Banking Sector Of Jakarta example essay topic

As recent research markedly demonstrates, consumers in Jakarta now attempt to limit the time they spend shopping. Time-pressed by family and work, they spend less time cruising the mall in search of the perfect item, but rather look to get what they need as quickly as possible. This trend has been labeled precision shopping. However, especially young people of Jakarta still enjoy shopping there more than spending time at home. The evidence is that the average age of people who spend their leisure time shopping the mall is higher of that of the western countries.

There is little doubt that Jakarta itself is now prepared to follow this trend, as a tide wave of new mall openings has overtaken Far East and shows no signs of abating. In Jakarta over the past decade, there have been more than a few developments, which have been touted as shopping malls, but have fallen far short in many regards, because of scale, layout, facilities and other factors. However, it has not been until the past few years when huge malls have opened in the city. These new buildings have brought already a new standard to Jakarta residents and even to Western tourists; they lay the ground for more of the same in the future. Indonesia is industrialized country. Majority of Indonesian businesses are located in Jakarta, which is the economic heart of the country.

In Jakarta electronic and information technologies are highly developed. However, the economic crisis, which hit Indonesia, had hurt economy of Jakarta severely in 1998. It rapidly spread, causing stocks to tumble and many Asian currencies to fall, the worst of all the Indonesian Rupiah. Indonesia worsening economic situation is mainly due to the sharp depreciation of Rupiah against the US dollar. Being out of our governments control, the Rupiah keeps on sliding further and at its lowest point touched a level of Rp. 17,000 against the US dollar.

Realizing that the economy will not recover overnight, it takes time and serious effort to bring back the economy on the right track. In order to cover the budget deficit, the Indonesian government asked the assistance from the International Monetary Fund. As for the revival of the economic crisis, Indonesia needs massive aid. The crisis has caused the banking sector of Jakarta to collapse dramatically. The large number of banks in the city might be one of the main problems as there are more than 265 units. The recent economic crisis has put more burdens on the banking sector so the government decided to close down 16 ailing private banks without a full guarantee on the return of their deposit funds.

This has forced depositors to draw their savings and moved to foreign and government banks which resulted in a big rush for several private banks. Due to this, The Central Bank has to print new money for injection and bailing out the insolvent banks caused by the rush. By printing money, the government unintentionally prompted the outbreak of hyperinflation. Panicked by this, the Central Bank decided to raise interest rates. As a result, companies in Jakarta were highly dependent on loans are forced to close down. Many factories of the city are facing financial difficulties due to the huge and extensive overseas debts and a tremendous dependence on importing raw material and supplies.

We know that most factories have been too dependent on imports and their owners much too attracted to foreign capital without hedging. They are facing problems with loan repayment due to the drastic depreciation of the Rupiah. Even medium and small enterprises are facing the same problem. They have difficulty in running their businesses since they could not afford to pay the high interest rate. Meanwhile, the economy continues to deteriorate with the annual inflation rate once rising more than 100%. Many factories are closing down and the number of unemployed people increase.