Indonesia is currently grappling with a major economic challenge, which is the continuous outflow of national wealth. A significant portion of the wealth generated in Indonesia is being stored and utilized overseas, leading to a situation where the country is essentially haemorrhaging financially. This issue has been persisting for decades, with the wealth of Indonesia being drained out of the country, much like blood leaving a body.
During the colonial period, particularly under the Dutch East India Company (VOC) era, Indonesia experienced a significant outflow of wealth, with profits being banked in the Netherlands. Today, although the situation is less overt, the outflow of wealth continues to occur, albeit in a more discreet manner. Many Indonesians are oblivious to this issue, while some are complicit in facilitating the outward flow of wealth.
To understand how Indonesia’s wealth is being drained abroad, one can look at various economic indicators. For instance, the trade balance of the nation and the ownership structures of exporting companies can provide insights into this issue. Additionally, records of deposits in foreign banks belonging to Indonesian entrepreneurs and companies shed light on the extent of wealth stored overseas.
Analyzing Indonesia’s export-import activities from 1997 to 2014 revealed that the country’s total exports amounted to USD 1.9 trillion, resulting in a trade surplus of approximately IDR 26.6 trillion. However, these figures might be underreported, with estimates suggesting that export leakages due to trade misinvoicing could be as high as USD 38.5 billion in 2016. Furthermore, Indonesian entrepreneurs and companies have approximately IDR 11,400 trillion stored overseas, which is five times greater than the national budget and equivalent to the GDP.
The majority of Indonesia’s export profits end up in the hands of foreign companies with accounts abroad, who capitalize on the country’s natural resources and labor without reinvesting their earnings domestically. This poses a significant challenge for Indonesia, as the capital that leaves the country cannot be utilized to stimulate the economy or support domestic businesses.
This issue of wealth outflow is not new and has been a systemic problem for centuries. Leaders like Sukarno have previously addressed the issue, highlighting the exploitation of Indonesia’s wealth by foreign powers. The outflow of Indonesian wealth continues to hinder the country’s economic growth and stability, perpetuating a cycle of wealth inequality and poverty.
In conclusion, addressing the outflow of national wealth is crucial for Indonesia’s economic development and prosperity. By acknowledging and tackling this issue, the country can retain its wealth within its borders and utilize it for the benefit of its people. It is imperative for Indonesian elites to be transparent about this issue and take proactive steps to repatriate the wealth that rightfully belongs to Indonesia.
