Indonesia’s economy through Quarter 2 grew by 2.8% which meant that over the first two quarters economic growth had reached 6.4%. This was indeed good news amidst global economic uncertainty and political and legal unrest at home lately.
Economic growth performance was sustained by investments amidst downturn of export performance. Naturally this should be perceived as good news to think that only yesterday there was growing anxiety over weakened export, but thankfully other sector as investment had proven itself as significant contributor to GDP.
The fact was that fear never materialized. So appreciation should be addressed to the economic team of the United Indonesia Cabinet Chapter II (KIB II) especially the Coordinating Board of Investment (BKPM) who had been able to jack up investment as the backbone of economic growth.
As known, lessened export was on account of declining economy in Europe and the USA. Interrupted economy in the two titanic regions had apparently made other parts of the world to turn feverish. In the past, many analysts and high Government officials cast aside any fear that the adverse condition in Europe and America would have any significant effect on Indonesia’s economy.
The reason was that the portion of Indonesia’s total export to Europe was not significant against total export. But perhaps they overlooked that soon or late, directly or indirectly, the feverish economy of America and Europe would lessen their demand from China and India. The implication was obviously that it would lessen demand from Indonesia. The transmission of crisis had apparently spread out through the financial line and international trading such it seemed, was the one thing not being watched on.
In an integrated world, a slight dissonance in one zone could, soon or late, vibrate to all over the world, only the gradation might differ. It should be borne in mind that Indonesia was not living in a vacuum space, where we were the only one is existence. It was just like living in a neighborhood when one of our neighbors were dengue-stung the chances of contamination to other neighbors were not small.
The monetary crisis of 1977 should serve as a mirror wherefrom lessons might be learned. It was a time when the value of Thailand’s Baht was corrected it instantly affected Indonesia’s currency, being crisis torn. That was known as the domino or contagion effect in economy.
Back to Indonesia’s economic structure. To rely on domestic consumption as fuel and propeller of the nation’s economic growth was not wrong indeed. Moreover with per capta income of the Indonesian people which reached USD 3,500 per capita per year means an enormous economic potential. The middle class emerging from high economic growth served as sustainer of consumption growth. That was the reason why Indonesia’s import was shooting up fast.
But one thing was to be watched over an economic based growth was a vulnerable thing because there was limit to it. Moreover the big cake of growth was not evenly and fairly distributed. Many economists rated that the economic growth being attained was of no high quality, with poverty figure standing out dishearteningly.
Rumors had it that the growth was only benefited by 20% of population. The biggest contributor to growth was the financial sector. Meaning, only the rich were enjoying prosperity. Even that already included the non-tradable sector which relatively had no impact on the process of employment and poverty elimination.
That was perhaps why the APBN budget increased. The GDP as criteria of economic magnitude continued to swell, while the nations debt expanded as well, and the nation’s debt kept pilling up but the population of poor people hardly inched down and the breed of the unemployed never shrunk. Those were the reason that made the Indonesia’s economic growth remain sullen, clumsy and vulnerable.
The fact strengthen cynical comment that Indonesia’s high economic growth was characterized by the problems of scarcity of soy, suger, rice, and meat. This truly ironic when it was happening in a country highly reputable as a fertile agricultural country time after time but always overshadowed by food crisis. And yet if the Government was committed an determined to realize the four pillars of development, i.e. pro-growth, pro-poor, pro-employment and pro-environment, the wolf at the door might simply go away unless the condition was deliberately made by the selfish who wish to benefit from it.
The Government may take pride in Indonesia’s economic growth which in the first Semester was posted at 6.4%. But as export dropped and import was soaring up, while budget absorption by ministries and institutions were not maximized, it seemed hard to chalk up economic growth in the second semester as in Semester one.
It seemed reasonable that many economists and analysts predicted Indonesia’s economic growth in Semester 2 would be only around 5.9% - 6.2%. To calculate by the year, Indonesia’s projected economic growth could only be around 6.0% to 6.3%. As domestic consumption was getting more limited, it was not easy to rely on investment as the backbone of the nation’s economy as other countries were just as aggressive in drumming up foreign investor the their country.
How about 2013? The RAPBN Sate Budget of 2013 was already announced, somehow the content of RAPBN itself was still a hot discourse in various circles of economists, analysts businesswold and academicians. For the most part they rated that the target growth of 6.8% set by the Government was over ambitious.
Even Chairul Tanjung, Chairman of the Committee of National Economy (KEN) felt that the target was something ‘extraordinary’ the point was that the target was set right at a time when Indonesia’s economy was problem-entangled. It seemed not an exaggeration that the comment made by the Chairman of KEN as a ‘subtle criticism’.
It seemed that Bank Indonesia themselves did not fully believe in the figure. Amidst economic downfall of Europe and the USA plus economic slowdown in China and India, who were Indonesia’s important trade partners would almost certainly have their negative impact on Indonesia. So BI was still thankful if Indonesia’s economic growth was above 6 percentile’s say 6.3% or 6.5% but to attain 6.8% it seemed difficult.
Business players were not less critical: they had their own view where even China who in the beginning was predicted to score two digit growth, only made 7.6% growth. Moreover this figure was predicted to even worsen in line with declining export of that country. For information, China’s export last July did not move an inch, i.e. stuck at zero percent.
Therefore if the world’s economy failed to improve significantly, it seemed impossible that Indonesia would attain notable growth as assessed in RAPBN state budget 2013. And if the condition in Europe and China were worsening extremely the World Bank predicted that Indonesia’s growth would be not more than 3.8% - 4%. So right was some people’s comment that the Government better be realistic and objective.
Business News - September 5, 2012