The weakening of the Rupiah always becomes bad news for the future of Indonesia Economy. Even though this is not the first time, it can do a huge damage to the local economy especially during high inflation right now.

According to the economists in Indonesia, they already warn that the recent weakening of the Rupiah against the USD could put more pressure on people’s purchasing power, along with the high prices of imported goods.

Which Sectors will be Affected for the future of Indonesia economy?

The strengthening of the dollar will clearly affect the future of Indonesia economy. This is because this country is still quite dependent on imports. If the Rupiah exchange rate weakens, various sectors that depend on imports will suffer major losses.

So, what are the sectors that will be most affected by these economic conditions? The following is a list and explanation.

1. Foods  

This one is actually quite ironic since the future of Indonesia economy still relies on imports to meet domestic needs. Most of the imported foods are actually staple foods like rice, flour, sugar, beans, onion, and etc. If the weakening of the Rupiah becomes worse, the government needs to make proper regulations to keep the price of basic necessities.

Just like what we explain above, with this condition imported goods like food will become more expensive and make low income families unable to afford it. This can also cause a chain effect because with the rise of food prices, the prices of other necessities will also rise.

2. Manufacture Industry

You may have heard about this word but do you know what manufacturing really means for the future of Indonesia economy? Manufacturing is a branch of industry that operates equipment, machines and labor in a process medium to process raw materials, spare parts and other components to be produced into finished goods that have selling value.

Even though Indonesia is rich with natural resources, this country mainly produces and exports raw material. To produce better products, they still depend heavily on imported materials. In fact, it is not uncommon for them to export raw materials and import finished products.

This is certainly very unfortunate considering that the Indonesian manufacturing sector is actually able to compete with foreign products. With the strengthening of the dollar, it will be difficult for the local manufacturing industry to survive because production costs will increase significantly while income remains the same.

3. Pharmacy

For the future of Indonesia economy, It is not a secret that most of the raw materials that are used for the pharmaceutical industry in Indonesia are mostly imported. Even according to some experts, the ratio of imported material in the industry has already reached 90%. 

Just like the food sector, Indonesian pharmaceuticals, which should be an important sector, are still dependent on imports. In fact, this industry has a big role in the national health system.

If the price of imported materials increases, the price of medicines will also increase drastically. This is certainly dangerous because it could burden the state’s health insurance budget.

4. Electronic

Do you know if Indonesia is one of the biggest smartphone markets in the world? With a population around 270 million, this country is a massive potential market for electronic devices. Unfortunately, Indonesia may be seen only as a consumer and not producer of these electronic goods.

Why? Because the majority of the products are imported, mainly from China. The future of Indonesia economy actually has few electronic and technology companies but most of them also still rely on imported parts. So, if the dollar rises, the price of these products will get more and more expensive.

5. Energy

For information, even though Indonesia is able to produce its own energy like oil, gas, and electricity, it is not enough to meet domestic consumption. Because of this, Indonesia still has to import large quantities of oil from other countries to maintain its energy needs.

The future of Indonesia economy has actually started to reduce the amount of imported energy but the number is still very high. And for information, almost the majority of the imported energy will be used as subsidies for its people.

This type of subsidies actually has become the subject of debate among officials and the public because the numbers are very large and continue to burden the state budget along with the strengthening of the dollar.

The following is some information regarding the sectors most affected by the rise in the dollar. It is necessary to understand that this problem is actually quite serious because it is related to the future of Indonesia economy sustainability. So, let’s pray that the Indonesian government can handle this problem as soon as possible.

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