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Indonesia-China Partnership: New Alternatives, Besides Devaluation Policy?

10 September 2015   14:46 Diperbarui: 10 September 2015   14:50 87
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Ekonomi. Sumber ilustrasi: PEXELS/Caruizp

 

Kevin Tan, Jakarta

Recently, China decides to devaluate its currency until around 3,3%. This policy has destabilized most of the parts in the world, including BRICS (Brazil, Russia, India, China and South Africa), European countries, and Asian region, including Indonesia. As Indonesia is China’s strategic partner, China should be mindful to execute this policy.   

There are two reasons behind this.

First, according to Minister of Trade Republic of Indonesia, Indonesia has a deficit trade to China with the total amount of 13 billion USD until May 2015. In this sector, China has maximized its profit from Indonesia, during Indonesia’s hard time to increase its economic growth.  It shows that Indonesia cannot get its chance to get more profit with their cooperation to China.

Second, China’s devaluation will jeopardize the competitiveness of Indonesia local products. When Indonesia still in a dilemma to strengthen its currency to USD, the devaluation will bring Indonesia’s economy going nowhere.

Devaluation policy will lead China to decrease its good’s value to be exported to other countries. Since Indonesia’s fundamental economy is not as stronger as China, in term of industry development. Indonesia will import more good from China, where our local products will not be bought to our local people.

In this period of time, China’s devaluation policy is hardly to be considered as a right time to be executed to Indonesia.  When Indonesia is in the struggle in inviting investors to help Indonesia in its infrastructure program, Indonesia has to swallow second bitter pill from China. 

Rather than bringing a benefit to Indonesia, it creates fear to our small-and-medium enterprises to sell their product locally and internationally for their product competitiveness with China, especially on the price.

When Indonesia has not a strong economic sector nowadays, the reasons above will put Indonesia’s economy remain in the crisis.

It is regrettable that this policy will only bring benefit to China, without thinking further to a longer term of Indonesia-China partnership. Partnership should bring a benefit to all party, not only one party.

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