Indonesian Migrants’ Contribution to Indonesia's GDP

Although the pandemic had slowed down the economy significantly and reduced the population of Indonesian migrants in Malaysia, it is without doubt that there are still tens of millions active in the labour force. 

For decades, migrants had successfully remitted a percentage of their income to their family and friends, contributing to billions of Indonesian GDP. In 2000, remittance from migrants had contributed to $1.2 billion which had drastically increased to $11.7 billion in 2019. According to a study, Indonesia is amongst the countries that rely heavily on the remittance industry to get their income to their families, using the help of commercial banks in the country. The foreign income brought into the country contributed to 1.1% of the GDP, thus having a major influence in the economy and the balance trade as well as standards of living of the people with the increase in money supply. 

Income from remittance was seeing an upward trend, before the pandemic had hit and slowed economies around the world. To which it did not shy away from negatively impacting the pockets of Indonesian migrants everywhere. As the demand for migrants in foreign countries reduces alongside the limited international mobility offered, TKI placements in 2020 had reduced 59% compared to the year before. With unemployment at a high around the globe, these factors can be noted have dropped an estimated amount of $1.86 billion from 2019 to 2020 sitting at a total of $9.84 billion. 

With the current account deficit recorded to be at $2.2 billion in the 2021 national balance trade, it is important to note that an increase in remittance receipts will be able to soften the impact of the pandemic.

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