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Melissa Gibson ID# 000330911

Project Development & Analysis

1/1/2015National Stability Report

Table of ContentsIntroduction………………………………………………………………………………………..2

Columbia……………………………………………………………………………………….3 – 7

Political Climate……………………………………………………………………………………3

Economics……………………………………………………………………………………….....4

Legal Climate………………………………………………………………………………...…5 – 6

Social Climate…………………………………………………………………………………...….7

Political Climate………………………………………………………………………………....8 - 9

Indonesia……………………………………………………………………………………...8 – 12

Economics………………………………………………………………………………………...10

Legal……………………………………………………………………………………………...11

Social……………………………………………………………………………………………...12

Bibliography………………………………………………………………………………….13 - 14

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2015National Stability Report

Introduction

Expanding a business into a foreign country can have great advantages and disadvantaged to their success. Companies must take into consideration a great deal of information to understand if the move may be right for them. Expanding to other countries occurs for many developmental reasons such as labour and work force issues, a desire to reach new markets, to lower costs and

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increase cash flow. The stability of the political and social climate has a significant effect on the investment of the expansion and the success of your business. Columbia and Indonesia are both up and coming countries that offer a positive outlook into the future. I have outlines the political, social and legal climate for both countries and any concerns that this expansion may face.

ColumbiaPolitical Climate

Columbia is run by a presidential system of government. The president is elected for a term of four years, which can be renewed once, and appoints the government. This government is approved by the Congress and

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legislative powers are led by the House of Representatives, which holds 163 members and the Senate, which holds 102 members. Columbia has been divided into 31 departments and district and those departments are run by governors that are also elected.

The current President today is Juan Manuel Santos Calderon. President Calderon was born in Bogota on August 10, 1951. He is married to Maria Clemencia Rodrigues and has three children; Martin (21), Maria Antonia (19), and Estaban (16). He was a cadet of the Navy Academy in Cartagena, the Chief of the Columbian delegation, a recent Designate to the Presidency and Columbia’s first Foreign Trade Minister, the Minister of Finance & National Defense. He studied Economics and Business Administration at the London’s School of Economics, Harvard University and the Fletcher School of Law and Diplomacy. He also founded Columbia’s largest political party the Partido de la U in 2005, and created the Good Government Foundation.

When he was a journalist he was the Deputy Director of the newspaper El Tempo and a columnist. During that time he was awarded the King of Spain prize. He was also the President of the Freedom of Expression Commission for the Inter American Press Association (IAPA). Juan Calderon has published several books such as The Third Way, which was co-written by the former British Prime Minister Tony Blair, and the book Check on Terror.

President Calderon received the largest votes during the first round of the presidential election. He was elected for his first four year term from August 7, 2010 to August 7, 2014. During his first campaign he promised national unity that would carry out the transition of

Democratic Security to Democratic Prosperity. After a successful term as President Calderon decided to run for a second term and was given approval to run again for presidential election. Calderon won the vote by 50.95% in the second round of the election.

Although Columbia is a parliamentary democracy there are still concerns surrounding corruption and irregularities. Claims of corruption within the election itself have been made with incidents such as candidates being threatened to pull out. The biggest concern is the battle against FARC, the revolutionary armed forces of Columbia, and the ineffective drug war policy. Reports do show that negotiation for peace between FARC and the government look promising, which could end a 50 year old conflict that has claimed thousands of lives. If negotiations can be met the economy of

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Columbia is expected to boom and that can divert $13 billion away from defense and into infrastructure and allowing future foreign investments.

Economics

Columbia has ranked 28th for economic freedom for the 2015 index, which put them one point higher than last year. Columbia scored their highest rating in history for 2015 and has shown improvements in 6 of the 10 economic freedoms. The diminished threat from FARC, open economy and the government reform programs will open the country further to trade, investments, and financial flows. Mauricio Cardenas was able to keep his job as Minister of Finance for a second term due to the investment boom and the country’s economic growth of 6.4% in the first quarter.

Much of Columbia’s economy is built off of the agricultural industry with a large variety of crops grown such as bananas, cotton, sugarcane, oil palm, tobacco, beans, grains, flowers, temperate-zone fruit and vegetables, and coffee Columbia’s largest market and biggest contributor to their economic health. Columbia also relies on the sale of minerals such as petroleum, natural gas, coal, iron, nickel, gold, copper, emeralds, and platinum. These exports bring in approximately $59.96 billion a year.

Although Columbia’s expected GDP growth has already been reduced from 4.8% to 4.2% it is still expected that they will still continue to develop.

The average monthly salary is $692, which totals to $8,304 a year. Columbia ranks 54 of 72 countries on the global pay scale. Although this standard is low it’s higher than Mexico’s average salary of $609.

The average Columbian worker has seen an increase in benefit from the heightened cost of labour, although that has reduced the attraction to Multinational Corporation into the country. Overall 81% of average Columbian workers have job satisfaction, 5% are very satisfied and 14% are dissatisfied with their job. Columbia’s unemployment rates have been the lowest in 14 years and have been steadily declining since 2013.

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Legal Climate

The Colombian Constitution 1991 is the source of all legislation and overrides all other forms of judge-made law etc. It is based on the Spanish law and follows a criminal code based on US procedures.

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Supreme Court

Structure

Civilian

Superior Judiciary Council

Administrative

Council of State

Constitutional

Constitutional Court

Special

Supreme Court of Justice

Lower Court

Structur

Ordinary, civil, family, commercial, criminal

Administrative Indigenous Jurisdiction

Peace, minor criminal and civil

matters

All levels of court have judges that have been chosen by their peers and serve and 8 year term. The Supreme Court of Justice has 23 judges and has the highest jurisdiction over civil, family, labor, commercial, and criminal cases. The Council of the State has 27 judges and is the highest court of administrative law and takes appeals from departmental administrative courts and some national officials. The Constitutional Court has 9 judges and rather than being nominees of the Superiors Judicial Council they are nominees of the President, the Supreme Court, and the Council of State. They are responsible for the constitutional validity of laws approved by the legislative branch. The Superior Judicial Council has two chambers; administrative and jurisdiction and disciplinary and consists of 13 members that are selected by the three highest courts and by Congress from nominees of Executive for an 8 year term.

Columbia has been well known for the production of cocaine since the 1980’s with Pablo Escobar. Fortunately due to the strong efforts of both the government and law enforcement Columbia has seen a 60% drop in cocaine production. Violent crimes, especially murder, has been the biggest concern in Columbia with a murder rate of 30.8 per 100,000 population and only a 2.7% rate for solved homicides. Bogota once known in the 90’s as one of the most violent cities in the world sees approximately a crime rate of 19 per 100,000 for murder each year. Cali has seen an increase of violent crimes and murder since 2011 from 62 to 71 murders per 100,000. According to Columbia’s most influential magazine has about 1,700 assassins working for various groups in the city. Although these numbers are high Columbia has shown a decline in violence and murder over the years.

The Columbian National Police (CNP) if often overworked and tends to lack sufficient resources to deter crime. The CNP can take up to 15 minutes to respond to an emergency. Although they have police and military personnel, referred to as Centro de Atencion Immedietas (CAIs), posted at kiosks and random acts of thefts and violence on roads and intersections still occur without police interruption.

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Social Climate

Columbia is full of heritage and culture and is a very diverse country. With ethnic groups that ranging from Mestizo (58%), Caucasian’s (20%), mulatto’s (14%), black (4%), mixed black-American’s (3%), and Amerindian’s (1%). Columbian’s ranked 3 out of 151 countries on the Happy Planet Index reflecting high life expectancy, 73.7 years, relatively high levels of well-being and moderate ecological footprint. Despite the stats surrounding happiness and life expectancy a large portion of Columbians live poorly (23 million) or below the extreme poverty levels (6 million). Approximately 47% of the population lives below the poverty line.

With a decline in corruption, and increase in crime fighting the Columbian population has a positive outlook and encourages foreign business into their country.

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IndonesiaPolitical Climate

The Indonesian Political System

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The Indonesian political system consists of three branches the executive, legislative, and judicial. The executive branch consists of the President, the Vice President, and the cabinet. The legislative branch is the People’s Consultative Assembly (MPR) and consists of the People’s Representative Council (DPR) and the Regional Representative Council (DPD). The DPD consists of 132 members that oversees 33 provinces and stands for a five year term. The judiciary system is the independent Supreme Court.

The highest political institution is an elected MPR and convenes every 5 years to approve state policies. The President is responsible to the MPR. The legislative institutions consist of the MPR and the DPR.

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Jokowi Widodo was born June 21, 1961 in Surakarta, Central Java, Indonesia. Widodo served as governor of Jakarta from 2012-2014. In 2005 he was a member of the Indonesian Democratic Party Struggle and also won election to become mayor of Surakarta. Jokowi won admittance to Gadjah Mada University in Yogyakarta and graduated with a degree in forestry engineering. With Jokowi’s work he was very

effective in reducing crime, which attracted foreign tourists. He also served a second term as mayor with a 90% vote and was ranked the 3rd best mayor in the world by the international City Mayors Foundation. In 2014 the PDI selected Jokowi to be a candidate for the Indonesian presidential election. He won with 53% vote on July 9. As a part of his presidential plan he made statements to clamping down on corruption and attempting to attract more foreign direct investment to the country, along with his nine-point plan to improve public services, implementing land reforms, developing more-affordable housing, and helping the poor.

Indonesia still faces the darkness of corruption, drug smuggling, and human rights issues throughout its country. Jokowi faces media back lash due to his stand for capital punishment. There have been accusations of blackmail within the political structure and Indonesia has been regarded as the most corrupt government of all.

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Economics

Indonesia was ranked 105th for economic freedom for the 2015 index. It score has decreased by 0.4 points since last year. This decline is reflected on business freedom, the control of government spending, and monetary freedom. There may have

been a decline in some areas such as freedom from corruption and labor freedom. Indonesia has seen a 5.8% growth over the last year.

Indonesia major exports contribute to their economy some of these exports are from its generous natural resources such as; crude oil, natural gas, tin, copper, and gold. And some of their key exports include

machinery and equipment, chemicals, fuels, foodstuff, electrical appliances, plywood, rubber and textiles. Indonesia has seen a 6.5% increase and sees approximately $1 trillion in revenue from their major exports.

Although Indonesia’s expected GDP growth has already been reduced from 5.6% to 5.2% it is still expected that they will still continue to develop.

Indonesia has one of the largest economies in South East Asia and is a member of the G-20. Although they have a great success in their economy Indonesia still has an unemployment rate of 7%, which means that a 7th of its population in living below the poverty line. Minimum wage is approximately $100 (USD) a

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month, which totals to about $1200 (USD) a year. As of 2014 11% of the population lives in relative poverty and 28 million live in absolute poverty.

Indonesia is working hard towards growing a stronger economy to compete in the global economy. They’re working on increasing the minimum wage for the average worker in hopes to become more attractive as an FDI destination. It’s been said that investors shouldn’t overlook the country with what they have to offer in the labor intensive industry. Although the government is working hard towards bettering the minimum wage and attracting investors Indonesian’s are not happy. Approximately 76% on Indonesian citizens are dissatisfied with their jobs.

Legal Climate

The judicial system consists of several types of courts all under the oversight of the Supreme Court (Mahkamah Agung) Indonesia in different from most common courts because they don’t apply the principle of precedents. Most disputes appear before the courts of general jurisdiction such as the State Court (Pengadilan Negeri). There are approximately 250 courts throughout of all Indonesia each with its own jurisdiction. The High Court (Pengadilan Tinggi) is the district court of appeal and hears the appeals from the State Courts. In the event of a cassation appeal, which is a final appeal from lower courts, the Supreme Court will hear such appeals. The Supreme Court can also hear case reviews in the event that new evidence justifies a new hearing. Commercial Court, established in 1988, handles bankruptcy and insolvency applications and has the ability to extend jurisdiction to other commercial matters. In the event that there is an appeal from the Commercial Court the Supreme Court will oversee that appeal. Any administrative law cases filed against the governement are heard by the State Administrative Court (Pengadilan Tata Usaha Negara).

Indonesia’s biggest concern is the high violent crime rate. In 2014 11,776 violent crimes were reported in the city of Jakarta

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most of those being aggravated assaults and burglaries. Crime rates have decreased over the years due to the ongoing work of the Indonesian National Police (INP). Although they have worked hard towards reducing violent crimes that are occurring in the cities of Indonesia little has been done surrounding the organized crime occurring. Organized crime is responsible for most of the illegal logging/fishing, human trafficking, sales of illicit and counterfeit drugs, corruption and other major problems. The prosecution has been unsuccessful in capturing those committing these crimes because of the corruption that continues with government officials. Since Indonesia has a high Muslim rate crime always increases before the Ramadan because of the need to giving family members presents for the Eld-Al-Fitri holiday.

Social Climate

The Indonesian Constitution allows for freedom of religion. Indonesia has the largest Muslim population with 88%. The remaining 12% worship Protestantism, Catholicism, Hinduism, Buddhism, and Confucianism. Much of Indonesia’s culture is influenced by religion. Art forms such as dance dramas of the Java and Bali are influenced from Hindu mythology. The demographic of Indonesian citizens goes as follows; Javanese 45%, Sundanese 14%, Madurese 7.5%, Coastal Malays 7.5% and the remaining 26% is other.

Indonesia ranked 14 out of 151 countries on the Happy Planet Index reflecting medium life expectancy, 69.4years, medium

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levels of well-being and low ecological footprint. Despite the stats surrounding happiness and life expectancy a large portion of Indonesian citizens live poorly 11% of the population lives in relative poverty and 28 million live in absolute poverty.

Indonesia is very traditional and because of this tradition they celebrate multiple festivals throughout the year. Some of those festivals are; Bali Spirit Festival, Sanur Village Festival, Eid ul Fitr, Kuta Karnival.

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