Name : Riski Paulina

Class/Program : 1-10/D III of Tax

NPM : 2301180741

Economic Growth in Indonesia from the Past until Now

For the past few months, we have heard news about Indonesia’s economic
growth in this year. Some people may think that the news is less important than the
other news like politic, fun, and so on. Actually, in my opinion, the news is such a big
thing because it is important for us to know about economic growth. Through this
essay, I want to show you about economic growth in Indonesia year by year.

Before I discover about how is Indonesia’s economic growth year by year, I

want to tell you about what economic growth in general is, so that you readers can
understand what I write. Economic growth is an increase in the production of goods
and services or an increase in the country income over a specific period. In other
words, economic growth is the process of continually economy changing in a country
towards better condition for a certain period.

Economic growth can indicate how big an economic development success by

a country, so that it is important to do economic growth calculation. To know how
much economic growth in a certain period, we can use Growth Domestic Product
(GDP). Gross Domestic Product is the total value of everything produced by all the
people and companies in the country. It takes into account the country’s entire
economic output. It includes all goods and services that businesses in the country
produce for sale. It doesn't matter whether they are sold domestically or overseas.
Calculating or measuring Gross Domestic Product can’t be done every time because
collecting Gross Domestic Product data is difficult to be done, but we can calculate it
quarterly in a year or yearly.

Next, how about Indonesia’s economic growth year by year? See the
explanation below!

Index
Year Index (1951=100) % Changing Year % Changing
(1951=100)
1951 100,0 – 1959 149,1 -1,9
1952 103,8 3,8 1960 146,8 -1,5
1953 126,8 22,1 1961 149,4 1,7
1954 128,6 1,4 1962 145,3 -2,7
1955 133,4 3,7 1963 141,4 -2,7
1956 136,4 2,2 1964 144,7 2,4
1957 144,4 5,8 1965 145,5 0,5
1958 152,0 5,3 1966 146,4 0,6
(source : https://langit2download.wordpress.com/2014/08/13/pertumbuhandan-
perkembangan-ekonomi-indonesia-dari-masa-ke-masa/)

The table above shows how Indonesia’s economic growth in the Old Order is,
especially between 1951 and 1966. We can conclude that Indonesia’s economic
growth was still very low, with fluctuating economic growth percentage. Why was it
happened? We know that Indonesia has proclaimed its independence on 17 August
1945. After the proclamation of independence, Indonesia should face some war in
order to maintain its independence from the invaders who wanted to dominate
Indonesia again. Indonesia had imposed bumi hangus tactic, so that many
infrastructures were broken. It was not good for Indonesia’s economic condition.
Besides, economic blockade by Dutch at the time also makes Indonesia’s cash was
empty because there was no export and import activities to fulfill Indonesia’s cash. It
was so tragic, isn’t it? After Dutch admitted Indonesia’s independence, Indonesia
inherits all colonial debts and faces some domestic rebellion, such as DI/TII, PRRI,
PERMESTA, Andi Aziz rebellion, Gerakan 30 September/PKI, and so on. It spent so
much money. Indonesia was too focused on how to dampen the rebellions, not on
how to increase society economic level, so that many people lived under poverty. In
order to repair the economic condition, Ir. Soekarno as Indonesia’s president at the
time tried to implement some economy policies, even tried to implement guided
system, but unfortunately it didn’t change much because the policies made Indonesia
shut itself off from the West Block, although the West Block’s economy was
developing rapidly. Therefore, Indonesia’s economic growth at the Old Order was
very low.

After Supersemar (Surat Perintah Sebelas Maret) had appeared, Indonesia

entered the new era called the New Order, under leadership of Soeharto who was
called as the father of Indonesia development because of his contribution for
developing Indonesia’s economic growth. The table below will show you how
Indonesia’s economy growth at the time was.

GDP (trillion) Growth Rate

Year
Applied Price Constant Price Applied Price Constant Price
1969 2,7 4,8
1970 3,2 5,2 19,1 7,5
1971 3,7 5,6 13,4 7,0
1972 4,6 6,1 24,3 9,4
1973 6,8 6,8 48,0 11,3
1974 10,7 7,3 58,6 7,6
1975 12,6 7,6 18,1 5,0
1976 15,5 8,2 22,3 6,9
1977 19,0 8,9 23,1 8,9
1978 22,8 9,6 19,5 7,7
1979 32,0 10,2 40,8 6,3
1980 45,5 11,2 41,9 9,9
1981 54,0 12,1 18,9 7,9
1982 59,6 12,3 10,4 2,2
1983 77,6 12,8 30,2 4,2
1984 89,9 83,0 15,8 7,0
1985 97,0 85,1 7,9 2,5
1986 102,7 90,1 5,9 5,9
1987 124,8 94,5 21,6 4,9
1988 142,0 99,9 13,8 5,8
1989 162,6 104,5 14,5 7,5
1990 188,5 112,4 15,9 7,2
(source: https://langit2download.wordpress.com/2014/08/13/pertumbuhandan-
perkembangan-ekonomi-indonesia-dari-masa-ke-masa/
 From the table above, we can conclude that Indonesia’s economic growth in
the New Order developed faster than Indonesia’s economy growth in the Old Order.
Indonesia’s economic was more stable than in the Old Order. Indonesia’s economic
grew with an average annual percentage of seven percent. This achievement enabled
the Indonesian economy to grow from a 'low-income country' category become the
'middle to lower income country' category.

To get this achievement, Soeharto as Indonesia’s President implemented

many economy policies. First, he made Indonesia come back to United Nations, join
regional organizations called ASEAN, change the political direction, unite a
previously divided nation, and receive donation from IMF. It made Indonesia’s
economic growth increased around five until nineteen percent during 1966 until 1970.
Next, he also applied policies called Repelita (Rencana Pembangunan Lima Tahun)
and took advantage from the rising world oil prices with exporting Indonesia’s oil.
Besides, he also reformed tax regulations in Indonesia in order to rising Indonesia’s
income from tax because oil exports could not strengthen the Indonesian economic
forever. The policies made Indonesia’s economic growth increased around five until
ten percent during 1971-1990.
 During 1990 until 1996, Indonesia’s economic growth was stable at the rate
five until ten percent, but unfortunately, it was a sign for overheating economy.
Overheating economy is a condition where the demand rate is more than the supply
rate, so that economy capacity cannot offset economy growth. It brought Indonesia to
economy crisis in 1998. The economy growth reached minus thirteen percent and
inflation reached 75%. The condition brought Indonesia to political and social crisis.
It also made Indonesia should face new era called Reformation.

In Reformation Era, Indonesia tried to rise up. Although Indonesia’s

economic growth only rose about 0.3% in 1999, it did not quell Indonesia spirit to
improve the situation. Rising of economic growth after 1999 became prove for it. The
table below shows you the economic growth during Reformation Era.

Year Average Growth for GDP (%)

1998 – 1999 - 6.65
2000 – 2004 4.60
2005 – 2009 5.62
2010 – 2015 5.63
2016 – 2017 5.05

   2007  2008  2009  2010  2011  2012

GDP 432.2 510.2 539.6 755.0 893.0 918.0
(in billion USD)
GDP   6.3   6.0   4.6   6.2   6.2   6.0
(annual changing in
%)
GDP per capita 1,861 2,168 2,263 3,167 3,688 3,741
(in USD)
 

   2013  2014  2015  2016  2017  2018

GDP 915.0 891.0 861.0 933.0
(in billion USD)
GDP   5.6   5.0   4.9   5.0   5.1
(annual changing in
%)
GDP per capita 3,528 3,442 3,329 3,603
(in USD)
(source: https://www.indonesia-investments.com/id/keuangan/angka-ekonomi-
makro/produk-domestik-bruto-indonesia/item253?)

Indonesia succeed in improve the economic growth from the situation in

1998. During 2000 until 2004, Indonesia could raise its economic growth at the rate
4.6%. After that, Indonesia’s economic growth increased except in 2009. In 2009, the
economic growth in Indonesia decreased about 4.6% because of global financial
shocks and uncertainty. Then, Indonesia increased its economic growth again in
2011, but the pace of economic growth slowed down because global economy
condition was still weak. Nevertheless, the economic growth of Indonesia was still in
safe condition, even Indonesia was considered to be one of the countries with a high
economic level. This was proven by Indonesia’s entering in G20. G20 is an
organization for the country which has high economic level.

Those are the economic growth of Indonesia from past until now. Indonesia
has experienced the economy crisis for many times. Indonesia also has risen up again
from it. I hope Indonesia can maintain its economy condition in order to welfare the
society as one of Indonesia’s purpose which is written in UUD 1945. I also hope that
Indonesia’s society can work together with Indonesia’s government to improve our
economic growth. In order to improve our economic growth, the society can produce
more domestic product and eliminate the habit of consuming foreign goods, not just
with blaming the government when the country’s economy go down because words
without action is useless. I hope we can make it. Fighting, Indonesia!