The
economic system adopted by each nation is different. This is consistent with
the philosophy and ideology of each country. As with Indonesia, the economic
system adopted by the Indonesian people will differ with the economic system
adopted by the United States or other countries. Indonesia initially embraced
liberal economic system, in which all economic activity left to the community.
But because there is the influence of communism that is spread by the Communist
Party of Indonesia, then Indonesia’s economic system changed from a liberal
economic system into a socialist economic system.
In
the New Order era, the economic system adopted by Indonesia changed back into a
system of economic democracy. This system lasted until the Reformation. After
the Reformation, the government carry out economic system based on social
economy. This system is still applicable in Indonesia.
Indonesia’s
Economic System
The
economic system adopted by each nation is different. This is consistent with
the philosophy and ideology of each country. As with Indonesia, the economic
system adopted by the Indonesian people will differ with the economic system
adopted by the United States or other countries. Indonesia initially embraced
liberal economic system, in which all economic activity left to the community.
But because there is the influence of communism that is spread by the Communist
Party of Indonesia, then Indonesia’s economic system changed from a liberal economic
system into a socialist economic system.
In
the New Order era, the economic system adopted by Indonesia changed back into a
system of economic democracy. This system lasted until the Reformation. After
the Reformation, the government carry out economic system based on social
economy. This system is still applicable in Indonesia. Here is the form of
economic system in Indonesia from the New Order until now.
Democratic
Economic System
Indonesia
has idiil basis of Pancasila and the constitutional basis of the 1945
Constitution. Therefore, any form of activity
society
and the state must be based on Pancasila and 1945 Constitution. Economic system
existing in Indonesia must also be based on Pancasila and 1945 Constitution.
National economic system is based on Pancasila and the 1945 Constitution are
prepared to realize economic democracy and made the basis for economic
development. Indonesia’s economic system is based on Pancasila and the 1945
Constitution referred to the economic system of democracy. Thus the economic
system of democracy can be defined as a system of national economy which is a
manifestation of the philosophy of Pancasila and the 1945 Constitution which is
based on kinship and mutual cooperation of, by and for people under the
leadership and supervision of the government.
In
the system of economic democracy, the government and all the good people of the
economically weak and entrepreneurs active in efforts to achieve prosperity of
the nation. In addition, the state role in planning, guiding, and directing the
activities of the economy. Thus there is cooperation and mutual assistance
between the government, private, and community.
- Characteristics of Positive Economic System of Democracy
- The economy is prepared as a joint effort, based on the principle of kinship.
- The branches of production that are important to the state and are fundamental for the many controlled by the state.
- Earth, water, and natural riches contained therein controlled by the state and used for the maximum benefit for the prosperity of the people.
- The sources of wealth and state finances are used to plot the representative institutions of the people, as well as monitoring of existing policies on people’s representative institutions as well.
- Citizens have freedom in choosing the desired job and have the right to decent work and livelihood.
- individual property rights are recognized and their use must not conflict with the interests of society.
- The potential, initiative and creativity of every citizen was developed entirely within the boundaries of which do not harm the public interest.
- The poor and abandoned children reared by the state.
- Negative Characteristics Democracy Economic System
In
addition to having positive characteristics, the economic system of democracy
also have things that should be avoided.
- System free fight liberalism, the system of free competition which destroy each other and to foster the exploitation of humans and other nations so that they can cause structural weaknesses of the national economy.
- etatisme system, in which the state apparatus and state economies are dominant as well as urgent and deadly potential and the creation of economic units outside the state sector.
- Competition is healthy and the concentration of economic power in one group in the form of monopoly is detrimental to society.
Indonesia
has a market-based economy in which the government plays a significant role.
There are 141 state-owned enterprises, and the government administers prices on
several basic goods, including fuel, rice, and electricity.
In
the mid-1980s, the government began eliminating regulatory obstacles to
economic activity. The steps were aimed primarily at the external and financial
sectors and were designed to stimulate employment and growth in the non-oil
export sector. Annual real gross domestic product (GDP) growth averaged nearly
7% from 1987-97 and most analysts recognized Indonesia as a newly
industrializing economy and emerging major market. The Asian financial crisis
of 1997 altered the region's economic landscape. With the depreciation of the
Thai currency, the foreign investment community quickly reevaluated its
investments in Asia. Foreign investors dumped assets and investments in Asia,
leaving Indonesia the most affected in the region. In 1998, Indonesia
experienced a negative GDP growth of 13.1% and unemployment rose to 15%-20%. In
the aftermath of the 1997-98 financial crisis, the government took custody of a
significant portion of private sector assets via debt restructuring, but
subsequently sold most of these assets, averaging a 29% return. Indonesia has
since recovered, albeit more slowly than some of its neighbors, by
recapitalizing its banking sector, improving oversight of capital markets, and
taking steps to stimulate growth and investment, particularly in infrastructure.
GDP growth steadily rose in the following decade, achieving real growth of 6.3%
in 2007 and 6.1% growth in 2008. Although growth slowed to 4.5% in 2009 given
reduced global demand, Indonesia was the third-fastest growing G-20 member,
trailing only China and India. Growth rebounded in 2010 to 6.1% and is forecast
to have reached 6.2%-6.5% in 2011. Poverty and unemployment have also declined
despite the global financial crisis, with the poverty rate falling to 12,5%
(March 2011) from 13.3% a year earlier and the unemployment rate falling to
6.6% (February 2011) from 6.8% a year earlier.
Indonesia’s
improving growth prospects and sound macroeconomic policy have many analysts
suggesting that it will become the newest member of the “BRIC” grouping of leading
emerging markets. In December 2011, Fitch Ratings upgraded Indonesia’s
sovereign debt rating to investment grade. A similar upgrade to investment
grade is expected from Standard and Poor’s and Moody’s.
In
reaction to global financial turmoil and economic slowdown in late 2008, the
government moved quickly to improve liquidity, secure alternative financing to
fund an expansionary budget and secure passage of a fiscal stimulus program
worth more than $6 billion. Key actions to stabilize financial markets included
increasing the deposit insurance guarantee twentyfold, to IDR 2 billion (about
U.S. $235,000); reducing bank reserve requirements; and introducing new foreign
exchange regulations requiring documentation for foreign exchange purchases
exceeding U.S. $100,000/month. As a G-20 member, Indonesia has taken an active
role in the G-20 coordinated response to the global economic crisis.
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