Economics Problem in Indonesia

By Nafil Adiwafi

10 April 2017 13:23 Diperbarui: 10 April 2017 13:23

As we know, Indonesia is a very rich country, especially in natural resources. But

unfortunately, Indonesia cannot use the natural resources maximally. That happens because
Indonesia does’nt have good quality human resources even though Indonesia is a country with
the high population in the world. That’s one of many economic problems in Indonesia.
Economics problems are also occurs because of the needs and wants of people are endless, but
the resources available to satisfy theirs are limited. In Indonesia, the government is still looking
for the solution to overcome the economics problem. This essay will focus on the economics
problems in this country. In my opinion, there are 3 big economics problems that can hardly
be overcome.
The first problem is low economic growth. Economic growth is the development of
activities in the economy that increase the production of goods and services. Most developing
countries like Indonesia face many problems in accelerating their economic growth. Economic
growth in Indonesia is still low because the number of population in Indonesia is very high.
Logically, the high population can increase the economic growth, but in Indonesia, the high
population is not balanced with the number of jobs. Beside that, Indonesia cannot manage the
natural resources because of the lack of quality of human resources. So Indonesia cannot use
the natural resources properly. But, economic growth can be increased by developing the
infrastructure, increasing saving and investment, improving the public education and formulate
and implement economic planning.
The second problem is external debt or foreign debt. Foreign debt is a country’s total
debt obtained from the creditor outside the country. In other words, foreign debt is the source
of state financing coming from other countries, agencies or international financial institutions
in the form of foreign exchange, goods, services including the payment in the future based on
an agreement. Recipients of foreign debt may include governments, companies, and
individuals. In the long term, foreign debt can cause many economics problems like inflation.
But in the short term, foreign debt can help Indonesian government in an effort to close the
budget deficit. Foreign debt can also assist the development in Indonesia, by using the
additional funds from the other country. Foreign debt becomes a serious problem in Indonesia.
The last data reported by BI shows the position of Indonesian foreign debt at the end of
December, 2016 are USD 316,97 billion or Rp. 4.225 trillion
(http://www.bi.go.id/en/statistik/utang-luar-negeri/Default.aspx) . But actually, Indonesia can
decrease the external debt by suppress all forms of wastage of state, regulate export and import
that can make the domestic economy stronger, and increase the taxes on luxury goods and
imported goods.
The third problem is inflation. Inflation is a condition that general level of prices
and wages are increase continuously (Malinvaud, 2000). In another word, inflation is also a
process of decline in currency values continuously and very easy to rides. Based on Indonesian
central bank’s data, the highest inflation level in 2016 occurred in March amounting 4.45%
(http://www.bi.go.id/id/moneter/inflasi/data/Default.aspx) . Actually, the inflation occurred
because of rising public demand for goods and services, the increase of production levels,
deficit budget, and the decline of currency exchange rate. To reduce the inflation level in
Indonesia, the government must have a policy that has a good strategy to reduce or overcome
the inflation. The policy could be like monetary or fiscal development policy. The other ways
are the government must raise interest rates in the bank and make policies to the prices on the
market. Those ways must be created to make Indonesian people diligently to save their money
to the bank that also can press the circulation of the money. Inflation can also reduce by
maintaining the stability of the currency exchange rates. It must be implemented because rupiah
rates can easily slide against foreign currencies that will encourage inflation. With that ways,
government can reduce or even overcome the problem of inflation in Indonesia.
Indonesia has many economics problems in the short term or even in the long term.
A few of them is a big problem that’s very difficult to overcome. Actually, the government is
trying to overcome the problem by implementing the economic system of Pancasila. But this
system run unmaximally. Because of that, the government must improve that economic system
to resolve or even to overcome the economic problems to make Indonesian economy better.