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Causes Of Commodity Boom In Indonesia

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Indonesia is part of Southeast Asia, and also one of the economy pioneer in this part of Asia. As a country with the fourth largest population in the world, around 255 million people, and live in an approximately 735 thousands square feet of land and sea, Indonesia has plenty of natural resources, and human power to boost their economy. In addition, with those sources and power, Indonesia should be able to have a great economy. Unfortunately, Indonesia also suffer a common economic problem, which is an unequal income distribution. This condition is described by the increasing amount of Gini index in Indonesia in the last decade. Therefore, it is important to know the cause of unequal income distribution, and also the government reaction in…show more content…
Commodity boom is a phenomena when the price of many physical commodity rise like a rocket. This attracted Indonesia 's businessman to take an advantage of this event by exploiting the natural resources that Indonesia 's has, and then became the exporter of the commodity. The commodity boom in Indonesia might boost the economy of Indonesia, but there were some drawback also. The example of the impact of commodity boom is shown at 2008 that Indonesia suffered for some food and commodities shortage in domestic. This was because Indonesia was too focus on exporting their commodities, such as crude palm oil, coal, and gas, until they overlook the local condition that lead the price of some commodities in domestic rose (Wright). As a result, some part of Indonesia that do not have much natural resources left behind because many Indonesian businessman focus on investing in the region that has the commodity. Furthermore, the commodity boom just benefit and make the rich people become richer, and widening the gap from the…show more content…
This makes some regions to have better resource and commodity from the others, which attract the investors to invest in wealthier region. Moreover, this leads the richer region to have better economic growth that effect them to earn greater income. The commodity boom also take a part in raising the income inequality because it more benefit the rich people rather than the poor. In addition, the poor people who the one that feel the impact from this phenomena, since the price of some commodities in Indonesia rise, as a result of the over export in the commodity. Then, the poor labor welfare that makes the low-income people to suffer more because the government is not strict enough, so that there are workers that earn less money than the minimum wage, and cause them unable to improve their life and income to shrink the gap. Moving to the government reaction, they raise the minimum wage in order to make the low-income people to have an improvement in their life. Furthermore, the government also allocate lots of money in helping poor people, by giving them health care and smart card in a purpose of creating healthier and smarter new generation. Moreover, a better new generation means that a higher quality of human resource will be create and supply, which responsible of the Indonesia 's economy in the