Monday, October 13, 2008

On the Brink of Recession

In the last few days the world financial systems were shaken badly. Bankruptcies sent thousands of people to the streets. Share prices tumbled and investors lost their savings. Jakarta Stock Exchange activities were suspended for two and half days due to steep drop in the stock index. People were concern of the weakening currency. We were entering a period of severe economic turbulence.

I'm no expert, nor economist, and hence I'm not in the position to offer any financial advice. Leave it to the hands of the experts. It's the expert who says that while the wealth of middle class and upper class people were slashed down already, but the disastrous effect towards common people will likely be seen in the next few months when the world’s economy is stagnating.

The latest Indonesian government actions, however, supported by positive global financial development that involved trillion dollars of rescue package in the developed countries, have apparently tamed the local market for a while. Share prices and Rupiah were strengthening again.

The Capital Market Supervisory Board had issued regulation to allow companies to buyback their shares up to 20% of their stock from the paid-up capital without shareholders' approval. While the Finance Ministry issued new regulation to increase government guarantee up to Rp.2 billion from Rp.100 million of bank deposits. Bank of Indonesia also issued regulation to allow banks to use lending assets as collateral to increase Banks' access to liquidity resources.

Still, the government and the people need to continue preparing for the worst. Unnecessary denial statements of the looming economic hardship shall be avoided as it will irritate market, leave people in the dark and make them act as if nothing happens. The market needs honest, correct, firm, bold and timely action, while common people needs clear information, encouragement and guidance to survive the turbulence.

We should have learned a lot from 1998 economic crisis, and people shall now act more constructively. Power play, selfishness, greediness, shall be minimized.

Export business will be down but illegal products will still be flooding the market. Our customs and excise office is not strong enough to curb the rampant smuggling activities. It’s not difficult to find illegal products in the market though. It just needs commitment from the authority to discourage importer, malls, and shops to sell illegal products.

In order to help local people and industry during economic turmoil, people’s spending behavior shall be adjusted. My advice is to allocate 80% of our spending to help local economy when we really need it. When we are strong, then we shall spend more for legal imported products. The world is interconnected. We can’t take benefit at the expense of others for too long, as it will hit us back sooner or later.

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  1. Even a terminally ill patient has their good days. We have not yet seen the real deep contradictions in the global economy emerge yet. All we have seen is economies be propped up by yet further debt. Those that are being "bailed out" or "rescued" and the same people as caused the problems we are now seeing in the first place. It is time to rethink everything.

    As intractable as some of Jakarta's problems appear to be the city has an opportunity to encourage innovation and creativity in its economic life. As strange as it might sound Jakarta may play an important role in staving off the economic trouble that is sure to come.

  2. Agree and we must start from ourselves

  3. ultratupai:
    The mindset of the people, at all levels, is critical to walk through the economic hardship. Social solidarity must be strengthened.

    Ho'oh nduk, start from ourselves. Contribute where we can.

  4. aku meski di amerika, kalo nemu baju/produk buatan indonesia, tetap milih indonesia. yah drpd beli punya negara orang yak.

    mudah mudahan cepat berakhir neh krisis

  5. aku kena cipratan gak enaknya niy.
    Cita2 jd gagal..hiks...
    moga yg diramalkan orang indonesia akan mengalami krismon ke 2, gak sampe terjadi.
    biar gituh kan negara saya sendiri.

    btw, pa kbr pak? dah lama saya gak kunjung kesini

  6. I agree, I think things will get worse before they get better unfortunately.

  7. semoga penarikan uang secara besar2an oleh penduduk indonesia seperti yg terjadi di th 98 nggak terjadi saat ini, sehingga keadaan ekonomi kita tidak kian memburuk

  8. I think if Indonesian people are not panic, the rupiah will be still in strong position.
    Btw, today U$s 1 = Rp 12.000
    Why this happened?

  9. Yeah this depression is hitting the whole world and every segment, right from the international stock market to the local vegetable market. Lets hope for the this to get over soon and the better times to come.

  10. The crises is still in our economy,its has badly affected almost all the people in every field,now it is the time for reacting everyone have their own things to do we should plan and act accordingly.The renewal of the bankruptcy laws are needed.If we are not acting against this problem it will raise and completely spoil our economy.

  11. hal ini juga tergantung pada kebijaksanaan pemerintah gimana caranya mengendalikan keadaan ini kalo pemerintah tidak bisa mengambil tindakan yang bisa membantu maka akan menjadi tambah kacau