Indonesia: Lessons for the World
Image Credit: REUTERS/Ahim Rani

Indonesia: Lessons for the World


The year 2014 will be a pivotal year for Indonesia; one in which the political baton will be handed over. Both the nation’s highest offices will have new occupants: the House of Representatives (DPR) and the presidency. Indonesia will begin a new chapter in its history.

The new custodians of Indonesia’s future will face many challenges. Recent months have brought a chorus of criticism as the economy slowed, the rupiah slid, and government policy appeared to lose direction. Commentators have poured scorn on the country’s economic outlook and questioned whether it deserves its status as one of the world’s hottest emerging markets.

Everyone knows the challenges; Indonesia needs to push ahead with reforms if it is to move up the economic ladder. Certainly, the country does need to do more to stay competitive, but the tremendous strides it has made should not be forgotten. Just consider where Indonesia was a little more than a decade ago.

In fact, looking at Indonesia’s recent domestic accomplishments, what the country has achieved is nothing short of outstanding. After the fall of Suharto’s New Order regime in 1998, many analysts predicted that the country was standing at the end of a precipice, posed to tear itself apart in much the same way as the terrible ethnic conflicts that ravaged the former Yugoslavia. Without a doubt, this was a distinct possibility. With a vast sprawling archipelago of more than 17,000 islands; hundreds of ethnic and linguistic groups, speaking over 300 unique local languages; multiple religious sects; and a huge population, estimated at just over 200 million in 1998, keeping sectarian and ethnic conflict at bay would be a challenge at the best of times. Yet during this tumultuous time, Indonesia was facing political and economic instability, sparking armed separatist rebellions in Aceh and Papua, and secession from Indonesia by the East Timorese in 1999. National disintegration and large-scale ethnic conflict were more likely than not.

Yet Indonesia managed to navigate its way through this turbulence, emerging as a multi-party democracy with a directly elected president in 2004. The country reformed its institutions, rapidly decentralized its governance structure, and came out the other side with its sovereignty intact. A remarkable feat to say the least. Today, democratic institutions and political stability reassure consumers and attract investors; the streets of Jakarta look a lot more attractive than the streets of Bangkok right now.

Indonesia’s experience offers some lessons for the rest of the world. Indonesia has proven that a vast country comprising a dizzying array of ethnicities, cultures and religious sects can live side-by-side in one nation state. Bhinneka Tunggal Ika, or “Unity in Diversity” is more than just a national motto; it is an underlying principle that has shaped the country. Indonesia has just celebrated Christmas with all of its modern excess and extravagant decor in a Muslim majority country; a celebration of diversity and tolerance, and a true reflection of modern Indonesian values. Don’t let the extremist or the intolerant fool you. These are a mere handful in a vibrant and friendly country of close to 250 million people.

Indonesia’s recent experience demonstrates to the newly enfranchised countries of the Arab Spring that democracy and Islam are mutually compatible in a predominantly Muslim country, with a complex dynamic of ethnic groups. This ought to give hope to countries in Central Asia, the Middle East and North Africa currently experiencing economic instability, political turmoil and military rule.

Today, Indonesia is one of the most energetic economies in Asia, attracting investors from around the world into a rapidly growing consumer market; this continues despite the slowdown. Growth has slowed but is still strong at around 5.6 percent. Despite the negativity of some commentators, this is still the second-fastest growth rate after China in the G20 group of major economies.

There has also been much recent controversy over proposed changes to Indonesia’ mining laws; natural resources are undoubtedly important, but Indonesia’s economy is more than just natural resources. Today, the country is characterized by an increasingly dynamic economy and a growing middle class. These middle and affluent classes are likely to double to more than 141 million people over the next seven years, according to the Boston Consulting Group. Young, enterprising, self-reliant and ambitious, Indonesia’s middle class is pushing the economy forward. From banking, to tourism, to entertainment, food and retail, Indonesia’s service sector is driving growth and employment, while contributing to around roughly half of total economic output. Indonesia’ economy has come a long way since 1997 and has undergone a remarkable turnaround.

During the Asian financial crisis of 1997-1998, Indonesia was crippled as its banking sector collapsed and the country lost a devastating 50 percent of its GDP; a huge fiscal cost comparable to the recent financial crisis faced by Western economies.

However, Jakarta took the hard choices. A decade of laborious restructuring of banks, companies and institutions followed. The banking and financial system was completely overhauled and consolidated from 236 to 128 banks, an independent central bank – the Bank of Indonesia – was created to regulate and supervise the sector and state banks were cut back, with much more room for the private sector. This same banking sector – brought to its knees just 15 years ago – barely coughed during the 2008 financial crash. Indonesia’s institutions acted decisively to stimulate the economy and weather the impact. Indonesia’s experience shows that by being brave enough to make hard choices and undertake necessary radical reforms, economic success can once again be achieved. Many of the continuingly troubled economies of Europe could learn a lesson or two.

Indonesia provides an abundance of constructive lessons for the rest of the world. Of course the country still faces many challenges as we head into 2014, but Indonesia has come a long way in a short space of time. It has had transformative successes. The media discourse may focus on the negatives, but don’t forget the huge positives. Indonesia has achieved a lot more than you might think.

Edward Parker is a writer living and working in Jakarta, who has worked on Indonesian policy issues. He writes here in a personal capacity. All views expressed are his own.

April 13, 2014 at 21:02

I think if indonesian people can control the birth and don’t have more than 2 children we will be a stronger nation. Indonesia is scarily overpopulated.

John Leask
February 4, 2014 at 13:09

Interesting that the author says that the establishment of a central bank is a step in the right direction.

Zahrah Nida Rosyida
January 26, 2014 at 23:41

I’m Indonesian young people.

Watching on TV, reading on newspapers and those articles on internet, yes I did desperate because of this country. The political, economy, and the most hot issues, governance. So many big cases haven’t finished yet, I don’t know they ways to working. I was so done with this thing, but read this article moved me.

Yes, seems like too optimistic, but optimistic brings positive thinking right? And it’s good to make someone who wants to change this country.

Compared with South Korea which is younger than ID, but we can see they growth. Back than, we face different problems. Indonesia is rich, a vast country, so many languages, ethnics, and religions. These diversity should become the main strength, but the fact reveal it’s still [sometimes] become problem.

And I think side which should be the focus thing is the governance. Corruption everywhere. it’s terrible. And those ludicrous-people want to become the House of Representatives. I really can’t get what they want to do.

And now, I wait our [Indonesian young people] turn to change our beloved country.

Thanks to Mr. Edward Parker. I moved, really. As I said, I did desperate. But I think again, you aren’t Indonesian, but you can look another side of Indonesia’s tumultuous condition, even you wrote “…A remarkable feat to say the least.” you can appreciate Indonesia, so I should do that too as an Indonesian young person,

I hope there will be many Indonesian people will read this good article.

Little Helmsman
January 25, 2014 at 03:40

I have to admire what Indonesia has accomplished. It is a vibrant and functional democracy. That accomplishment in itself will provide Indonesia stability for years to come. Also, the success of Indonesian democracy is a beacon and inspiration for other democracy advocates in the developing world. It is a stark contrast to China’s state capitalist model with one party rule. The success of Indonesia will inspire other people throughout the world beyond Indonesia’s borders.

Felicia Kania Tantra
February 12, 2014 at 14:49

Wow Sir you’re so optimistic, a rare trait among the Indonesians nowadays.
It’s true that our country is getting better and better compared to the 90s.
But several major issues like corruptions, bad disaster prevention, inefficient bureaucracies, sluggish law and human rights enforcements, and a crappy national football team are still haunting us.
The next president has to take an immediate action to solve these problems.
And the last thing we need is a bunch of aggressive businessman politicians like Bakrie and Harry Tanoe.
The next president should be a young moderate leader like Jokowi, Anies Baswedan, and Dahlan Iskan.
Go Go IndONEsia Yes We Can!!

January 23, 2014 at 17:47

the religious hardliners have not been able to gain enough power through the past 3 elections, i think it will go the same in 2014. Indonesia is quintessentially not a homogeneous country, and the Indonesian people know that…by the way, it’s Gong Xi Fa Choi everywhere in Indonesia, a national holiday. Peace out.

January 23, 2014 at 17:08

Democracy and Islam mutually compatible in Indonesia? I will start to try to believe when FPI is dismantled and the members responsible for violence are brought to justice.

Sanusi ismail
January 24, 2014 at 00:56

Indeed, the fpi has been a pain in the butt sometimes but they have not resorted to deliberate killings of people of other faiths. You should concern yourself with what christianity and democracy–which is practised by almost all of the nato countries plus the us–is doing to muslims everywhere. You seem to be somewhat educated so i don’t think that i have to spell it out to you.

Stella Su
January 22, 2014 at 17:28

Jen, i think your view is way outdated. At this stage, Aceh is stable and unlikely to strive for independence. And as a Chinese Indonesian, i am not familiar with the idea of “seek sanctuary” in Singapore.

Mitch MC
January 25, 2014 at 14:34

I’m not sure how you are not familiar with the term (seek sanctuary) and be Chinese Indonesian. Did you not live through the massacre on May 1998? You know where many Chinese-ethnic people were murdered, tortured, and raped?

Stefani Mochtar
January 30, 2014 at 20:21

Yes, we did remember, in fact my uncle live in HK now because of that. But, but, do you even know that those incident only took place in certain areas, mainly jakarta. For example, Surabaya, where i live, there’s no such case ever happened.

Jen Whitten
January 21, 2014 at 16:11

The author is too optimistic. Aceh could still follow East Timor into independence, West papua is a running sore and ethnic-Chinese Indonesians are still occasionally forced to seek sanctuary in neighboring Singapore. Indonesia is more an aspiration than an actual country, although in time it might become one. My personal opinion is that Indonesia is too large and diverse to be governable using the weak institutions available and will eventually split into several independent states. East Timor has shown the way.

Tunjung Utomo
January 21, 2014 at 21:42

Am I wrong to get an impression that you DO want Indonesia to split into several independent states?

January 22, 2014 at 00:32

He is just talking about the big possibility.

January 22, 2014 at 00:00

Jen, if you want pessimistic point of view, just read any Indonesian media

January 25, 2014 at 19:54

Agree. I really like this article. Objective. Optimistic. I’m sick of reading Indonesian media, full of whining, any bad stories come first, as if there’s nothing positive about Indonesia. You think it’s easy to run a country? Oh, wait, yea, I forgot, the owners of those media are the oppositions. Hah!

Ahmad Fikri
January 22, 2014 at 14:04

East Timor, Aceh, Papua and Chinese ethnic issues… typical topics said by anyone who is not updated about Indonesia. You’re frozen in one or two decades ago, my friend. Come again to Indonesia.

January 22, 2014 at 17:22

Most ethnic Chinese are descendants of millions Chinese Communist cadres that Mao sent to and planted in Idonesia in an attempt to Communisise Indonesia and make it become CCP satellite like VietNam However, that conspiracy has been purged by President Sukarno and million Indo Communist cadres forced into exile to thos eislands.Therefore,it’s justifiable for Indonesian Gov to play tough with those Communist descendants to avoid and prevent Indonesia being sinonized.
You must look back Indonesia and Phillipines recent histories when both Presidents of both countries were ethnic Chinese .Open your eyes bigger to look at Thailand situation at the moment. PM Yingluck family is ethnic Chinese.Most tycoons in Phillipines, Indonesia, Malaysia ,Thailand and now including Viet Nam are ethnic Chineses

a proud indonesian
January 24, 2014 at 10:34

Funny you should say that. I’m ethnically chinese myself and never has been in my whole life that I was thought by my parents or/and relatives that I should rule the world with communism. And correct me if I’m wrong, but as I recall both Thailand and Philippines people are ethnically chinese. Oh and should I remind you that even native Indonesians originated from Taiwan? Get your facts straight brother.

January 22, 2014 at 18:36

Things in aceh and west papua are getting better in the last few years.
The biggest threat, in my opinion, is religious hardliners. The call to dismantle the pluralistic foundation of the country (pancasila) is getting louder. I hope this country will not descent into a theocracy.

Jan Van Huis
January 24, 2014 at 19:40

What happened a few years or 15 years ago has changed drastically. Also it is too typical for average foreigners not being updated of another country’s changes and progress.

Split Indonesia? Over My Dead Body!
February 1, 2014 at 19:51

Jen, your opinion is very hostile. Stop fear mongering and most definitely stop advocating for my country’s destruction. There are no persecution of ethnic Chinese — they’re Indonesians just like everybody else. And not a single inch of our territory will secede. East Timor was a mistake anyways, it was not part of the dutch colony so it wasn’t ours to begin with. Comments like yours are only fueling domestic xenophobia. Are you Australian by any chance?

February 14, 2014 at 22:56

@Jen Whitten

“My personal opinion is that Indonesia is too large and diverse to be governable using the weak institutions available and will eventually split into several independent states. East Timor has shown the way.”

In Western society, there is such as thing called social etiquette to govern inter-personal interactions. For example, if you were to visit a stranger’s house and you notice their toilet is dirty, you wouldn’t tell your hosts to clean up their toilet because that’s just not good manners. Similarly, if you’re a Western guest in an Asian country and you notice their politics is chaotic, you shouldn’t tell your hosts to split their country into different states because that’s just rude behavior.

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