TUGAS ILMU EKONOMI UNTUK BISNIS

Oleh:

Gerald Kevin Bonifacius Hasintongan (1806278775)

Kelas: F18-2S

Dosen:

Prof. Susijati B. Hirawan, SE., M.Sc., Ph.D

MAGISTER AKUNTANSI

FAKULTAS EKONOMI

UNIVERSITAS INDONESIA
2019
Indonesia’s debt became the most trending topic issue among the reelection of presidential
when will be held on 17th of April 2019. Current president Joko Widodo is headed with the
issue from the opposition who will be the candidate of the presidential 2019-2024 Prabowo
Subianto about Indonesia’s raising debt which can get Indonesia’s bankcrupcty on 2030.
Prabowo siad that the government’s debt can bring Indonesia to be like Greece. For
additional information, Greece has been suffering with Uncontrollable government’s debt in
2017 and faced crisis. Joko Widodo responded Prabowo’s statement with “pesimistist”. So,
the question, is it truth that the debt’s government of Indonesia cause weak economy’s
structure which shall cause crisi? Should we support that statement or no? To get better
understanding, we should know about:

a) The economy of Indonesia historical background

b) Why Indonesia needs to have government’s debt?
c) How much debt is allowed according law which Indonesia can have? And how to get
it?
d) Where is the distribution of the debt and what percentage of the needs from the debt?
e) Compare to other country, where is the Indonesia’s position out of the countries
which has government debt?

There is the correlation between Indonesia’s proportion government’s debt and GDP (Gross
domestic product) of the country. Gross domestic product according IMF (International
Monetary Fund) is Monetary measurement of the market value of all the final goods and
services product in a period of time (Callen. 2016). Indonesia rank 16th for highest GDP in
the world from the data of IMF 2018 with US $ 1.002.454 million.

Indonesia has a ratio of government’s debt in 30% of GDP. It is lower percentage among
ASEAN country such as Vietnam (54,9% of GDP), Thailand (45,27%) and India (67,7% od
GDP). According to the law, maximum goverment’s debt which is allowed is US $ 245.388
million. When President Joko Widodo was elected on 2014, He has faced the debt of from
previous president SBY (Susilo Bambang Yudhoyono) US $ 122.000 million. From 2014 –
2018, the government’s debt increased dramatically.
According the data of Bank of Indonesia, it is increased 48% to US $ 188.000 million. From
this table, in SBY era, the increasement is only 26% and the Joko Widodo era, the
increasement is around 48%.

With that debt, Indonesia is still in lower rank compare like other country such as United
state, United Kingdom, Japan, and other countries. Contracly, Indonesia is not in the top
highest government’s debt according to the CIA (Central Intelligence Agency). United stated
takes the position as the highest country with the debt round US $ 17.910.000 million. It has
been cleared that Indonesia is out of the list has the highest government’s debt country.

Why Indonesia needs more debt and what for? Mr Joko Widodo targeted more on the
infrastructure of Indonesia. Some opiniones stated that it is better to reduce the price but
instead, Mr President Joko Widodo thought that the infrastructure of Indonesia needs to be
prepared more. If the Infrastructure has been fixed, it can helps the distribution of the goods.
It is not diretly reduct the cost of transportation.

One of the infastructure which become the main target is managing the toll road in every
single province such as South Sumatra even Papua. According to the statement of Renan
Raimunduds (2014), the average of travel time in Indonesia is about 2.6 hours/ 100 km
compare to Malaysia which has 1.1 hours / 100 km. Average dewlling time on in an
Indonesia seaport is 8 days compare with Hongkong which can reach on 2 days. These are
two additional reasons why Mr. Joko Widodo concern more in infrastructure.
There are two reasons why Indonesia needs to raise public debt for the necessary funding.
First is that many necessary infrastructure projects to develop the country simply are not
attractive to the private sector. These projects, such as non-toll roads, public transportation
networks, water treatment facilities and public hospitals, are called public goods. As public
goods, they do not give sufficient investment return to private investors, because the cost of
provision is very high and the payback period is quite long. Hence, the government should
step in to finance infrastructure to provide such public goods. If the government budget is not
sufficient for such investment, it can borrow from domestic or foreign markets.

The Mass Rapid Transit (MRT) Jakarta project is financed with a loan from the Japan
International Cooperation Agency (JICA) at an interest rate well below 1 percent and with a
much longer maturity period than a typical commercial loan. If the government chose to
finance the MRT project with private investment or borrowing from financial markets, the
cost could be 10 times higher or more, and Jakarta might not be able to afford the project

Mr President Joko Widodo also prioritize in the two other key sector in Education and Health
service. According to OECD on the seminary which presented by Minister of Finance Sri
Mulyani with the title of “Striking the Right balance between Reform and Growth” 7th
february 2018, the performance of Indonesian students (girls and boys) in science,
mathematics, and reading is one of the lowest among PISA-participating countries with an
average ranking of 62 out of 69 countries. With that result, Mr President spend 20% of the
annual budget for education.

One of the contribution of the government for Indonesia student for education is the
scholarship LPDP. It was contributed and created by Minister if Finance Sri Mulyani. During
2014 – 2019, it has been 472.000 students got scholarship in the nation and 20.000 young
generation of lecturer study in the best University in the world and hopefully can go back to
Indonesia and contribute to increase the Indonesia’s education.On September 2017, there
were 70% of Indonesian people enjoyed the benefit of Government-support health coverege
program.
This is the graph of the productive spending report from 2013- 2018. Government increase
the budget more on education and infrastructure while reducing the energy subsidies. Most of
the spending of education is allocated on scholaship.

Scholarship for young generations of Indonesia is kind of Investation. In my opinion, it is not

directly to increase the GDP of Indonesia in the further. It is due to, household consumption
has an important key of increasing and contributing of the Indonesia GDP. According to CIA
data, it is around 57.3 % of household is in GDP of Indonesia.

Here is the data of GDP Consumption of Indonesia according CIA.

Nowadays, there are many situation of startup or unicorn in Indonesia. It is actually back
from the ability of the personal who can create the own job. To create such a unicorn like
GoJek, Bukalapak, etc, need enough background of education. Lets’s say Tokopedia. The
owner of Tokopedia was graduated from Harvard university, top five university in the world.
With that education back ground, Wiliam Tanuwijaya, create jobs field for other people. Not
only that, Mr Joko Widodo also predict that Digital Economy contribution can be 8,5 % of
GDP. It is the reason why Mr President allocate 20% of the annual budget to the health care
and also education.
In my assumption, the debt can also can help in agriculture sector such as giving subsidice on
fertilizer, seed (variety of the seeds), tools and hard materials to cultivate the land, and also
make the irrigation to increase the yield on agriculture sector. During 2014 -2017, there are
170. 400 fields has an irrigation for farmer. This situation can brings farmer to produce more
yield or even export it to other country.

The candidate of presidential 2019-2020 argue that Indonesia has more import especially to
China rather than Export. To analyze that statement, it is better to see back on the data.

According to the data, we can conclude that Indonesia does Export more to China rather than
the mount of the import. Indonesia exsport mineral fuel, animal and vegetable fats (including
palm oil), electrical machinery, rubber, machinery and mechanical appliance parts.

Indonesia's foreign debt will have a positive impact on the economy, if it is managed well,
and vice versa will be bad for the economy if not managed properly (Adwin,2000). Foreign
debt can cover the budget deficit, and this is much better by printing new money, enabling the
government to implement development with a relatively larger capital support. Thus the
government can increase economic growth. The increasing rate of economic growth means
an increase in national income. Thus the income per capita can rise. If the income per capita
increases the so does the welfare of the community.

A country's debt can be a positive thing if used properly and effectively. State debt can help
meet the needs of the state budget. Conversely, if a country's debt is not used properly it will
burden the country in the future. For that the government should be able to think of ways to
pay off the debts.
 Bibliograph

https://www.cia.gov/library/publications/the-world-factbook/geos/id.html

Adwin Surya Atmadja, 200, Utang Luar Negeri Pemerintah Indonesia Perkembangan dan
Dampaknya. Jurnal Akuntansi Universitas Kristen Petra. Vol 2, No 1,pp 83-94.

Raimundus, Reinan. 2014. Why Indonesia needs to borrow. University of Tokyo Graduate
School of Public Policy.

The Seminary from the Minister of Finance Sri Mulyani. “Striking the Right Balance
between Reform and Growth”. 7th February 2018.