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