me your opinion on futures
Well, I try. Need is mother of all invention. So, future will be positive. Will be something optimist. Something will be invented. Knowledge Kapitalism will play significant roles. If we children nowadays, no need to worry about the future. The one that to be worried is our self. Is not that in the 2020 something worse will be happened, humanity and society will crumbled? no, I think the one that need to be worry is us. Us, become older people. That’s for sure, I am in the process watching that thing happened.
World (512 Quad BTU/year): 34% Petroleum, 25% Gas, 30% Coal, 5% Nuclear, 8% Renewable
Indonesia: Coal 24%, Gas 20%, Oil 48%, RE 7%
Indonesia (PP5/2006): Coal 33%, Gas 30%, Oil 20%, RE 17% (Target 2025)
PP 5/2006 National Energy Mix
Current Electricty Sources
Indonesia: Coal 44%, Gas 21%, Oil 23%, Hydro 7%, GT 5%
World: 41% Coal, Gas 21%, Oil 4.8%, Hydro 15.8%, Nuclear 11,7%
Energy Risk Professional (ERP)
Petroleum 35%, Gas & Coal 25%, Electricty 25%, Renewable/Carbon Emissions 15%
- How much energy is consumed in the world by each sector?
What is Risk?
Risk is a probability of damage, as it is a probability, its uncertain. Risk is something that not yet happened. Risk is a potential that something goes wrong. Risk is an exposure to danger. If you are a driver, means that you have a risk being hit by another car. If you are an chemical engineer then there is a risk that you spill something then its exploded. Or if you are a mining truck driver, then there is possibility that you crash something. Even if you are a student, there is a risk that you forget to complete your homework.
Risk Management, is a field that specializing on how we manage the risk. So why on earth that something is not yet happened become important and top priority?
Because in some Industry, for example in Banking, the philosophy of banking is operate based on risk principle. It is assume that the debitor will pay. Or in Energy, because fuel is flammeable. So because of that, there is a serious effort to manage the risk. And that’s why, I am able to make living by understanding something that not yet happened.
Whats the trend of risk management in future?
I have been working for more than 10 years, in this Industry, and I would say, as a player, the business of risk management is highly interesting and competitive. One of my reason, especially in my country, but I guess it’s same in every place. It’s because of the regulation. But on another side, there is a crisis everywhere. Mexico Gulf Oil Disaster, Financial Crisis/Disaster, something like that is a demand factor of risk industry nowadays’
So how about big data?
Yup, big data is everywhere. Big data also plays important roles in risk management. The bigger data you have on risk data, the better your company manage the risk. So, the identification of risk, the mitigation of risk is require a number of data to be able to performed the risk management very well. So, the future will be brighter, by the use of big data.
Who is your customer?
Mainly corporate, because corporate is afraid of losing money. Afraid something goes wrong. The reason that the insurance industry growing, is as the same reason this risk industry grow.
My roles is to manage the risk in the company by helping them identify, plan, evaluate and mitigate the risk. My main specialty is in the technology risk (technology/project/operation) and my industry specialization is related with financial institution/telecommunication/energy.