The 1997 Asian Financial Crisis had a great effect on the economy of Indonesia. Its currency, which was allowed to float freely in the market, has caused its value to depreciate. The reform by the International Monetary Fund (IMF) aimed to help the country improve its situation failed. The value of the rupiah halved in January 1998, the GDP growth was negative at -13.6%, and inflation rates soared to 65%, compared to the year before the financial crisis where growth was high at 8% and inflation was 6.5% (Indonesia Investments, n.d.). Indonesia was badly affected by the crisis. Only in mid-1998 to 1999, did the situation ease and the economy slowly improved, with increased revenues from exports.
4. Indonesia’s Successes Successes of Indonesia
…show more content…
However, the current issue is that there is a skill gap present, where the skills possessed by the people do not match what is needed by the firms. Therefore, the quality of the education needs to be improved, and also to allow more young people go beyond the basic education and attain higher education where can learn and get the relevant skills, especially for the industrial and services sectors. There should also be opportunities for the lower income families to receive education as well. Helping the people to become more skilled and employable, will then attract even more foreign investments when they believe that their business will be put into the right …show more content…
Too much focus on commodities will not help to further grow their economy as commodity prices are generally lower than manufactured goods, and are volatile, very much determined by world market forces. When prices drop, it will affect Indonesia’s export income greatly. Therefore, a shift in focus will help to make the economy more stable.
6.6 Corruption
In terms of the corruption level in Indonesia, they are ranked 114 out of 177 countries in the Corruption Perceptions Index (Transparency international, n.d.). With corruption, it is difficult for the economy to further grow, and is not beneficial to the society, as some of the corrupt officials and businesses are keeping all the money to themselves, while the local citizens are suffering.
6.
Indonesia is a rich country with its resources. Not only oil and gas, but Indonesia also had been a producer of mining and agricultural products such as rubber, tin, tea, coffee, spices and timber. In 2002, timber is one of the key export for “non-migas” (non oil and gas) commodities to provide foreign trades.
Indonesia today has rebuilt its financial stability and has tried to reorganize its fiscal policies since the global Asian monetary crisis. Even though the problems which rise from monetary crisis remain (such as unemployment), the condition of economic development in Indonesia is positively growing up. The total GDP (purchasing power equality) in Indonesia is $827, 4 billions (estimated in 2004) and the GPD per capita is $3,500. These numbers show a good progress sign for standard of developing countries.
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.
The financial crisis in many countries in Asia in 1997-1998 was an unexpected event. It was mainly because most of the Asian countries had been enjoying economic growth prior to the crisis. The crisis itself started with the devaluation of Thailand’s Baht in July 1997. The Thailand government decided to float its currency in order to defend the Baht against speculative attack, despite its fixed exchange rate system. This decision was apparently the beginning of the economic downturn of many Asian countries, such as Malaysia, Philippines, Hong Kong, South Korea, and Indonesia. Before the crisis, Indonesia’s economy was growing rapidly; having a low inflation and a well-maintained current account deficit. However, Indonesia surprisingly became the country that was affected the most by the crisis. This paper aims to examine the effects of the Asian financial crisis in 1997-1998 to Indonesian economy and how it could happen.
In the period between 1997 to 1998, a great economic storm blew the some fast-developing countries, especially Thailand, Indonesia and Malaysia. They had great economic development before the crisis, but left almost everything at the end of the storm. The most obvious impact of the crisis is the capital outflows and currency devaluation. So, people in those developing countries began to find who should be responding to the crisis. International speculators were appropriate targets to be blamed due to their actives during the crisis. The President of Indonesia, Suharto, even claimed “There are [parties] trying to engineer the fall of the rupiah to the 20,000 level [against the dollar]. It
Corruption is a complex political, social, and economic anomaly that negatively affects developing and developed countries. It weakens democratic institutions, holds economic development, widening the rich-poor gap and certainly leads to governmental instability. The World Bank definition of corruption states that “…the abuse of public office for private gain”.
The post authoritarian Indonesian governments had different policies toward Aceh conflict. Habibie’s government had placed the military to protect the state from external threat however hold the referendum toward East Timor. Wahid’s domestic politics emphasized to uphold territorial integrity (Shihab 1999) and started a peace talk between the Indonesian government and GAM with the facilitator of Switzerland-based Centre for Humanitarian Dialogue (HDC) in which cultivated Humanitarian Pause in 2000 and Cessation of Hostilities Agreement (COHA) in December 2000 (Aspinall 2005, p.3) and revisited the issue of autonomy and draft law that give Aceh a larger share of profits from natural resources (McCulloch 2005, p. 8). However, the peace
In the period between 1997 to 1998, a great economic storm blew the some fast-developing countries, especially Thailand, Indonesia and Malaysia. They had great economic develop before the crisis, but left almost everything at the end of the storm. The most obvious impact by the crisis is the capital outflows and currency devaluation. So, people in those developing countries began to find who should be respond to the crisis. International speculators were good targets to be blamed due to their actives during the crisis. The President of Indonesia, Suharto, even claimed “There are [parties] trying to engineer the fall of the rupiah to the 20,000 level [against the dollar]. It does not make sense.
country which is fourth most populous nation on the planet, is on the course of becoming one of the biggest economies in coming decades, Indonesia’s influence and role on the international platform cannot be overlooked especially when one of the fastest growing tension in the world is taking place in its own backyard. The recent heightening of competition for the dominance over South China Sea, an enormously important region due to its strategic location and vast amount of untapped natural resources, has strained relationships between China and other countries in the region. China’s extensive claims of authority over the sea—and the sea’s supposed 11 billion barrels of untapped oil and 190 trillion cubic feet of natural gas—have provoked challenging claimants Malaysia, Vietnam, Brunei, Taiwan, Indonesia, and the Philippines. As early as the 1970s, countries in the region began to claim as their own islands and various zones in the South China Sea for instance the Spratly islands, which may have rich natural resources and fishing areas.
Education: If a country has good literacy rate then it has bright future. Same thing apply on Indonesia. 90.4% of its populations are literate in which male are 94% and female are 86.8%. 3.6% of their GDP is spent on education.
Since the completion of the internal strategy paper, our delegation has reviewed a publication written by Andy Rachmianto titled: “Indonesia’s Approach to Strategic Trade Controls: The Perspective of a Developing and Archipelagic Country.” In his paper, Rachmianto outlines the specifics of the Indonesian National Single Window (INSW), an important domestic policy our delegation hopes to promote during our Commission’s deliberations. The document’s clear language will strengthen our delegation’s ability to discuss issues of macroeconomic integration during conference.
In Indonesia, petroleum is one of the main sources of the state revenues. It is also a very important strategic commodity and often as political issue. The revenues from oil and gas have driven the economic growth and contributed significantly for the development of Indonesia. In the world, legislations which regulate oil and gas are varies from country to country. In spite of many variations, in general, the upstream oil and gas activities, based on two systems, the production-sharing contracts and the licensing systems. Indonesia was the country that introduced the concept of production-sharing contracts in 1966 (Bindemann, 1999).
uplift, which is an incentive where contractors may get additional recoverable cost based on uplift rate (Lubiantara 2012).
The problem of poverty is a social phenomenon found in many regions in Indonesia. Hence, various efforts have been made by Indonesian government to overcome poverty and construct strong economic growth through health, education, and infrastructures. The policy to cut down poverty actually has been started for more than four decades by focusing on industry, agricultural, administration, and rural infrastructures. “During 1976 – 1996 the overall number of the poor in Indonesia sharply decreased from 54.2 million people (40.08% to total population) to 22.5 million people (11.34%)” (Soemitro & Tjiptoherijanto 2001). However, in 1997 Indonesia was struck by a monetary crisis and experienced high volatility in poverty rates worse than before. Since then many developed countries give efforts to address the causes and effects of poverty in Indonesia, which these efforts are known as poverty reduction programmes. The Indonesian government was then managed these programmes, one of them was known as “The National Program for Community Empowerment or PNPM”, which enacted in 2007.
Malaysia was nearly always in favor of close economic co-operation among Southeast Asian countries; however, this was impacted often by different nationalistic sentiments in Indonesia, rarely ones coming from Malaysia. Although tensions and separation have increased, Malays are much more likely to view Indonesians as a part of their nation than Indonesians are to view Malaysians as part of their nation. There are likely a variety of reasons contributing to this. Most importantly, Indonesia is a significantly larger country than Malaysia, with about 250 million people, while Malaysia only has about 30 million people, of whom only approximately half are ethnic Malays and 12% from other Bumiputera (native Malay) populations. Furthermore, while Indonesia does have some non-pribumi (native Indonesian) populations, such as the Chinese-Indonesians and Arab-Indonesians, these numbers are significantly smaller than those in Malaysia, where the Chinese population makes up over 22% of the country and the Indian population makes up about 7%. There are also significantly more non-citizens in Malaysia than there are in Indonesia, contributing to more questions of identity.