Monday, October 8, 2007

Idul Fitri spending spree

Opinion and Editorial - October 08, 2007

It is again the time of the year when millions of people in urban areas across the country begin their home-sweet-home journey to celebrate the Idul Fitri later this week with their parents and families. This moment seems culturally so sacred to the Muslims that make up the majority of Indonesia's 230 million population, no one wants to miss the annual exodus called mudik.

Apparently taking great lessons from past experiences where employees and civil servants always risked being dismissed or strongly reprimanded after longer holidays, the government has decided to make the entire next week (Oct. 12-19) a semi-official holidays, which will see a portion of the holiday deducted from the annual-leave of employees.

Foreigners may shake their heads in wonder as they observe how people, in defiance of simple logic, should struggle to such lengths and undergo such pains only to rejoice for a few days in their home villages. But this tradition has multi dimensions -- religious, cultural, social and economic.

This is partly the result of the country's transformation from a largely agriculture, rural-based economy into a modern, urban-based one where the urban share of the population today is as large as 60 percent.

To the migrants -- street vendors, hawkers, maids, construction workers and even officials and corporate executives and professionals -- mudik is a kind of therapy to revitalize family relationships, generate new freshness and rejoice a family bond they all miss working in the city.

Holiday-makers abide long queues for train and bus tickets, jump into overloaded transportation vehicles and happily get stuck for hours in traffic jams. For them, all the pain and inconvenience is but a small sacrifice for their home-sweet visit.

The exodus will reach its peak on Wednesday and Thursday, the eve of Idul Fitri, yet there is already heavy traffic along Java's main highways as well as those to the Merak ferry port crossing between Java and Sumatra islands. Long lines of would-be Idul Fitri revelers are a common scene at railway and bus stations. Similar scenes, though on a lesser scale, have already been taking place in other provincial cities.

The current fasting month of Ramadhan is also very crucial for the performance of department stores and almost all other kinds of retail shops selling consumer goods across the country. It is during this season they ring record sales of the year. Several analysts even estimate the Ramadhan month alone accounts for more than 70 percent of annual sales of retail shops and department stores.

The central bank has increased the amount of bank notes in circulation to meet the demand for cash from people who are going mudik and companies which have to pay out Idul Fitri bonuses to employees.

While most of the savings raised in the countryside are usually throughout the year sucked into Jakarta and other major cities through the banking system, mudik reverses this money flow back to rural areas as millions of Idul Fitri revelers return to their home towns.

Spending during Ramadhan and during the week-long holidays next week would surely generate an enormously strong market demand for goods and services. This is expected to fuel private consumption, which has been one of the main drivers of economic growth since 1997.

Trillions of rupiah will be pumped into the rural economy during the week of the Idul Fitri festivities as millions of Idul Fitri revelers enjoy their holiday. So Mudik also serves to redistribute income as city folk share their earnings with rural family members and show off their material achievements.

This trend consequently further strengthens the temptation for rural people to try their luck in the cities.

Next week is also the season when Jakartans will revel in almost-empty roads, as the city's population will be reduced by almost one quarter. But more efficient traffic on Jakarta's streets will not contribute to the economy as production operations virtually stop during the week-long holiday.

ButMudik is a tradition that is worthwhile maintaining despite the annual haggling and uphill challenges for transport officials to make all the logistical preparations -- to say nothing of the National Police and their efforts to maintain public order. But not for a full week.

The week-long holiday, though a strong boost to private consumption, may be too long for an economy as Indonesia's, which needs to expand at least by seven percent to absorb the almost three million new job seekers entering the market annually. And that's not to mention the almost 12 million currently unemployed and nearly 30 million under-employed.

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