...Economic Problem in Indonesia Introduction and Overview Indonesia as the development country has to facing so many challenges and obstacles in order to achieve the goals of the country. From the very beginning the economic system in Indonesia is followed the Pancasila economic system. But, at the time before the new order, the economic system in Indonesia are liberal and statism that is not suitable for the citizen in the early of 50’s to 60’s. Before that time there are many program that already made by the government about the development of Indonesian economic, but that plan is not work as they are because the government not apply ‘the right man in the right place’. The economic activity that has to be handled by economist, at that time is handled by the politicians. So the fund is used in the sector of politics instead of economic activities. The problem that surfaced at that time is the abused of the foreign debt, the high inflation, and the population growth that are higher that the economic growth. After the new order, there are rehabilitations in the many aspects of life, and also decrease the rate of inflation at that time. All of that is included in the problem of economic in Indonesia such as; inflation, unemployment, poverty, income, and so on. Indonesian economy already experience the hyperinflation in the 1996, the inflation rate at that time is reached 650%. But, because of the development of economic growth, the hyperinflation now can be controlled According...
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...project include the determinants of long-run economic growth, unemployment, inflation, and macroeconomic policy. In addition, this mini project are also able us to know the measurement of the standard living of a country in term of productivity, efficiency and effectiveness. Besides that, we are also able to determine what is measured by Gross Domestic Product, Inflation and etc as well as know how the government policy could contribute to improved productivity of the country. The picture below shows the brief idea how does Indonesia looks like. Picture 1: Tourism in Indonesia’s island Picture 2: Place to travel in Indonesia Picture 3: City in Indonesia Picture 4: Map of Indonesia Choose one country of the world The chosen country was Indonesia. The reason of Indonesia been chosen because Indonesia is given public an image that Indonesia is a lag behind country than other since there was a tragic event happened in Indonesia in the middle of 1997 all along. This causing Indonesian suffered a great deal and many of them have experienced a very large decline in their living standard. It was irony in Indonesia’s case seen a country that achieved decades of rapid growth, stability and poverty reduction, is now near economic collapse. No country in recent history like Indonesia, let alone one size of large land suffered such a dramatic reversal of fortune...
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...Public debt External debt of Indonesia has been declined to around 28% in 2013. This speaks to a healthy condition contrasted with developed nations that are at present stuck in an unfortunate public debt. Thus, Indonesia's showed attractive decline in export percentage; from 179.7 % in 2004 to 97.4% in 2011. These percentages calculate the administration's capacity to make future instalments on its debts, therefore emphatically influencing Indonesia's cost of borrowings, government security yields and global credit assessments when this debt is as low as on account of Indonesia. This improvement is especially because of the judicious monetary arrangement methodology of the Indonesian government and consistence with financial principles that set cut-off points on the upper level of debt. Biggest Contributors to Government Debt in Indonesia Biggest creditors of Indonesia is united states and japan and other 25% is borrowed from the international organisation like world bank, asian development organisation and etc. The forecasts done about indonesia’s GDP again moderate sliding in governments debt due to appreciation in rupiah, reduction in interest rates, and robust economic growth. Debt of Indonesian to GDP Ratio from 2008 to 2015: There is only little impact in Indonesia’s debt ratio in macroeconomics. depreciation of currency in Indonesia is 30% and it would increase the public debt ratio about 25 % of GDP. The hike in real interests rates may have a little change...
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...onesia as the development country has to facing so many challenges and obstacles in order to achieve the goals of the country. From the very beginning the economic system in Indonesia is followed the Pancasila economic system. But, at the time before the new order, the economic system in Indonesia are liberal and statism that is not suitable for the citizen in the early of 50’s to 60’s. Before that time there are many program that already made by the government about the development of Indonesian economic, but that plan is not work as they are because the government not apply ‘the right man in the right place’. The economic activity that has to be handled by economist, at that time is handled by the politicians. So the fund is used in the sector of politics instead of economic activities. The problem that surfaced at that time is the abused of the foreign debt, the high inflation, and the population growth that are higher that the economic growth. After the new order, there are rehabilitations in the many aspects of life, and also decrease the rate of inflation at that time. All of that is included in the problem of economic in Indonesia such as; inflation, unemployment, poverty, income, and so on. Indonesian economy already experience the hyperinflation in the 1996, the inflation rate at that time is reached 650%. But, because of the development of economic growth, the hyperinflation now can be controlled According to the deputy of Indonesian Bank...
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...1. Population of Indonesia With a population totaling around 250 million individuals, Indonesia is the fourth largest country with regard to population size. Its ethnic composition is characterized by a wide variety as the country contains hundreds of different ethnic groups and cultures. However, more than half of the population can be classified as belonging to the two main ethnic groups: Javanese (41 percent of the total population) and Sundanese (15 percent of the total population). Both these groups originate from the island of Java, Indonesia's most populous island, which contains almost sixty percent of the country's total population. When the island of Sumatra is included, this figure rises to approximately eighty percent of Indonesia's total population, indicating a significant population concentration in the western part of the country. The most populous province is West Java (with more than 43 million people), while the least populous province is that of West Papua in the far eastern region of Indonesia (having around 761,000 people). Map of Indonesia Five Most Populous Provinces (in millions) Province | Population | 1. West Java | 43.1 | 2. East Java | 37.5 | 3. Central Java | 32.4 | 4. North Sumatra | 13.0 | 5. Banten (Java) | 10.6 | Source: Statistics Indonesia Population Census 2010 This section discusses a number of important aspects regarding Indonesia's demographic composition...
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...Economic Problem / Challenges faced by Indonesia and the ways to overcome them. Indonesia’s economy has performed well in recent years. Economic growth, at around 5.8 percent in the past 10 years, has made Indonesia one of the world’s fastest growing large economies. But Indonesia faced the problem government in 2012 faces the ongoing challenge of improving Indonesia's insufficient infrastructure to remove impediments to economic growth, increase in inflation and lack of technology. First, the most problem that Indonesia facing is poor infrastructure. Despite the country's rapid economic growth over the past few years, Indonesia still needs to improve its infrastructure to assure a long-term and sustainable growth Data released by Indonesia's Central Statistics Agency (BPS) Monday shows Indonesia's gross domestic product (GDP) grew 6.2 percent in the third quarter thanks to the strong domestic consumption and huge inflow of foreign investments despite the global economic slowdown. The Indonesian government has pledged to improve the country's infrastructure through massive public funding. Lawmakers also approved a land acquisition bill last year expecting to help pave the way for land clearance for infrastructure projects. Indonesia should decrease inflation rate by monetary policy, fiscal policy, exchange rate policy and wage control as well. The first step is for the monetary policy is to try and predict future inflation. They look at various economic statistics...
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...5 Abstract This paper investigates the impact of real interest rate on national saving in five Association of Southeast Asian Nations (ASEAN) of Indonesia, Malaysia, the Philippines, Singapore and Thailand. We analyze impact real interest rate to nation saving for ASEAN starting 1991-2013. Through an analysis from Excel, real interest rate is found to have significant impact on national saving during different stage of economic. Extensions using a graph reveal the impact of real interest rate in ASEAN-5 and thus mainly reflect heightened concerns to national savings amid the Asian financial crisis and the global financial crisis. Keywords: real interest rate, national saving, financial crisis 1.0 Introduction The world’s average saving rate has been declining since the first oil shock and through the early 1990s. However this trend conceals a large and increasing dispersion of saving rates, particularly among developing countries. The large heterogeneity in saving behavior is associated to country and time differences in levels of development, growth performance, and fiscal and financial policies. The level of real interest rates has once again become the focus of policy makers' concerned. To understanding the response of national saving to changes in interest rates is central to many issues in economic policy. For example, a reduction in the budget deficit would probably cause interest rates to decline. If personal saving declined as a result, the overall increase...
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...flow of funds from trade in goods and services. The Central Bank raised the interest rate by 0.25% to 7.5%. Moreover, recently in August Indonesia faced a hike in the inflation rate, thus raising the interest rate would also help to control the inflation. Inflation is a sustained increase in price levels of an economy. As mentioned in the article, the Central Bank predicted that they could ease the current account deficit to $8.4 billion in the third quarter, from $10 billion in the second quarter by raising the interest rate. Raising the interest rate is a deflationary monetary policy that is aimed to reduce the Aggregate Demand in the economy. This can be depicted through figure 1.0. The Central Bank raised the interest rate to correct the current account deficit. With higher interest rates, consumers are encouraged to save money instead of spending money, thus the Aggregate Demand would decrease. This also means that the consumption of imports would significantly drop to some extent, which helps to correct the current account deficit. The decision made by the Central Bank to run an expenditure-reducing policy by raising the interest rate of Indonesia has its advantageous and disadvantages. Recently in June the government cut its subsidies on fuel, which caused a hike in inflation rate. Raising interest rate would lead to a lower inflation rate would lead to greater competitiveness of export products because the average price level would be relatively less expensive. With...
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...on Growth Diagnostics of Indonesia February 6, 2013 I. Introduction The goal of every country is to achieve not only sustainable development but also inclusive growth. Sustainable development, as defined by the Brundtland Commission, is a "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Inclusive growth on the other hand, pertains to an equitable allocation of resources to every sector of the society which in effect decreases the rapid growth rate of poverty, at the same time increasing the involvement of its people to the growth of the country. To be considered as an industrialized and developed country, one must take consideration on the political, social and most importantly the economic aspect in order for the country to be competitive in the market and also promote a high standard of living. Those prerequisites can be achieved by determining first the factors that trigger the economic growth of a country and that include infrastructures, human capital, literacy, safety, and other indicators. In layman’s term, an economy can be defined as the system that is used to manage the resources in a country. It is often used as an indicator to measure how rich or poor a country and its people are. When an economy is doing well, the government is able to meet the needs of the people and its country. In this paper, we will study the growth diagnostics of Indonesia to determine how far the...
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...Members: Archie Rabino Florence Sido Carl Christian Samson Section: CE21FA4 Date: September 26, 2014 John Mark Ammugauan COUNTRY ANALYSIS IN INDONESIA BACKGROUND OF INDONESIA Indonesia, officially the Republic of Indonesia, is a sovereign state in Southeast Asia and Oceania. Indonesia is an archipelago comprising 13,466 islands. It encompasses 33 provinces and 1 Special Administrative Region (for being governed by a pre-colonial monarchy) with an estimated population of over 252 million people, making it the world's fourth most populous country. Indonesia's republic form of government comprises an elected legislature and president. The nation's capital city is Jakarta. The country shares land borders with Papua New Guinea, East Timor, and Malaysia. Other neighboring countries include Singapore, the Philippines, Australia, Palau, and the Indian territory of the Andaman and Nicobar Islands. Indonesia is a founding member of ASEAN and a member of the G-20 major economies. The Indonesian economy is the world's 16th largest by nominal GDP. The Indonesian archipelago has been an important trade region since at least the 7th century, when Srivijaya and then later Majapahit traded with China and India. Local rulers gradually absorbed foreign cultural, religious and political models from the early centuries CE, and Hindu and Buddhist kingdoms flourished. Indonesian history has been influenced by foreign...
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...Introduction Indonesia rely its economy through various activities. The resources and commodities includes agricultural i.e. tea, coffee, beans, etc.; Mining i.e. coal, crude oil, valuable stones, etc.; Plantation i.e. palm oil, and many others. There are some tourism attraction spots that contribute in the GDP, such as Bali, Lombok, Yogyakarta, etc. Although, the maximum value of the resources have not achieved yet, the GDP of Indonesia is already top 5 in Asia. Indonesia has made a positive and stable trend in these past ten years, few reasons that caused this to happen is the stability of the political condition that in a sense favor the people more and more, which pushes job creation in many sector and decreases unemployment. Even though the currency is weakened over time but the overall living standard is boost up, this can be seen from the rise of the middle or even middle-high income population as the economy improves. Production Output Performance Analysis Real GDP (GDP Constant Prices) of Indonesia 2005-2014 For almost six years from 2005 to late 2009, real gross domestic product has been relatively the same around 500,000 billion rupiah or equivalent to 38 million US dollar. Global financial crisis on 2008 to 2009 surprisingly did not make a significant impact on the value of real GDP, as the value fell not below the previous lines. In fact shortly after, its value was rocketing more than three times in less than quarter of a year to 1,800,000 billion. During...
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...FIN 382 COMPANY ANALYSIS GROUP ASSIGNMENT PREPARED FOR : PUAN NORSALIZA BINTI ABU BAKAR PREPARED BY : KHAIRIL AZMAN BIN RADZALI 2010459076 DHARWIS BIN HASNIM 2010699142 MUHAMMAD FAIDI BIN SAFARRUDIN 2010408132 ELMIRUSHUDA BINTI AMERUDIN 2010248112 FAZLIAH NOOR BINTI MOHD FOUZI 2010834506 GROUP : JBM114 6A DUE DATE : 21st DECEMBER 2012 ECONOMY ANALYSIS 1.0 WORLD ECONOMY The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways. It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy – even if currently exploited in some way – and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services,...
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...Assignment 4 – Group Assignment Palm Oil Dilemma in Indonesia Natural Resource Economics 601 – Lecturer: John Karasinski Word Count – 2,016 (not including Tables and Figures) Aaron Smith: 1662 4483 Leonardo Molinari: 1728 4820 Reuben Dias:1313 9900 Group Assignment 2 Palm Oil Dilemma in Indonesia Executive Summary Indonesia’s GDP is estimated at $US868 billion in 2013, which classifies it as a lower middle income country. GDP growth has averaged almost 6% over the last decade with a population growth averaging at 1.4%. Indonesia’s population is expected to grow at an annual growth rate of 0.57% to over 271 million by 2030. Indonesia’s industrial sector largely dominates production, contributing over 48% to aggregate economic activity (including oil and gas which accounts for 10% of GDP). The palm oil industry has the potential to generate significant social and economic development in Indonesia. It is Indonesia’s largest agricultural export and provides income and economic development to the large proportion of rural poor Indonesia. In recent decades the global market for palm oil has seen exponential growth with current production estimated at over 45 million tons, with Indonesia being one of the world’s, largest producers and exporters, producing over 18 million tons of palm oil annually. Although only contributing 8 % to GDP, the palm oil plantations provide for around two thirds of rural household incomes. Over 41% of plantations were owned by small land...
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...General Business Environment (Monetary and Fiscal Policies) THE INFLUENCES OF BI RATES AND EXPORT TAXES ON INDONESIAN PALM OIL INDUSTRY Prof. Wihana Kirana Jaya, M.Soc.Sc., Ph.D. by: Nanang Suko Sadono 13/361118/PEK/19272 Batch 63 International MAGISTER OF MANAGEMENT UNIVERSITAS GADJAH MADA YOGYAKARTA 2014 THE INFLUENCES OF BI RATES AND EXPORT TAXES ON INDONESIAN PALM OIL INDUSTRY 1. INTRODUCTION Indonesia is the biggest producer of Crude Palm Oil (CPO) in the world which produced more than 25 million tons in 2012 and more than 200 trillion rupiahs in foreign exchange. The development of this industry, therefore, is important for the development of economy in Indonesia, as one tool to deal with problems faced such as poverty. This industry is also crucial in supporting the government in anticipating crisis of energy in the future due to the decreasing number of gas and oil over time. The increasing needs of renewable energy as the substitute of petroleum has also driven the demand of pam oil in international market. This high demand has led the price of palm oil in international market become higher. The high international price then persuade domestic producers to market their products to other countries, and this is a logic consequence since the companies as business entities always want to maximize their profit. The problem arise when all companies are forgetting the domestic market. Cooking oil, which is the end product of CPO, can be said...
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...CHAPTER I Introduction Stability is a prerequisite for growth and equity so that the rate of inflation is too high to be lowered by interrupting the growth and impoverish the small people on low incomes and fixed. That is why after the 1965/1966 crisis and also after the 1997 crisis, lowering the inflation rate is a top priority in which the government and Bank Indonesia has succeeded admirably. In three years, inflation can be derived from 650 percent (1996) to 9 percent (1969), after 1997 inflation can also be reduced from 70 percent (1998) to only 5 percent (2003). But stability is not just for the sake of stability, but for something larger that is equitable and growth. After rising fuel prices, the prices become so high that people's purchasing power is still low. Economic growth indicate that the government has not been able to open employment opportunities to the people. Meanwhile, the business world also slows down. This is because the minimum wage increases the demand which must be fulfilled. Unemployed increased every year, in 2004 unemployment reached 10,854,254 people. Therefore, the purpose of making this paper are: 1. Knowing the concept and the relationship of inflation and unemployment. 2. determine the condition of inflation and unemployment in Indonesia 3. What the policy taken by the government to control inflation and reduce unemployment, increase employment. CHAPTER II Theory 2.1 Unemployment Unemployment...
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