REPUBLIKA.CO.ID, JAKARTA -- The Institute for Development of Economics and Finance (INDEF) has stated that high dependence on raw material exports has worsened the Indonesian economy, putting the country at a higher risk of crisis.

"The high dependence of Indonesian exports on raw materials which have low added value may contribute to worsening the economy," INDEF economic researcher Dzulfian Syafrian said after a business and economic discussion here on Saturday.

Dzulfian said raw materials are highly influenced by global commodity prices and demand.

"To make thing worse, the Indonesian exports are highly dependent on unprocessed commodities which make up 40 percent of the overall exports," he said.

Indonesia should reduce its export of unprocessed commodities while at the same time raising its export of processed goods and that it will not be highly dependent on the global commodity prices and demand, he said.

The other factor worsening the national economy is the capital outflow due to the US Federal Reserve' plan to increase its interest rate, he said.

"The capital outflow is inevitable because 30 percent of the private sector's foreign debts is short-term debts. Consequently, investment continues to fall and the rupiah's weakening against the US dollar cannot be avoided," he said.

The worsening economy is also the result of low absorption of state budget fund due to the market's and public's declining confidence in the government. By September 25, 2015, the budget absorption only reached 47 percent, he said.

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