The economic world is certainly familiar with the term inflation. Inflation is a continuous increase in the prices of goods and services over a certain time scale. So in this case, an incident occurred where money was no longer a valuable item. Inflation itself is caused by two factors. Namely inflation due to increasing levels of demand which are not balanced by increasing levels of production or what is usually referred to as demand pull inflation.
And inflation is caused by an increase in production raw materials or what is usually called cost push inflation. Inflation is divided into several levels of severity. Inflation that is at a moderate level and above will be very detrimental to society, especially for people with fixed incomes. However, on the contrary, inflation that is at a low level is really needed as a sign that a country’s economy is running and developing.
Indonesia is one of the countries on the Asian continent which is known to have a stable economy. However, judging from its history, this country experienced inflation at hyperinflation levels around 1965. This caused the currency in Indonesia to experience devaluation, or a decrease in one country’s currency relative to another country’s currency. In response to this, the Indonesian Ministry of Finance issued a monetary policy in the form of the Gunting Syafruddin policy.
Namely the policy of cutting banknotes in half. This policy was effective in dealing with inflation and the economic downturn in Indonesia at that time. As time goes by, the economy in Indonesia becomes more stable. However, that does not mean it is an inflation-free country. In fact, Indonesia continues to experience inflation from year to year, but at a low level. So it will not be dangerous to the economic system in this country.
Recently, the Indonesian people have been shocked by the news of the relocation of the National Capital. The National Capital, which was originally located in Jakarta, will be moved to Kalimantan Island. To be precise, it is in East Kalimantan. The government deliberately moved the capital city of Indonesia to reduce the burden on Jakarta. Also considering the issue of global warming which is getting worse, it is feared that Jakarta will sink over time.
Apart from that, this transfer must be carried out in order to improve population distribution in Indonesia. Because so far, Indonesia does have problems with the inequality of its population. Where the community only focuses on the island of Java, resulting in land on the island of Java decreasing. The burden borne on the island of Java, especially the Special Capital Region of Jakarta, should be reduced as soon as possible. On the other hand, on the island of Kalimantan there are still many areas that have not been touched by humans.
So, if we look at it from an ecological perspective, moving the National Capital is indeed necessary to maximize the environment to make it even better. But still on a scale that is not excessive.
The relocation of Indonesia’s capital city certainly raises many pros and cons for the Indonesian people themselves. Because apart from having a positive impact, moving the National Capital also has quite a negative impact. One of them is in the field of economy and inflation. As mentioned above, inflation due to demand pull inflation causes demand for goods or services to increase without being balanced by an increase in production levels.
The construction of the new National Capital will of course require a large amount of costs and raw materials. So the State Expenditure Budget will experience swelling. Currently, inflation in Indonesia is at a low level, but with the project to move the National Capital, it is feared that it will affect the inflation rate in Indonesia, where inflation is increasing. Apart from that, long-term impacts may also be felt by humanity. Moving the National Capital means also moving the heart of the country. Therefore, the center of the country’s economy will automatically move. So gradually people will migrate to Kalimantan Island just to look for decent work.
The more people who migrate, the more land will be needed. It is possible that in the future, the wealth of forest products in Indonesia will decline due to forest land being converted into residential areas.
This of course also poses a threat to humans on a global scale. Remembering that currently Indonesia is known as the lungs of the world. Due to the conversion of forest land, Indonesia lost this title. Apart from the impact from an ecological perspective, the transfer of IKN also has a long-term impact from an economic perspective. Both on a national scale and on a global scale. If in the future the population around the new IKN will increase. So land conversion will also increasingly be carried out on a large scale. This of course will reduce biodiversity in Indonesian forests.
Considering that Indonesia is a country with quite large forest product export commodities. With the reduction in biodiversity of forest products, Indonesia could reduce export activities. So this can also have an impact on the global economy. Population migration caused by the desire to have a decent job, if carried out on a large scale, can also trigger economic shifts. The more residential areas that will be created, the more raw materials needed to make the settlements. So we can return to the inflation concept above regarding an increase in public demand.
So the conclusion that can be drawn is that inflation is an increase in prices that is commonly found in every country. Low levels of inflation are very necessary for a country as a benchmark for economic development. A country with a stable economy does not mean that the country will continue to be prosperous for a long time. Indonesia is a country with a fairly stable economy, but currently there is a lot of news circulating about the relocation of the National Capital. This is what triggers various pros and cons from society. One of them is about inflation that will occur in the future.
But in line with this, as a good citizen. It seems that the Indonesian people still have to trust the government to regulate further. Because the government should have had a special solution to deal with the long-term impacts of moving the National Capital. However, on the other hand, the community should be better at cooperating with the government. By not carrying out large-scale migration to Kalimantan Island. So that biodiversity conservation is maintained. Likewise with maintaining economic stability.
By: Aisha Sofi Maurisa
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