Sri Mulyani Discusses New Economic Order, Slower Revenue Growth
Table of Contents
- Indonesia Navigates the New International Economic Order
- Indonesia Navigates teh New International Economic Order: A Q&A Guide
Jakarta – finance Minister Sri Mulyani Indrawati has assessed that the global economic order is undergoing a meaningful transformation, a shift she identifies as the new International Economic Order (NIEO).
According to Sri Mulyani, the post-World War II era saw globalization and a global rule base as the cornerstones of international interactions. However, this structure has been evolving, particularly since Donald TrumpS presidency in the United States.
The Rise of Unilateralism
The Minister of Finance highlighted the move away from multilateralism.”Kita telah tiba di era The New Economic Order. Setelah lebih dari 50 tahun rule based multilateralisme dan globalisasi menjadi fondasi tatanan ekonomi dunia, kini unilateralisme menjadi rule of the game,” she stated in an Instagram post on Friday, March 14, 2025.
Trade Wars and Economic Sovereignty
The imposition of tariffs by the U.S. on allies such as Canada, Europe, Mexico, and China has triggered retaliatory measures. In response to these global economic shifts, Sri Mulyani emphasized the importance of national resilience. “Setiap negara harus bekerja keras melindungi kedaulatan dan kepentingan masing-masing – tidak terkecuali Indonesia,” she asserted.
Indonesia’s Economic Resilience
Amidst escalating trade and economic tensions, coupled with rising geopolitical concerns, Indonesia’s economy has demonstrated resilience. The nation’s economic growth in 2024, maintaining a level of 5%, is considered a notable achievement.
Sri Mulyani highlighted key economic indicators: “Inflasi rendah dan neraca pembayaran 2024 surplus US$ 7,2 miliar, naik 14,2% dari tahun sebelumnya. Posisi keseimbangan tetap baik dengan surplus neraca perdagangan Januari 2025 naik 78% (US$ 1,5 miliar) dibanding 2024 hingga mencapai US$ 3,5 miliar.”
Fiscal Performance and Strategic Initiatives
While state revenue has experienced a slowdown, primarily due to declining commodity prices, strategic initiatives are underway to bolster the nation’s finances. Tax revenue collection reached Rp 187.8 trillion by february 2025, a 30.19% decrease compared to the Rp 269.02 trillion collected during the same period last year.
Despite this, efforts are being made to improve revenue streams. “Penerimaan negara mengalami perlambatan, namun berbagai inisiatif strategis dan perbaikan administratif terus dilakukan untuk menjaga dan meningkatkan penerimaan negara,” Sri Mulyani noted.
Maintaining Budget Agility
State spending remains on track, with efficiency measures in place. As of February 2025,state expenditure reached 9.6% or Rp 348.1 trillion.
Sri Mulyani affirmed the government’s commitment to social welfare: “Dengan efisiensi, namun tetap menjaga belanja bantuan sosial dan kepentingan serta kebutuhan rakyat. APBN tetap agile sebagai instrumen penting untuk menjaga kinerja ekonomi, serta mendorong pertumbuhan dan kesejahteraan masyarakat.”
This article delves into how Indonesia is responding to the evolving dynamics of the global economy, frequently enough referred to as the New International Economic order (NIEO). We’ll explore key aspects of Indonesia’s economic performance and strategic approaches in this changing landscape.
Understanding the New International Economic Order (NIEO)
What is the New International Economic Order (NIEO)?
The New International Economic Order (NIEO) signifies a shift in the global economic landscape away from the post-World War II order characterized by multilateralism and globalization.Indonesia’s Finance Minister Sri Mulyani Indrawati describes it as an era where unilateralism is becoming increasingly influential, impacting international trade and economic interactions.
What factors contributed to the emergence of the NIEO?
Several factors have contributed to the emergence of the NIEO, including:
Rise of Unilateralism: A move away from rule-based multilateralism towards individual countries prioritizing their own interests.
Trade Wars: imposition of tariffs and retaliatory measures between major economies, such as the U.S., China, and its allies. This is impacting global supply chains and international trade relationships.
Geopolitical Tensions: Heightened tensions adding to economic uncertainty.
How does the NIEO contrast wiht the previous global economic order?
The previous global economic order was largely based on multilateralism and globalization, emphasizing cooperation and interconnectedness among nations. It was built upon a global rule base. The NIEO, however, is marked by:
Unilateral actions: Countries prioritizing domestic interests over international collaboration.
Increased protectionism: Tariffs and trade barriers disrupting free trade.
Focus on economic sovereignty: Nations emphasizing self-reliance and the protection of their own economies.
Indonesia’s Economic Performance and Resilience
How has Indonesia’s economy performed amidst global economic shifts?
Despite the challenges posed by the NIEO, Indonesia’s economy has demonstrated notable resilience. Key highlights include:
Consistent Growth: Maintaining an economic growth rate of 5% in 2024.
Low Inflation: Keeping inflation under control.
Balance of Payments Surplus: Achieving a balance of payments surplus of US$ 7.2 billion in 2024, a 14.2% increase from the previous year.
Trade Surplus: Experiencing a trade surplus, with January 2025 showing a 78% increase (US$ 1.5 billion) compared to January 2024, reaching US$ 3.5 billion.
What are the key economic indicators highlighted by Sri Mulyani?
Sri Mulyani highlighted the following key economic indicators as evidence of Indonesia’s resilience:
5% Economic Growth in 2024
Low Inflation
US$ 7.2 billion Balance of Payments Surplus (2024)
US$ 3.5 Billion Trade Surplus in January 2025
What challenges does Indonesia face in the NIEO?
Despite its resilience, Indonesia faces several challenges:
Slowdown in State Revenue: Declining commodity prices have led to a slowdown in state revenue.
Decreased Tax Revenue: Tax revenue collection in February 2025 decreased by 30.19% compared to the same period last year.
What strategic initiatives are being implemented to address these challenges?
To counter economic challenges, Indonesia is implementing strategic initiatives such as:
Improving Revenue Streams: Efforts to enhance tax collection through strategic initiatives and administrative improvements.
Maintaining Budget Agility: Ensuring efficient state spending while preserving social welfare programs.
Indonesia’s Fiscal Policy and Budget Management
How is Indonesia managing its state revenue and expenditure?
Indonesia is focused on maintaining fiscal discipline:
State Spending: State expenditure remains on track, with efficiency measures in place.
Social Welfare: The government is committed to maintaining spending on social assistance programs and meeting the needs of its citizens.
Budget Agility: Utilizing the state budget (APBN) as a tool to maintain economic performance, stimulate growth, and improve public welfare.
How does Indonesia ensure budget agility in the face of economic changes?
Indonesia ensures budget agility by:
Efficiency Measures: Implementing efficient spending practices across government sectors.
Prioritizing Social Welfare: Continuing to allocate funds to social programs that support the population.
Strategic Use of APBN: Using the state budget as a flexible instrument to respond to economic fluctuations and support long-term growth.
How is Indonesia protecting its economic sovereignty?
Indonesia is prioritizing the protection of its economic sovereignty through:
National Resilience: Strengthening the national economy to withstand external shocks.
Strategic Initiatives: Implementing policies and programs that support domestic industries and reduce reliance on other countries.
NIEO Key Takeaways
| feature | old International Economic Order | New International Economic Order (NIEO) | Indonesia’s Response |
| ———————– | ——————————————— | —————————————————– | ———————————————————— |
| Dominant Paradigm | Multilateralism, Globalization | Unilateralism, Economic Nationalism | Maintaining national resilience, protecting economic sovereignty |
| Key Characteristics | Rule-based, cooperative, interconnected | Prioritizing individual interests, protectionist | Strategic initiatives to improve revenue streams |
| Trade Relations | Free trade, reduced barriers | Trade wars, increased tariffs | Seeking balanced trade relationships |
| Economic Focus | Global growth, interdependence | National interests, economic sovereignty | Ensuring budget agility, supporting social welfare |