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Indonesia: the Troubled Giant

By aneekoikaw14 Feb 18, 2013 876 Words
CASE ANALYSIS: INDONESIA-THE TROUBLED GIANT
I.Time Context
Indonesia is a large country in the Southeast Asia. It has been in steady growth economically under the leadership of Suharto but experiencing unfair treatment by the government as the president favors those of his colleagues in many aspects. Due to Asians financial crisis debt of considerable value has been incurred and lead to economic downturn. Recovery was in 2004, upon inauguration of a democratic president but wasn’t enough to answer problems on unemployment, corruption, and red tape. Worse still, foreign capital is fleeing the country. The stock of foreign direct investment in Indonesia fell as foreign firms left the nation. II.Viewpoint

The economy of Indonesia deteriorated drastically as a result of political instability, a young and inexperienced government, and economic nationalism, which resulted in severe poverty and hunger. By the time of Suharto’s administration, the economy was in chaos inflation, shrinking export revenues, breakdown infrastructure, factories operating at minimal capacity, and negligible investment. Growth came at a high cost in terms of weak and corrupt institutions, severe public indebtedness through mismanagement of the financial sector, the rapid depletion of Indonesia’s natural resources, and a culture of favors and corruption in the business elite. As a result, the legal system was very weak, and there was no effective way to enforce contracts, collect debts, or sue for bankruptcy. Non-tariff barriers, rent-seeking by state-owned enterprises, domestic subsidies, barriers to domestic trade and export restrictions all created economic distortions. Following President Suharto's downfall, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. But still, lags behind its Southeast Asian neighbors. The considerable increase of economic growth after Suharto’s downfall reflects a number of structural weaknesses of Indonesian government. Although the change of government type into democratic form helped a lot to increase the economic situation, still, Indonesia is far behind its neighboring countries. Indonesia will still go a very long way in fixing all that had been messed up because of the unsound government system in the country. More rigid steps in building up again a strong republic that will solve the problem must materialize. III.Statement of the Problem

“But when you have bad governance, of course, these resources are destroyed… I got pulled deeper and deeper and saw how these issues become linked to governance, to corruption, to dictatorship.” (Wangari Maathai)

The strength of a nation is greatly affected by the kind of leader and his leadership style. In the case of Indonesia, the very problem is the groundless, ineffective leadership that lead to problem chains such as: business activities are hurt by excessive red tape; high level of corruption; poor infrastructure; growth in labor productivity has been nonexistent for a decade; foreign capital is fleeing the country; and unemployment is still high at around 10% of working population. IV.Objectives

Must Objectives
The problem on poor infrastructure and high unemployment rate should be addressed by the government.

Want Objectives
Leadership strategy that would promote effectiveness and efficiency of the government that would foster political and economic growth and sustainability.

V.Areas of Consideration/ Analysis
The focus is on the unsound government management. In the system during the time of Suharto, processes are prolonged and people in the position get used to in getting bribes . This system has not been even changed by elected President which he must be capable to do so.

VI.Alternative Courses of Action
Find ways to educate the people in the government of the proper conduct of good governance. Amendments of the constitution to polish policies and procedures.

VII.Recommendation
The leader/ president together with the other government and public servant should not neglect to their •They must improve their infrastructure for easy accessibility of market. •Indonesia had been blessed with the greatest and most diverse biological resources in the world. The country should be fully utilized the enormous natural wealth to improve the wealth of their people. •Improve employment opportunity to reduce greediness of people which results to engaging in corruption. •Stop corruption by making and implement laws firmly.

VIII.Conclusion/ Detailed Action or Implementation Plan
Indonesia have had experienced some recovery from the past economic distress, but because the main problem have not yet been solved, economic progress is still halfway. The group agreed upon actions that should be taken in to consideration: The government and the people in it should act accordingly. Though reforms have been made to straighten the path of governing the nation, these pieces of paper could never have any significance unless implemented and monitored strictly. Secondly, processes being adopted should be reviewed, analyzed, and for better efficient output most especial those concerning. Another thing is government should address the problem on poor infrastructure. By investing money on infrastructure improvement, the country could achieve a much better opportunity for good business operation for both local and foreign industries and thereby promote economic growth and increase the income of the country. Secondly, processes being adopted should be reviewed, analyzed, and for better efficient output most especial those concerning. Effective leader, well developed and aligned policies and processes, strategic leadership not dictatorship, and balance

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