Saturday, April 13, 2024 | 09:40 WIB

Assessing National Debt Problems

J. Soedradjad Djiwandono
J. Soedradjad Djiwandono, Emeritus Professor of Economics, Faculty of Economics and Business, Universitas Indonesia, and Adjunct Professor of International Economics, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

And what about us? 

We in Indonesia may accord a fair judgment of the problems deriving from the “Old Order” Government of President Soekarno. With his ambitious program to gather together non-aligned countries, embracing President Tito of Yugoslavia and President Nasser of Egypt as he campaigned for former colonies to form “New Emerging Forces” against legacy colonial powers, he led Indonesia to host the New Emerging Forces Games – not to mention conferences whose unbearable costs crushed our national budget. Old-timers may recall how resorting to deficit financing, or to put it plainly, money printing, for these white elephant projects presented Indonesia with a 635 per cent inflation figure in 1965.

Please do not assume I intend to belittle President Soekarno’s monumental contribution in uniting such a plethora of ethnic groups and races with hundreds of languages, to become one nation, and to proclaim our Independence from both Dutch and Japanese oppressors on August 17, 1945, together with Dr Mohammad Hatta and other founding fathers, to become an independent Republic of Indonesia (RI), proudly standing today as a middle-income country full of achievements, confidently ready to lead the region and even more. 

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While I would not yet classify it as a “white elephant project”, as an economist, I would daresay that the proposal to build a new national capital in East Kalimantan to replace Jakarta is not my priority, at present. There will be a more propitious time, one when we can better afford to build a new capital there, but certainly not now. 

Finally, I would like to remind all to not kid ourselves by saying that our national debt is still acceptable, measured against the yardstick of developed economies like Japan, US, and the EU. We should keep in mind that they are generally creditor countries, not like us, also pointing out how they successfully impose a tax ratio of 30 per cent or more, not like our meager 9 per cent.