By: Safrizal Fajar *
As a developing country with economic growth that has skyrocketed, domestic market demand has increased along with the success of infrastructure development so that the economy wheels spin with consistent acceleration. The Indonesian government embodies the development and acceleration of the domestic economy by bringing quality machinery as capital goods from abroad so that later in the next few years, the production of goods made in Indonesia can compete in the international market.
Commitment to develop the economy has been challenged by the influence of the sloping dynamics of global demand and high domestic demand which has affected the performance of exports and imports. At present the trade balance has a deficit as an effect of the progress of the national economy with the large demand for capital such as production machinery and investment. Nevertheless, Bank Indonesia stated that the trade balance deficit would not have a significant effect on the current account balance (CAD).
The Governor of Bank Indonesia, Perry Warjiyo said that the current account balance in the fourth quarter is usually higher because there are many imports, and this is normal every year. The level of the current account balance that rose at the end of 2018 is the impact of growing and better economic activities. Bank Indonesia continues to look at global and domestic economic developments, and their influence on the trade balance, so that the economic sector is able to bring Indonesia out of the middle income trap country.
As a step, to keep the trade balance trend in a positive direction, BI will continue to intervene in foreign exchange (foreign exchange) and state securities (SBN). That way, it is expected to be able to encourage the entry of foreign investors so that the current account deficit will be more secure. One of the pre-emtive steps taken is interest rates. The increase in interest rates will further make investment in Indonesian government securities or fix income Indonesia attractive to investors, so that the inflow in SBN and corporate bonds also increases.
In addition, BI will relax in the housing sector. If the housing sector rises, it will attract domestic and foreign investment, especially share buying and selling. By carrying out these steps, the current account deficit that is still relatively safe is getting safer and stronger because the financing is also getting stronger.
Until now, the government is still designing economic transformation with a number of policies that encourage the investment sector. In the era of President Jokowi, Indonesia was awarded an award as a country worthy of investment. The government focuses on balancing supply and demand sides (supply side and demand side) so that structural transformation in the economy can be realized. The trade balance fluctuations are a natural result of the good economic growth that has increased dramatically. If this positive trend can be maintained, Indonesia will become the country with the best economic growth in history.
Government attention to Small and Medium Enterprises is also considered good because there are People’s Business Credit (KUR), village funds, and certificates. This year, the number of channeled KUR allocations is targeted to reach Rp 120 trillion, up significantly from 2017 at Rp 96.7 trillion and Rp 94.4 trillion in 2016.
Development achievements carried out by President Jokowi deserve a blue report card with a value above average. These achievements cannot be separated from reliable ministers who assist the President’s duties according to their fields and capabilities. In addition, community participation in the success of programs cannot be underestimated. The community is a key factor in the success of development for the awareness and determination power to bring Indonesia into a more developed country.
*) Banking Student at IAIN Langsa