What happened to Indonesia?

Underrated Indonesia poised to enter global stage

Five years ago I went on my first professional trip to Indonesia.  I had just joined the World Bank’s Indonesia Country Team and also prepared for the relocation of my family later that year. My wife was very concerned moving to Jakarta. At that time, Indonesia was associated with the Bali and Marriott bombings, the beginning of bird flu, and memories of the political chaos after the departure of Soeharto were still present.

Today, my wife does not want to leave Indonesia anymore.  What happened?
 
Indonesia recovered – and it recovered strongly. However, I truly believe that Indonesia is still underrated globally. During the past decade, Indonesia has embarked on one of the most ambitious political and economic transitions ever witnessed in any large country in recent history. According to Freedom House, Indonesia is entering a year of multiple national elections – both legislative and presidential – as Southeast Asia’s strongest democracy.

Economically, Indonesia has quietly moved from collapse and disarray to surprising stability. Indonesia is likely the world record holder in debt reduction (for any larger country since economic statistics have been collected systematically). At the beginning of the decade, Indonesia debt levels reached 80 percent of GDP, the highest in East Asia. By the end of the decade, Indonesia will rank among the least indebted countries in the region. Early 2009, debt levels reached 30 percent of GDP, almost on a par with China.

So why does the world not notice? Since hosting the summit of non-aligned movement in Bandung in 1955, Indonesia has not been really present at the global stage. In addition, Indonesia is particularly poor performing in sports and higher education, two areas which give countries a lot of international exposure.  Over the last decades, Indonesia has followed an education strategy that is broadly based bringing basic education to almost every village. The result is that almost every Indonesian can read and write, but very few have been able to run international companies or establish a strong presence in international organizations.

But in the last months, international perceptions seem to have started to change. Newsweek considered “Indonesia as the New India” and praised its Finance Minister for exceptional macroeconomic management. The Economist recently explained Indonesia’s surprising resilience amidst the global financial crisis.

The last week has been particularly eventful. Hillary Clinton made Indonesia her second stop (after Japan) of her first trip abroad as secondary of state. Then Maarti Attisari, the Nobel peace price winner, is visiting Indonesia to inspect progress on the peace process and post-Tsunami recovery in Aceh, which has become a symbol of Indonesia’s recovery.

My hope is that we are now witnessing the dawn of an emerging Indonesia, a country with a strong global standing – and not only as the one of the world’s best tourist destinations. The next years will be telling. After a decade of political reform, Indonesia is now undergoing a demographic and economic transition out of which a very different country will emerge in the next decade. Within the next five years, Indonesia will reach a population of 250 million, of which 60 percent of which will live in cities, and an economy that could exceed US$750 billion.

Indonesia is one of the best places to live as a family. However, it has been difficult to convince many friends about Indonesia’s beauties. Back home in Germany, people have often still difficulty locating this fourth most populous country in the world.

When I say “Indonesia”, often the response is:  “Yes, I have been there already.  Tunisia is really nice!”

Posted via web from Jim Nichols