UJIAN TENGAH SEMESTER

PROGRAM STUDI MANAJEMEN (S1)

FAKULTAS EKONOMI
UNIVERSITAS MUHAMADIYAH SEMARANG

Mata kuliah : Reading and Writing

Hari, tanggal : ….. November 2022
Pukul : 18.30 – 20.10
Semester / kelas :3/C
Dosen : Anjar Setiawan, M.Pd.

Instructions
Please read the following text carefully and answers the questions!

 
Indonesia’s Economic Problems: Asia’s Big Bad
Economy
by Reid Kirchenbauer | Blog

Indonesia enjoys Southeast Asia’s largest economy. Sadly, numerous problems make
it one of the region’s worst performing.
They’ve lagged behind frontier market peers such as Vietnam and the Philippines over
the past decade. Meanwhile, Indonesia’s GDP growth is stagnant at around the 5%
range – mediocre for an emerging economy.
Indonesia’s economic problems will unfortunately keep posing a big challenge
throughout the next decade. Some issues can be solved with time and money. Yet
others are more structural in nature and will stay around for awhile.

Fixing Indonesia’s economic issues will require greater effort than anyone is putting
forth right now. Both the government and private sector are falling way behind on
implementation, even if there’s plenty of talk and meetings.

Challenges Ahead for Indonesia’s Economy

For starters, let’s take a look at some  good things about the Indonesian market. The nation
is Southeast Asia’s biggest in terms of both population and economic size.
Indonesia is among the world’s largest exporters of automobiles, petroleum and palm
oil too. Furthermore, they haven’t suffered negative GDP growth since the 1998 Asian
Financial Crisis. That’s more than 20 years without a recession.
Broader concerns still overshadow these positive traits though. Indonesia’s problems
include slower economic growth, pressure on the state budget, a widening deficit,
plunging currency, and sheer lack of competitiveness when compared to elsewhere in
Southeast Asia.
Needless to say, such trends are all extremely worrying for Indonesia’s long term
prospects.
 
 Indonesia boasts Southeast Asia’s largest economy while Jakarta is the de-facto
capital of ASEAN. Sadly, neither is living up to its full potential.
 
So far, the World Bank maintained Indonesia’s 2018 GDP growth forecast of 5.1% –
among the lowest in Southeast Asia even if strong in a global context. Regardless, the
mere fact that GDP growth is slowing while the current account deficit widens is
causing even more concern.
Because of a number of cyclical factors, it’s not unusual for Indonesia’s current
account deficit to increase during the second quarter of each year.
However, Indonesia’s deficit rose substantially despite its overall decelerating
economy. That’s normally something which would be favorable for any nation’s
current account.
Yet another problem for Indonesia is its massive amount of government expenditure
allocated to fuel price subsidies.
President Widodo lowered subsidies, which mostly favor the country’s upper and
middle class. Nonetheless, fuel subsidies still account for more than 15% of
Indonesia’s total state budget.
And of course, taxpayers will keep spending money which could potentially go
towards better things.
 

No Planning Worsens Indonesia’s Economic Problems

Quite frankly, Indonesia must to step up its game if it wants to become a winner in
the ASEAN Economic Community (AEC 2015). This regional economic bloc will bring
greater competition between the ten member states of ASEAN.
AEC 2015 aims to transform Southeast Asia into a single economic union for trade,
labor, and investment. With that said, Indonesia is lagging behind many of its
neighbors in getting ready for the initiative.
Lawmakers must change several policies to not just comply with the AEC’s standards,
but for Indonesia to compete with its neighbors regardless of the community.
Required changes include allowing companies in all industries to legally have
majority foreign ownership, cutting government bureaucracy, and removing
protectionist barriers.
Indonesia isn’t alone though. Right now, Just two countries in Southeast Asia have
reached full compliance with ASEAN Economic Community’s requirements:
Malaysia and Singapore. Those are also the region’s two most developed economies,
so it’s probably not coincidental.
We still think that Indonesia’s massive population of 250 million people, strong
demographics, and rising middle class bode well for the country’s future. Yet
Indonesia’s economic problems can only be solved if they can learn a thing or two from
their neighbors.
If you’re a real estate or stock investor, think about looking elsewhere for your frontier
market exposure. Cambodia and Vietnam, among other places, have much of
Indonesia’s upside and less of its drawbacks.
 


QUESTIONS
1. Write a summary about the text in 5 sentences!
2. Mention the main economic problems faced by Indonesia!
3. Give your own opinion what should we do as students to help our country in facing the
economic problems! Why?

ANSWERS:
1.
2.
3.

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