JAKARTA — When assessing the quality of life in a country, it is important to understand the cost of living and whether it will be difficult to live comfortably. Through an assessment of the cost of living in Indonesia, it can be observed that the relatively low cost of domestic goods can enable both native Indonesians and foreigners to live comfortably.
The Rupiah, Domestic and Imported Products
Indonesia uses the Rupiah as currency which, due to a severely deflated value, has an exchange rate of approximately 13333 Rupiah equaling $1. Despite the low value per Rupiah, product prices are adjusted, placing the purchasing power of both domestic and foreign goods at reasonable levels.
Due to a combination of the low cost of food and other domestic products, the overall cost of living in Indonesia remains low. The main exception to this comes from the consumption of imported goods.
As an island nation located just North of Australia and South of the Philippians in the South Pacific, the cost of importing goods in Indonesia can be high. Imported goods become expensive due to the added cost of transportation, because of the requirement to ship most products on ocean freighters. Most of the country’s imported goods arrive from neighboring Asian countries, with annual imports amounting to $34 billion from China, $28 billion from Singapore and $11 billion from Japan.
In addition to imported goods, living spaces can be quite expensive. Housing is expensive due to the relatively high population density. Inside the center of Indonesia’s capital, Jakarta, rental costs for a one-bedroom apartment averages 3.5 million Rupiah and outside of the city center averages 1.9 million Rupiah.
The cost of real estate becomes particularly daunting after realizing that the average monthly net salary after taxes equates to 5 million Rupiah. Living in a city requires a significant portion of income earned to be dedicated towards housing.
Besides the cost of imported goods and real estate, the cost of Indonesian produced market goods is very low in comparison to many other countries, with one liter of milk and a beef round costing 16500 Rupiah and 115159 Rupiah, respectively.
Overall Cost of Living
The overall cost of living is dependent on the origins of goods purchased and living proximity to major metropolitan centers. If people living, or seeking to live, in Indonesia primarily purchase Indonesian produced goods, it is very feasible to live an inexpensive lifestyle. When consuming foreign produced goods and living close to a city center, it becomes increasingly difficult to live a sustainable existence.
While the cost of real estate and imported goods can make the cost of living in Indonesia high, the low cost of domestic goods acts as a counterweight and keeps the cost of living in Indonesia low. As an overall evaluation, the cost of living in Indonesia can be very affordable if managed by a wary budgeter.
– Garrett Keyes