Name : Ana Setyaningrum

NIM : 303402000040
Major : International Business

QUESTION
1. What political factors explain Indonesia’s poor economic performance? What economic
factor? Are these two related?
2. Why do you think foreign firm have been exiting Indonesia in recent years? What are the
implications for the country? What is required to reserve this trend?
3. Why is corruption so endemic in Indonesia? What are its consequences?
4. What are the risks facing foreign firms that do business in Indonesia? What is required to
reduce these risks?

ANSWER
1. Political and economic factors are always interrelated in the performance of a country.
Indonesia has several factors that cause poor economic performance, including: at the
beginning of independence many people rebelled, then Alibaba's policies were not
successful for indigenous people who had not been able to build their businesses.
Followed by the Suharto era, which found abuse of power, for example, support only for
companies that chose his family, until the fall of Suharto was marked by the monetary
crisis in 1998. As a result of this long political history, the Indonesian economy
experienced a setback, but Indonesia began to grow its economy in 2004 although still
lagging behind other countries. Because politics cannot be separated from a country, and
the magnitude of this political impact, political factors affect the economy of a country
2. Indonesia is considered unable to compete. This is related to Indonesia's high production
costs when the rupiah is weakening. This can happen because when the rupiah weakens,
the cost of raw materials and exports and imports becomes expensive, eventually
industrial products become more expensive. This is not profitable for investors. Apart
from the economic aspect, Indonesia is also considered not ready in politics, this is
because the government is not firm in making policies in the midst of these economic
conditions. These problems affect each other and make Indonesia unstable.
➢ To reverse this trend :
• The government is more assertive in making policies so that from the
political aspect it can facilitate the economy
• In addition to Indonesia itself, this policy will also benefit each other
between the company and Indonesia
• The community helps build the economy by building their own business, for
example UMKM
3. Corruption can be epidemic due to internal factors of the corruptor and external factors
such as punishment that does not make a deterrent. From the previous punishments
received by corruptors, other people are not afraid of corruption, besides that, there are
many other things including:
1. Salary is still low
2. The desire to live in luxury is not supported by a low salary
3. Punishment does not frighten and deter
Consequence :
• Government money that can be allocated to community facilities and can be used
together, is even used for personal needs
• Money that can be used for policies, especially those that ease the community,
actually disappears and people suffer more and more
4. Indonesia's geographical conditions make it difficult for transportation routes, especially
to carry production materials and products
Indonesia's difficult bureaucratic system, this has also been explained previously
regarding politics
Indonesia's infrastructure is still very complicated

➢ In order for foreign companies to invest, we need :

• the government's role in making firm political policies in all economic
problems.
• Exploring the potential of Indonesia which is rich in natural resources
• Implement policies that are mutually beneficial to both parties