√ Sanering: Definition, Impact, Weaknesses, Examples of Sanering
Sanering: Definition, Impact, Weaknesses, Examples of Sanering - On this occasion About Knowledge will discuss about Sanering. Which in this discussion explains the meaning of sanering or cutting money, impacts, weaknesses and examples briefly and clearly. For more details, please see the following article.
Sanering: Definition, Impact, Weaknesses, Examples of Sanering
Redenomination is intended to simplify currency, for example Rp. 1,000,000 to Rp. 1,000 and does not reduce its value, in other words, the two are still considered the same. While the sanering policy was made to cut the value of money.
So that people's purchasing power decreases because wealth will automatically decrease. Sanering policies in Indonesia have been carried out several times with the aim of overcoming an unhealthy economy.
Definition of sanering
The definition of sanering or another term for devaluation is a form of government policy to reduce the value of money with the aim of reducing people's purchasing power. The term sanering is often equated with redenomination, even though the intent of the two is different.
In accordance with the definition of sanering above, this policy not only has a positive impact but also has a negative impact on the Indonesian economy. The worst impact was also experienced by business people involved in the product industry due to decreased consumer interest. In fact, in the case of sanering that had been carried out in Indonesia before, it caused several industries to go out of business.
The difference between Sanering and Redenomination
As explained above, there are 2 (two) different policies on Sanering and Redenomination.
- Redenomination is the policy of simplifying currency fractions by reducing zero digits without reducing the value of the currency itself. For example, the IDR 1,000,000 note is simplified to IDR 1,000 by removing the three trailing zeros. This policy is usually taken when a country's economy is stable and healthy.
- While Sanering is a policy of cutting the value of money so that people's purchasing power decreases. The purpose of this sanering is to make it easier for people to transact and reduce the amount of money in circulation.
Sanering Impact on the Economy
If you look at it from the definition of sanering, this policy should have been made in order to improve the people's economy and reduce the inflation rate. However, in the history of Indonesia in 1959, there was economic chaos due to the government's sanering policy, Ir. Sukarno.
Long story short, based on Law No. 2 Prp. Th. 1959 regulates the government's decision to issue a sanering policy on August 25, 1959. Government of Ir. Soekarno decided to reduce the value of the Rp. 500 note (cabin with a tiger on it) and Rp. 1,000 (money with an elephant on it) to 10%, namely Rp. 50 and Rp. 100.
The purpose of the emergence of policies in order to reduce the rate of inflation which continued until the 1960s. However, in the past, information systems were not as easy as they are today. So that on the first day of the announcement of the policy it was not spread evenly throughout Indonesia.
As a result, every member of the public who already knows this information is competing to spend tiger money and elephant money simultaneously. Almost all basic food shops, livestock traders and others were attacked by the public to spend both types of money.
Of course this is a form of public panic and causes huge losses for business people. The economy of the Indonesian people at that time was very chaotic, causing them not to want to have elephant and tiger money whose value was decreasing.
Worse, the sanering policy actually increased the burden on the government and further strengthened inflation. In 1961 the government experienced a deficit of up to 29.7 percent and continued to fall to 63.4 percent in 1965.
Sanering Policy Weaknesses
Learning from the Sanering policy of 1959, you can see that this policy has more disadvantages than advantages. The possibility of a sanering policy at this time is indeed very small. However, as a businessman, you should be vigilant and keep an eye on how the economy is developing in Indonesia.
Some of the weaknesses and impacts of sanitation that have occurred on the country's economy are as follows:
- National economic development is neglected
- The value of the Rupiah currency decreased against foreign currencies
- There was a decrease in people's purchasing power so that losses increased
- Indonesian people experience economic difficulties, especially small communities
Sanering in 1959 was aimed at suppressing people's purchasing power, which was detrimental to business people. That way, entrepreneurs must always update information. If at any time there is a government policy related to currency such as sanering which is detrimental.
Example Sanering
There are several examples of sanitation policies that have been carried out by the Indonesian government. Among others are:
Sanering 1950
On March 19, 1950, the Indonesian government implemented the sanering policy for the first time. Known as "Syarifudin's scissors", that is where the paper money is actually cut in half, both physically and in value.
The cut banknotes are denominations of Rp. 5 which are physically cut where only the left side is worth Rp. 2,5. Meanwhile, the right side of the banknote has no value anymore.
Sanering 1959
On August 25, 1959, in the second sanering policy was enacted. At that time the Rp. 1000 (nicknamed elephant) to Rp. 100, and a fraction of Rp. 500 (nicknamed Macam) to Rp. 50.
Sanering 1965
On December 13, 1965, the third sanering policy was made again. At that time the Rp. 1000 changed its value to Rp. 1 (new money).
Thus the explanation about Sanering: Definition, Impact, Weaknesses, Examples of Sanering. Hopefully it can be useful and add to your insight. Thank You.
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