Advantages And Disadvantages Of The Indonesian Economy

It also requires more of an investment and commitment by the international company which creates a higher risk. There is also the down side of having difficulty managing local resources.

When a company relies on a production facility that is not local to their home land, they lose the majority of the control of their operations. Many of the developing countries that are chosen to outsource are underdeveloped which comes with a great deal of instability. When a country is not developed, although labor costs are low, the education level, physical and

Indonesia is the sixteenth largest economy, the largest economy in the South-east Asian economic region with the world's fourth largest population (263 million in 2017). It is an emerging economy that has increased its international integration, trade liberalisation and diverted from policies of import substitution towards export-led development. Indonesia is a member of the Group of 20 (G20) major economies and has been an active founding member of the World Trade Organisation (WTO). The impact of globalisation has benefited Indonesia as quality of life indicators and economic developments have improved but it also presents the challenge of improving regulations, building more competitive industries, increasing investment into education and infrastructure to remain competitive. Consequently, Indonesia has introduced numerous strategies to promote economic growth and development.

Indonesia complained of their lack of autonomy In regions such as Maluku or other areas of Eastern Indonesia, “a low capacity for generating local revenue restricted the ability to adapt projects and development to local conditions” (Bertrand, 198).). The scanty amounts of funds were unable to support the poor and other problems. Bertrand states, “Faced with the New Order regime introduced mild reforms that were designed to address some technical issues while avoiding political decentralization” (Bertrand, 198). In 1995 the Minister of Home Affairs selected 26 districts were used to evaluate the measures designed to increase autonomy. They noticed an increase in Indonesia budget, but they still failed to support the poor, which resulted in

Indonesia has been independent for just over half a century. In this short time the country has had to adjust to the demands of the modern world.

Since 1965, the president of Indonesia continued to provide continuity and stability. However, in order to define an effective and complex growth plan, a company wishing to be successful needed the president’s support to succeed in the plan.

Indonesia is the largest economy in South-East Asia; it has progressed into a decentralized electoral democracy and has managed to reduce its overall poverty from 17 percent in 2004 to 11 percent in 2014. However, despite their steady economy and major improvements, nearly 40 percent of Indonesia lives just above the poverty line. Additionally, Indonesian public services and health standards fall behind other middle-income countries; these facts combined with their high rates of maternal mortality, child malnutrition, and insufficient access to education place Indonesia in the developing or Third World realm. Indonesia’s history, geographic position, abundance of natural resources, wars and conquest, as well as trade has fundamentally shaped the economic and political structure. Furthermore, leadership influence, intervening forces, and its colonial masters have also played a large role in constructing the systems of this developing country.

There are many reasons an organization should pursue global sourcing. Figure 1, showcases many of the major advantages of global sourcing. The main advantages to source globally are cost benefits, new technology, and quality.

It is very common acknowledged that taxation plays an important role in economic growth development. In particular, taxes provide greater economic substance in order to build basic structure and the quality of life in developing countries. Indonesia is nevertheless also in the position that really depends on the collection of tax revenue as it generates almost approximately 70-80% of national income.

Capital account liberalization process in Indonesia started under Soeharto’s New Order presidency which was remarked by the introduction of Foreign Investment Law in 1967. Prior the issuance of this law, under President Soekarno regime (1945-1967), the government initiated self-sufficiency policy and Indonesia was administered as a socialist economy. In Soekarno era, investors from western countries were strictly restricted to invest in Indonesia (Fitriandi et al 2014, p.81). As a consequence, Indonesia was not an attractive place for foreign investors (Lindblad 2015, p.221). The absence of rule of law concerning foreign direct investment in the period of 1945-1967 has made investment environment in Indonesia became uncertain and had high business risks which were unfavourable for businesses. The business parties were became unconfident and faced uncertain and unpredictable of

Indonesia’s top imports are Refined Petroleum ($26B), Crude Petroleum ($12.1B), Petroleum Gas ($4.04B), Vehicle Parts ($3.01B) and Broadcasting Equipment ($2.78B). Top exports of the country are Coal Briquettes ($20B), Palm Oil ($17.5B), Petroleum Gas ($17B), Crude Petroleum ($9.7B) and Rubber ($5.42B). Indonesia exports to Japan ($24.9B), China ($20.8B), the United States ($18.8B), Singapore ($18.7B) and India ($13.6B). The top import origins are China ($32.5B), Singapore ($25.6B), Japan ($15.4B), South Korea ($11.6B) and Malaysia ($10.6B).

While the global economic condition is still recovering from crisis, many argue that the process is uneven and susceptible to shock (Bank Indonesia, 2015). The recovery process tends to slow down as there is weakened commodity prices and foreign investment, and these factors are inevitably affecting the growth rate of Indonesia. GDP growth is falling from 6.3% in 2007 to a forecasted growth rate of 5.5% in 2015 (Asian Development Bank, 2015). In this case, as a financial intermediary, banks have a strategic role in supporting the national economic growth. It is believed that efficient banking system is essential for the country development. Therefore, a study looking at the efficiency and profitability of Indonesian banks is substantial as it will signal the growth of the Indonesian economy in the future.

Therefore, it can be said that several aspects in Indonesia’s PSC, including cost recovery and profit oil split, provide risk-sharing in a fiscal system. However, other factor such as the income-tax rate, which has a fix-rate levy, is not in line with an optimal system.

Philippines repeatedly experienced boom and bust in its economy since 1980. Having faced huge debt crisis in 1983 and the Asian Financial Crisis in 1997, it can be said that the nation is back on its feet from being the “sick man of Asia” to a “tiger cub,” and becoming realigned with the ASEAN-6 (Worldbank). The GDP growth has been growing at 4.5 percent under Macapagal-Arroyo and even better under Aquino’s at 6 percent. Account balances also recorded surpluses repeatedly since 2003 (CIA Factbook).

The right to work and having a proper life are guaranteed in The 1945 Constitution Of Republic Indonesia, as in Article 27 verse (2) ;