Inflation

Inflation

From Jayakarta

According to economic science, the higher the demand for a commodity, the lower its price will be. Development economics also teaches us that development which steps up production and services will result in lower tariffs.

However, in this country the reality is different.

An example: the number of haj pilgrims increases every year, but the government invariably charges more every year for the pilgrimage. The reason given is that inflation and the dwindling value of the rupiah compared to foreign currencies. However, to charter five airplanes is clearly much cheaper than hiring one.

Another example: this year, the Head of Logistics Affairs has announced, and seemingly given the order, that until February rice prices will go up. The dry season and again inflation have been given as the cause of the increase. As a result, rice prices have gradually gone up. However, each time crops falls short of the target, rice is imported from abroad. And imported rice is clearly cheaper. Let us hope that the logistics agency does not come with the excuse that there are crop failures all over the world. There are always officials who want to have the last word.

Why should every price increase be linked with inflation and the dwindling value of the rupiah? Yearly inflation and reduced value of currency are experienced by nearly all countries. But officials and economists in the U.S., for example, fight to come to grips with problems such as those of foreign trade. The result was that the value of the U.S. dollar got a boost.

Criticism has been heard recently about officials who do not function well in their respective fields. An example: this republic is the largest island country in the world, but its foreign shipping is 95 percent dominated by foreign ships, while national shipping has a 50 percent right acknowledged by the UN and UNCTAD. The share must be fought for because it will yield a tremendous increase in foreign exchange and thus in the value of the rupiah.

Also, sea transport for the domestic trade dwindled to 60 percent in the past decade, while it should be 90 percent. Foreign shipping now takes 40 percent.

Foreign and domestic shipping is the responsibility of the communications ministry and the directorate general of sea communications. Officials and economists should continue to fight as tenaciously as their colleagues in the U.S. so as to raise the value of the rupiah and to curb inflation. The value of the rupiah and inflation should not be made the scapegoats by certain officials who are in the habit of increasing prices and tariffs.

MOELYONO

Jakarta