Indonesia Economic System Essay
Market economic system is also called the capitalist system. This system was originally used in the days of empire in England, the Netherlands, also in the days of empire in Indonesia used to be, for example, in the kingdom of Majority, Carriageways. At the time of this kingdom handed over to the private economy on the basis of demand and supply. In principle, the imperial never manage its economy. In the market or capitalist economic system is not known for any government intervention in the economy.
All economic solution left to the market mechanism. With the passage of the economic system in the manner of the kingdom of Europe leads to rookeries in some communities like landlords, businessmen and the elite of society, while on the other hand resulted in squalor in some other community, especially the workers, and finally come up call for the workers unite . Of this movement then emerged a command economy or economic system “Marxist”.
Command system adopted by the Nun Soviet, China, and the country – east European socialist countries and is known as a communist or socialist economic system. The communist system all economic activities is a matter of state planning. Countries have a central
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Monetary and foreign exchange systems and companies are generally owned or controlled by the state. Then in about the year 1929 – 1930 the world depression, prices have decreased, many companies lay off their workers, this situation is known malaise (the Great Depression) and the state of the economy is regarded as a failure of the market or capitalist system. Many experts say that the Indonesia Economic System By LidyaKusuma11 who say that due to insufficient consumption. Then in 1936 with the publication of the book by J. M.
Keynes called the General Theory of Employment, Interest and Money comes new economic flow that emphasizes the role of the state in the economy and is considered as a stream to cope with the current economic situation. This flow called Keynesian Economics. Thus the market follow the government’s role in the economy. On the other communist countries of the Nun Soviet and China also experienced the destruction and allow some of the economic problems solved through the market process. So today no country in the world that fully capitalist (adopts a fully market) and also does not fully embrace the communist system (central planning).
All countries in the world have recognized the importance of the state in the economy. The state intervened in the economy in socialist countries as it is through its ownership of state-owned enterprise, traffic exchange and foreign trade controlled by the state and centralized planning of economic development. While the economy of the market system of state interference do not through ownership but with a system that is capable of affecting supply and demand. Market economic system which recognizes the role of the state is usually referred to as the economic welfare system, and the country’s so-called Welfare State.
Role of the state through ownership at the beginning of the economic sector is the public needs such as air and ground transportation, electricity, gas, water, and others. Basically required state intervention in the field of business-where the private sector does not pick it up when the field is where the public sector is heavily dependent on the sector. But if the private sector can run with the same efficiency as that of the government, such area should be left to the private sector.
The rest of the state’s role is limited to setting the economy through taxation and government spending. II. DUALISM OF ECONOMIC SYSTEM J. H Booked (1953) Dualism means the same time in the community, there are two distinctly different social styles to each other, and each is fully developed and influences each other. Booked also said that their attitude is still being pre-capitalist society in a dualistic attitude of the natives distinguish these communities with western society against economic stimulus in it.
Benjamin Higgins and Mohammad Salad have different opinions, the local people or Indonesia in particular have the name attitude towards stimuli prices and other economic stimuli, but in reality it is very rare that an appropriate stimulus is rarely arise because of imperfections and rigidity in the economic system and often also rooted in government policies are not appropriate. Dualism is a concept that is often talked about in economic development. The concept of this dualism has 4 elements of which are: 1.
Two different circumstances in which the state is “superior” and other circumstances that are “inferior” can coexist in the same space and time. 2. The coexistence of two different circumstances those are chronic and not transitional. . The degree of superiority or inferiority was not demonstrated a declining trend, even increasing. 4. The linkage between elements of the superior and the inferior elements indicate that the presence of the superior element only a very small effect or no effect at all in lifting the inferior elements.
In fact, the superior element is often actually because of Ill. SOCIALIST ECONOMIC SYSTEM WITH INDONESIAN STYLE In 1960 are the period of socialist economic system with the Indonesian style by President Saguaro. Indonesian political guidelines are socialist countries of Eastern Europe, Russia, China. During this period, Indonesia is anti neo colonialism and neo- liberalism, and out from United Nations (UN) and form a new community with the New Emerging Forces. The economy in this period is similar to the socialist economic system, including: 1 .
The Government of Indonesia has developed the Eight-Year Development Plan 1960-1968 Universe for all sectors but not yet implemented. 2. Since the nationalization of private companies Netherlands around 1957, a large company owned by the state, the result of the nationalization of the company example is the aviation business, railroads, bus Dammar, shipping Pipeline, in export import trade, banking, and so on. But the private sector is also still play a role in the retail trade and small enterprises and cooperatives.
Traditional markets still play a role, and although slow but continues to grow. 3. The banking system; originally private banks owned by the Dutch government nationalized belong, and then converted to the Russian banking system. By changing the names of state banks into a name with certain units. Example: Bank Indonesia changed to Bank Engage Indonesia Unit l, in 1946 became BIN BIN Unit II, the People’s Bank and so on. 4. Foreign exchange system used is commonly used foreign exchange system of socialist countries, namely the Exchange Control.
In this system is not allowed foreign currency (foreign exchange) circulating in the community. All the state-owned foreign exchange. Export proceeds, loans / aid foreign countries and other foreign exchange proceeds into Indonesia must be delivered / sold to the state. Then the state sells its foreign exchange to importers. The government determines the foreign exchange rate, and therefore it is also called the foreign exchange system with a fixed price (Fixed Exchange Rate) or foreign exchange system at a price that was nailed (pegged exchange rate).
Over time, with the increasing supply and demands of goods and services in Indonesia, make the price of goods and services in Indonesia is constantly increasing. Which is affects the exchange rate against foreign exchange rate continued to weaken. This condition makes the value of rapier increasing continuously. This could be solved with wisdom devaluation. Wisdom devaluation was implemented by the government to encourage exports and restrict imports. Because the value of the rapier continued to weaken resulting in decreased revenue exporters with export values are fixed.
They earn less income as a result of the awakening of the rapier. Conversely, there are more incentive importers to import. Devaluation policy is expected to be able to improve the condition of the Indonesian when rapier continuously weakened. In addition to the efforts of wisdom devaluation, the government also gives discretion to direct a number of exporters to use a certain percentage of export proceeds by first selling the whole of export’s result to the government. Then in that years the government gives the percentage of 10% to the exporters of the export value.
This wisdom is called Automatic Foreign Exchange Allocation (ADO) Exporter. Government efforts to stimulate exports not only to give wisdom to the exporters, but also to local producers export goods or services. An automated foreign exchange allocation (ADO) to local producers export goods or services to boost productivity and quality produced. However, ADO is not given directly to the area, but given through a port of export is implemented. The big difference in the place and away producing region with the port where the export result of this policy do not running smoothly and having problems.
For example, the export is done in Bali through the Port of Curably. Because of different producing areas and ports and not be in the same region makes Bali claimed to the government because producers do not feel the impact and enjoy any of the Regional ADO policy. If seen from the reasons above, it can be said Indonesian economic system similar to the economic system in Eastern Europe. It said to be similar because not same at all. It differentiates the socialist economic system in Eastern Europe with Indonesian- style socialist economic system is still the magnitude of poverty in Indonesia.
Socialist system that applies globally, there is no proletariat and poor (very low numbers). Meanwhile the existence of the poor in Indonesia is still a lot. This is caused by Papas 34 DUD 1945 that has now the implementation. In addition to these reasons, there is one more reason that makes Indonesia has their own economy’s socialist system. That is because in Indonesia the entire supporting the economy as investors, producers and consumers are required to adhere to one religion recognized by the state. Religion is not required in other socialist countries.
Outside Indonesia such as in China, a person is allowed not religious as long as it does not destroy China’s security. V. FINANCIAL ECONOMIC SYSTEM Some leader from Gadded Mad University and Bog Agricultural University said that the system of the Indonesian economy is the economic system of Financial. It is happen on Order Barb after Palliate Ill (1974-1979). But besides the parties that agree there are those who disagree with the statement. Some leader who disagree that it originates from the Banding Institute of Technology and the University of Indonesia.
The system economics in that time are: 1. Economic planning In that time Indonesia was build economic planning in 5 years that called PALLIATE. The main point of this economic planning is agrarian sector for making assembled rice. This system was used in developed country that practice economic socialism and also developing country that not follow socialism economics. 2. The Role of Foreign Company After JUMP (Unhand-unhand Penman Modal Aging) was used in 1967, foreign equity such as foreign direct investment and also portfolio investment had increased.
Before that regulation the investment is like Joint venture, but after that regulation many investment increased in many sector in the big business. 3. The Role of Domestic Company Domestic company got profit from the regulation of JUMP that was used in Indonesia. Big domestic business got credit for increasing their equity. The bank that (BILL) that making many domestic conglomerate growth after that situation. 4. The Role of GIG and MIFF and also Foreign Payable In the beginning of power order barb GIG (Inter Governmental of Group on Indonesia) was build, GIG had function as a advisor of PAIN.
If PAIN less in budgeting source, the GIG helped for that situation by giving loan to increase budget in PAIN. In the budgeting meeting was held every year was definite whose country helping Indonesia for budgeting in PAIN in certainly amount. And the institution that helped GIG for that is World Bank and also MIFF (International Monetary Fund). 5. Foreign exchange system In the Order Barb, the first activity was done is liberalizing foreign trade, include the foreign exchange system.
From the foreign exchange system that powered by country full changed into the system according supply and demand. The economic that used standard paper now that followed by many countries is freely fluctuating: when the exchange rate increase, the exchange rate will increase and increase more and more, ND everybody don’t know when will the exchange rate decrease. And also the opposite of that situation can happen. Because that situation many countries had association that the function is stabilization the money exchange rate, that called Foreign Exchange Stabilization Fund.
That is back up budget of foreign exchange that use for buying dollar or foreign exchange when the price of dollar in market decreased in the certainly amount and selling the dollar when the dollar increased until certainly amount. By using back up budget of foreign exchange hopefully the exchange rate will be more relative controlled. That foreign exchange system called managed floating exchange rate. The example is like the table above, showed that rate exchange of dollar is relative constant for one period, such as about RPR 235/US$ until devaluation policy happen in 1978 growth as RPR 326/US$ and so on.
Table 2. Exchange Rate US $ in Rapier 1965-1978 Year Rapier 1965 1970 378 1975 415 1966 235 1971 1967 1972 1977 1968 326 1973 1978 625 1969 1974 By looking that table we can say that the system economic Indonesia in that time is closer to the capitalism. Many professional economics said that Indonesia at that mime is more capitalism than capitalism country such as USA, Australia, and so on. But the other professional economics said that capitalism in Indonesia is different between capitalism in West Country.
The difference is the performer economics Indonesia is according to the concept of Financial that is the fist sill Astrakhan Yang Amah Seas (Enormous God) for going to social prosperity that showed in the fifth sill. By Financial the performer economics in Indonesia the target is not Just how to get big profit but also also think and balance about social Justice. Because of that, any professional economists said that the system economics in Indonesia is system economics of Financial. Beside the reason Indonesian economy was regulated in Article 33 Unhand-unhand Dakar Republic of Indonesia.
Proof. Ambulant had view that Indonesia should embrace Financial economic system, with at least pay attention to 5 characteristics of Financial economic: 1 . The presence of the dominant role of cooperatives in economic life. Economic activities should be based on the principle of family and harmony as the cooperative principles. 2. The application of stimulus that are economically and morally to drive the economy. In this case, motifs such as solidarity, love for our fellow human beings, non secular beliefs, religious and other social institutions can be a driving force of economic activity. . There is a tendency and a strong social will toward egalitarianism. 4. The main priority is the creation of a “national economy” strong. Therefore frequent discrepancy between words and actions, so Financial economically the fact about nationalism sentiment is alive. The principle productive force systematic and purposeful development of balanced economic structure and improve human resource capacity arts of the national economy is the primary target, while the integration of national economies into the international economy is secondary target.