Rupiah Redenomination: Illusion Of Figures That Disrupt The National Economic Focus

Illustration of the redenomination of rupiah currency that will be carried out by the Minister of Finance Purbaya Yudhi Sadivewa. (Instagram)

JAKARTA - Andalas University economist Syafruddin Karimi assessed that the rupiah redenomination plan was only an illusion of numbers that did not add value to the national economy and instead diverted the government's focus from more basic problems, namely productivity and real growth.

The redenomination does not change purchasing power. Does not change real income. Does not change the relative price. Does not create jobs. Does not strengthen the industrial structure. Only change the numbers printed on paper money, price labels, accounting systems, and tax boards," he said in an official statement, Sunday, November 9.

For example, continued Syafruddin, if a bowl of meatballs costs Rp. 20,000 then it becomes Rp. 20, people's purchasing power remains the same.

"One hundred thousand dollars that can buy five bowls can still buy five bowls. Redenomination only exchanges appearance, not substance," he said.

According to Syafruddin, redenomination only offers symbolic administrative efficiency. Simplification of currency systems does seem administratively efficient, but does not strengthen the real sector.

The promised advantages are more psychological and symbolic. In fact, true economic stability is built from a much deeper foundation, productivity, fiscal credibility, and public trust in economic policy," he said.

Apart from not providing real benefits, continued Syafruddin, the redenomination process actually costs a lot, starting from reprinting banknotes and coins, updating software and recording systems. Not to mention, the government must carry out a national socialization campaign so that people are not confused and business actors do not miscalculate.

Even so, according to Syafruddin, during the transition period, the potential for administrative chaos and public confusion was difficult to avoid.

During the transition period, there will be duplication of old and new currencies that run side by side. This creates potential administrative chaos, consumer doubts, and even cheating opportunities. Small business actors will find it difficult to adapt," he explained.

"People are vulnerable to ilclusion money perceptions that prices have fallen because they see smaller numbers, even though purchasing power remains. As a result, trust in prices can be disrupted, and economic stability is threatened," he continued.

Syafruddin said that in many countries, redenomination is carried out because of urgent needs such as hyperinflation. Indonesia, on the other hand, is in a controlled inflationary condition.

"If the government insists on doing so, it means that they are actually diverting attention from the main priority of encouraging real economic growth," he said.

Syafruddin views the discourse of redenomination as a form of failure to prioritize essential things. Instead of being busy with three zeros in the currency, it is better for the government to be busy with structural reforms.

"Impose energy and budget for vocational education, digitize the agricultural sector, strengthen industrial supply chains, and eradicate unemployment," he said.

Furthermore, he said Indonesia does not need an illusion of stability in the form of a new nominal. He said, what was needed was a meaningful growth reality for the people.

"Redenomination is not the answer to the challenges of the times. Redenomination is a diversion from large work that is still delayed. Delay or cancel this policy, and direct all state resources for one thing that is really needed, productivity transformation for a stronger future of Indonesia," he said.