The Reason Why Export and Import are Down

Every country does these activities, from poor to rich countries. Yes, these activities are exporting and importing. Export is the purchase of domestic goods by foreigners, while imports are the purchase of foreign goods by domestic residents (Mankiw, 2012, p. 13). Export and import become a way for a country to boost economic growth. If exports are greater than imports the balance of payments will be surplus and if an import is greater than export the balance of payments will be a deficit. There are several reasons why exports and imports are down.

The first reason is a lack of competition in the sector of production and industry. It means that there is a decline in economics competition because of lack of creativity in the community. Consequently, there is an imbalance between export and import. Second is, there are no new investments in the manufacturing industry. Investors are an important part in boosting economic activities. If the companies get a lot of capital from investors, then their production process will go smoothly, thus a company requires a strategy in attracting overseas and domestic investors ' intention. One of the ways to do this is by promoting the company and its flagship products of the company. The government can also help in promoting the domestic industry to attract domestic investors in the country, such as Mr. Jokowi who builds strong bilateral relations to encourage other countries that want to invest in Indonesia (Waluyo, 2014). 

And then, the weakening of the rupiah exchange rate. When the exporter gets a payment from abroad, then the next he will exchange foreign money into rupiah to be functional again becoming the capital in the purchase of raw materials, and other operational costs so as to produce a product that will be sold again, and when the exchange rate of the Rupiah strengthens, then it could be said to be of export interest and domestic economy will decline (Ginting, 2006). In order to make a payment with a foreign currency, then the individuals and companies in Indonesia have to exchange the rupiah first into foreign currencies. 

If at that time the exchange rate of the rupiah is being dropped or weakened, then the next more money will be needed to get a number of dollars foreign currency payments to abroad. This, of course, causes harm to importers (Tjiptojuwono, 2015). Since the selling price of imported goods in the country will also increase or more expensive, it results in a declining purchasing power of the community to the goods and services that come from abroad and the state will reduce its interest in importing from abroad. And balancing the currency become an important obligation for a country to achieve a balance in the export and import. And below is the theoretical basis and data export, import, and GNP of Indonesia.

In macroeconomics theory, the relationship between export with national income affect each other and there is a positive correlation because export is part of national income rate (Yunan, 2009). For this case, we can see the data of export, import, and GDP and we can search about export, import, and GDP easier on www.bps.go.id and below is the data about export, import and GDP from 2010 to 2014.

Source: data processed 

From these data, it can be found the truth of Macro Economics Theory. And from economics growth theory it can be explained that the factors in determining economic growth is GDP, and it means the big or the small GDP results are very influential on economic growth (Ilmu Ekonomi ID, 2016).

Exports and imports that rise in balance will have a positive effect on economic growth so that economic growth is increasing, and if a country's economic growth is increasing the country's economy activity as well will increase. And the way in which export and import are not down is the government should fix this by providing lower interest rates for entrepreneurs of home industry, fostering of small entrepreneurs in the development of products and export products, or with the industrial area outside of Java. Second is, Improving manufacturing development to attract investors to invest their money. And then, strengthening the rupiah against the dollar to reduce the price of production, so the price of goods to be cheap and can compete with foreign products.

           

           

Refference

Ginting, A. M. (2006). Pengaruh nilai tukar terhadap ekspor Indonesia. Jakarta: P3DI, Bidang Ekonomi dan Kebijakan Publik .