Indonesia Grapple with Shaky Economic

Climate Akin to 1998 Crisis

English Version
By Ifsan Lukmannul Hakim
on 02 Sep 2015 at 15:10 WIB

Ilustrasi penurunan rupiah (Liputan6.com)

Liputan6.com, Jakarta The world's economy is currently at unpromising stage with many
countries reportedly affected by such volatility. It is a dangerous turn of events for these nations
as alleviation measures are underway.
Addressing economic issues for affected countries is of paramount importance and evidence
clearly shows that economic instability likely to spur equally catastrophic social upheaval in the
nations such as what has recently occured in Malaysia.
China makes immediate respond to such uncertain economic climate with its People' Bank of
China recent move of devaluing its currency for 3 consecutive days starting from the 11th
through to 13th of August 2015 by 2%.
China's hasty move is not without prior consideration to its domestic economy. It has been
learned that the devaluation strategy was based on the premise that it could spur its exported
commodities in the global market.
With devalued currency, products made in China will become inexpensive and capable in
competing in the larger international realm.
China has been pushing its exports as to boost its economic growth especially after the bamboo
country spending years of economic instability.
"As we all know, China resorts to its last option in anticipation of global economic slow down,"
Australia & New Zealand Banking Group Ltd. analyst, Khoon Goh said.

"Devaluation is a strategy used to improve and increase the possibility of achieving more market
base in the future especially for the new currency regime," he added.
Economist of PT Bank Negara Indonesia Tbk (BNI), Ryan Kiryanto explained that the
devaluation has a profound effect to other Asian nations around it.
Affected countries include: South Korea, Australia, Singapore and Indonesia.
Following China's devaluation is Indonesia's weakened currency with its level positioned at
14.000 per US$. This is the lowest since 1998 where the archipelago nation was in fatal political
and economic upheaval marking the end of Soeharto era.
"Currency issue has always been a problem for us because there are just too much of a foreign
donor in our economy," he explained.
Foreign Value analyst, Farial Anwar said that the unstable Indonesian rupiah is not caused
primarily by external factors. There are many internal or domestic factors that play a crucial role
in destabilizing the economy.
"Even with the cabinet reshuffled thereby cause for a massive replacement on several Ministers,
the government is still challenged by the lack of coordinacy among Ministries and contesting
opinions among them," Farial murmured.
But Indonesia is now progressing in its infrastructure development. So, surely there is still a lot
of hope that can be counted upon.

Source: http://news.liputan6.com

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