By Timur Abimanyu, SH.

MH

THE WASHINGTON POST

Problems of Economics and Government Policy in the Field of Economics

MACRO-ECONOMIC ISSUES
a. Poverty and Equality Issues
At the end of 1996 the number of poor people in Indonesia amounted to 22.5 million people
or approximately 11.4% of the total population of Indonesia. However, as a result of the
prolonged economic crisis since mid 1997, the number of poor people by the end of that
year jumped to $ 47 million or approximately 23.5% of the total population of
Indonesia. At the end of 2000, the number of poor people dropped slightly to Rp 37.3
million people or approximately 19% of the total population of Indonesia. In terms of
national income distribution, the Indonesian population is in poverty. Most of the wealth
owned many large-income groups or groups of wealthy Indonesian.
b. Exchange Rate Crisis
Currency crisis that has rocked Asian countries in early 1997, finally hit the Indonesian
economy. The rupiah which was originally associated with a fixed U.S. dollar began to hit
by speculators who cause the shock to the economy are also highly dependent on private
sector foreign debt. The government faces a crisis of this exchange rate by intervening in
the market to save devisayang dwindling reserves. The government implemented a policy
of free floating exchange rate policy instead of a floating exchange rate.
c. Foreign Debt Problem
Floating exchange rate policy is controlled at the time before the crisis turned out to save
the concern. Decreased depreciation of the rupiah against foreign currencies, especially
dollars ASyang relatively fixed from year to year, causing most of the foreign debt is not
protected with the facility of hedging (hedging) so that when a crisis occurs in an instant
exchange rate value of the debt to swell. In the year 1997, the carrying amount of foreign
debt and 63% of GDP in 1998 soared to 152% of GDP. To overcome this, the government
rescheduling of foreign debt by the borrower. The Government also took the international
financial institutions to help solve this problem.
d. Problem Banks and Bad Debts
 The amount of foreign debt caused further problems in the banking system. Many efforts
are stalled because of increased debt burden resulting in the increasing number of bad loans
that some banks experiencing liquidity problems. More severe liquidity problems when
most people lose confidence in some banks, causing withdrawal of funds by community-
scale secarabesar (rush).
Shocks that occurred in the banking system caused a greater shock to the banking system as
a whole, so that the economy will be dragged into the abyss of destruction. The reasons
above cause the government decided to rescue the bank-bankyang liquidity issues by
providing liquidity assistance. However, to control inflation, central banks must pull back
the money through open market operations. This is done with the increase in SBI
rates. This policy creates a dilemma because of the increased interest rates caused a burden
to the borrower (debtor). As a result the level of nonperforming loans in the banking system
increased rapidly. Increasingly complex dilemma in the banking system while trying to
maintain their likuiditasyang have to increase deposit interest rates exceed lending rates so
that they suffered losses resulting erosion of capital they have.
e. Inflation Problem
The problem of inflation that occurred in Indonesia is related to problems of crisis
exchange rate and banking crises during this happen. In 2004 Indonesia's inflation rate had
reached 10.5%. This occurs because the prices of goods continue to rise as a result of the
encouragement of high demand. The high rate of inflation is clearly exceeding the inflation
target of BI so that BI needs to do in the field of monetary tightening. Monetary tightening
can not be done drastically and excessive because it would threaten the continuity of the
process of bank restructuring and corporate restructuring program.
f. Economic Growth and Unemployment
Declining quality of economic growth in 2005-2006 reflected a significant drop in the
absorption of labor force growth. If in the past for every 1% economic growth can create
jobs to 240 thousand, then economic growth in 2005-2006 each only able to produce 40-50
thousand jobs. Decreased absorption of employment means increased poverty and
unemployment. To reduce unemployment and poverty, the government should save the
industry-intensive industries and irrigation improvements for pertan

MICRO ECONOMIC ISSUES

a. Problems Basic Price and Highest Price
The economic crisis sweeping the world has ever happened for a long time and it is
believed that the market mechanism can not solve these economic problems. That is, the
balance of demand and supply in the market is not achieved. The effect of this crisis is the
soaring price of various kinds of goods needed by producers and consumers.
One of the government interference in this matter is the government's policy on the basis of
price (floor price) and the highest price (ceiling price). The purpose of the basic pricing is
to help producers, while the highest price to help consumers. For example, the harvest of
paddy rice caused the overflow. As a result, rice prices down so that the farmers suffered
losses. To overcome these problems, the government determines the basic price (floor
price) of rice to help farmers.
b. Increased Demand for Rice
Crop failure will cause a reduction in supply of rice so that rice prices will rise. The high
price of rice will increase the burden of the people living on low incomes and are not
fixed. To overcome this rice supply, the government has imported rice program through a
tender against some national and foreign private companies.
c. Fuel Price Increase (BBM)
 Due to rising fuel prices, public transport entrepreneurs a city bus, city transportation
(public transportation), and the taxi has decreased revenues and reduced profits for the
entrepreneur and the driver. To adjust the fuel price hike, some public transport
entrepreneurs to raise tariffs unilaterally. This action would burden the consumers sajaakan
users of transport services. To overcome this problem the government together with the
transport associations to the public transport fare adjustment by setting the official rate for
entrepreneurs a city bus, city transportation and taxis. The amount of official rates is
certainly not burdensome nor harm the consumer or public transportation entrepreneur.
d. Monopoly Problems
Monopolistic practices would lead to market domination of certain goods or services
produced by one company. Monopolistic practices are often harmful to society and
consumers. In addition, the monopoly will narrow the opportunities for other people so that
less people cultivate the spirit of entrepreneurship. Companies who practice often playing
monopoly and set prices without considering the community groups who have similar
business. This will destroy the competition. To avoid activities monopolistic practices, the
government makes regulations governing business activities to foster a healthy business
climate for the community, namely Law no. 5 year 1999 concerning Prohibition of
Monopolistic Practices and Unfair Business Competition.
e. Distribution Problems
Distribution channels for goods and services that long would result in the price of goods is
high and expensive when it comes to consumer. To that end, several efforts have been
made by government or private to shorten distribution channels so that the price of goods
when it comes to consumers' hands is not expensive. For example, PT. Coca Cola
Indonesia lebihdari distribution of goods through 120 sales centers throughout Indonesia
and distributed directly through to the retail traders (80% retail) and wholesale and 90% in
the category of small business

Competency Standard: Understand government policies in the economic field

Basic Competence: - Describe the difference between microeconomics and macroeconomics
- Describe the problems faced by the government in the economic field Indicators:
- Describe the sense of Micro and Macro Economics
- Describe the differences in Micro and Macro Economics
- Giving the example of micro-economic communities (eg, small scale industries) and
macroeconomic (eg, inflation, national income etc.)
- Identify problems faced by the government in the economic (poverty, income distribution).
- Solve problems faced by the government in the economic field

GOVERNMENT POLICY IN THE ECONOMY

Economics emerged because of the following three facts:
• Human needs are relatively limited.
• The resources available are limited.
• Each resource has few alternative uses.
Economics is the science which studies human behavior in fulfilling their needs are relatively
limited with limited resources and each resource has an alternative use (opportunity cost).
Broadly speaking, economics can be separated into two micro economics and macro
economics.
1. Macro Economy
Macro economics studying economic variables in the aggregate (overall). These variables
include: national income, employment and / or unemployment, money supply, inflation,
economic growth, and balance international payments.
Macro economics study the major economic problems as follows:
• The extent to which various resources have been utilized in economic activities. When all
resources have been exploited is called full employment situation. Conversely if there is
still untapped resources means that the economy in a state of under employment or are
unemployed / not in the position of full employment.
• The extent to which the economy was stable, especially in the area of monetary
stability. If the value of money tends to decrease in the long term means there is
inflation. Instead deflation.
• The extent to which the economy experienced growth and this growth is accompanied by
an improved distribution of income between economic growth and equity in income
distribution there is a trade off when it mean that one improves the other tends to
deteriorate.
2. Micro Economics
While studying economics micro economic variables within the scope of such small firms,
households. In this micro-economic study of how individuals use the available resources in
order to reach the optimum level of satisfaction. In theory, individuals who perform a
combination of consumption or production of the optimum along with other individuals
will create a balance in macro-scale by assuming ceteris paribus.
Differences microeconomic and macroeconomic Viewed from Micro Economics Macro
Economics
Price Price is the value of a commodity (goods only) Price is the value of commodities in
the aggregate (overall).The analysis unit A discussion of individual economic
activities. Examples and supply and demand, consumer behavior, the behavior of
producers, markets, revenues, expenses and profits or losses of the whole discussion about
ekonomisecara activities. Examples of national income, pertumbu8han economy, inflation,
unemployment, investment and economic policy. More objective analysis focuses on an
analysis of how to allocate their resources to achieve the right combination. More focus on
the analysis of the impact of economic activities on the economy as a whole

The problems faced by the government in the economic field

1. Problems of poverty
Upaua poverty reduction can be done through various ways, such as program IDT
(Presidential Instruction Disadvantaged Villages), KUK (Small Enterprise Credit),
KMKP (Permanent Working Capital Credit) CCP (Integrated Area Programme), GN-
OTA and compulsory education program.
2. Problems Keterbelangkangan
The problem faced is the level of income and pemerataannya rerndahnya, poor health
services, lack of maintenance of public facilities, low levels of public discipline,
renddahnya skill levels, low levels of formal education, lack of capital, labor
productivity, poor business management. To overcome this problem the government
seeks to improve the quality of human resources, pertukranan experts, transper
technology from developed countries.
3. Problems of unemployment and employment
Unemployment problem arises because of the imbalance between the number of labor
force and employment opportunities available. To overcome this problem the
 government provided training for workers so that workers Naturalife Greenworld
expertise in accordance with the available job opportunities, opening new investment,
especially labor-intensive, providing fast information about job opportunities.
4. The problem of capital shortage
Lack of capital is an important cirri each State to start the development process. Capital
shortage due to low income levels that caused the savings and capital formation rates
slightly. The fix memlaui increasing or improving the quality of human resources into
more productive investment.

Role and Function of Government in Economic Field

1. Stabilization function, namely the function of government in creating economic
stability, social, political, legal, defense and security.
2. Allocation functions, ie functions of government as provider of public goods and
services, such as building roads, school buildings, provision of lighting facilities, and
telephone.
3. Distribution function, namely the function of government in public equity or income
distribution.

Illustration:
Where all the problems have not been full addressed by the Government and aspecially if
there is a dispute shariah, where the role of a particular court judges must be ready to handle
disputes that accurred in eavh of Sharia Islamic banking transactions.Judicial Institutions and
Human Resources, is a decision maker therefore required for the enforcement of justice
(judges) should always explore the principles of Sharia law based on Islamic law and the
Quran, with the aim that prodak-prodak Sharia law does not become stalled or faded give
consideration in resolving disputes within the Islamic financial services in Indonesia.

Referency :
http://www.yahoo.com
http://www.blogekonomisyariah.com
http://www.pesantrenvirtual.com
http://www.hukumonline.com
http://www.mediaindonesia.com.
http://www.Kompas.com
http://www.CNNMoney.com
http://www.Republika.co.id
http://www.google.com
http://www.washingtonpost.com
http://www.InfoMediaIlmiah.com