The Indonesian Rupiah: Second Worst Performer in Asia

From time to time we have received complaints from people who allege that this blog is making the Indonesian TEFL industry look bad, especially PT. Titian Buana Ilmu (TBI). It is alleged that the recruitment woes of PT. Titian Buana Ilmu are down to the nasty things we say about Ibu Mariam’s scandal and gaffe-prone ‘institute’.

While there have been around a dozen potential teachers and investors who have contacted us over the past three years to thank us for warning them about this unscrupulous business, in truth, this blog has only played a minor role in TBI’s recruitment problems. Surely a more important factor has been the steady decline of the Indonesian rupiah, which has been one of the worst-performing currencies in the world since 2011, falling from Rp 8,500 to the US dollar to almost Rp14,000 now.

This woeful performance has been due to a number of factors, some of which are completely beyond Indonesia’s control. Since 2011, commodity prices have trended ever lower. As a commodity economy, Indonesia has felt the full brunt of this. The rupiah started going down around the same time commodity prices went into a tailspin. This strongly suggests that crashing commodity prices are the key factor. Disappointment with the Jokowi administration has also been a major factor since late 2014.

Jokowi said that he would remove fuel subsidies, but he backed away from that promise, and the state-owned oil company Pertamina is once again losing incredible amounts of money every month. By banning imports on hundreds of different items, Jokowi’s administration has also started to look very anti-trade, which has also spooked investors. Its weak stance against corruption hasn’t helped either.

Whatever the reasons for its decline, the fact is that it makes a big difference to the attractiveness of Indonesia to TEFL teachers. As recently as 2011, a salary of Rp.9 million would have been equal to $1000 a month. It is worth a miserable $642 now. That is not going to attract many qualified English teachers, is it? Even a humble TEFLer with an online certificate would probably turn his/her nose up at such meager pay. Indonesia is rapidly losing competitiveness due to its weak currency, and unless schools raise salaries dramatically, they should not expect to generate a lot of interest from prospective employees.

Below is a graph which shows the decline in Asian currencies. Indonesia is in second last place, with only Malaysia faring worse. Malaysia is already deep in crisis, but if the rupiah continues to fall, Indonesia is not far behind.

Asian Currencies

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