Transforming Indonesia into Asia’s Economic Powerhouse in 20 Years

Reading time: 3 – 4 minutes

I am nothing compared to brilliant economists out there, but I would like to share my perspectives as a young person who studies business, and of course, the economy. This is the paper I wrote for one of my finals in February 2010 (things have changed, yeah). Happy reading, friends! (More after the jump)

Chairul Tanjung, Anthony Salim, James Riady, along with other executives and senior government officials of Indonesia, clustered themselves into an organisation that has been planning for a project called “Visi Indonesia 2030” or “Indonesia’s 2030 Vision” (Davies, 2008). It endeavours to reach a goal of making Indonesia one of the globe’s five leading economies in two decades, as well as having 30 business firms in the Global Fortune 500 (Davies, 2008). The plan seems attainable by linking it to some pleasant facts about Indonesia. For example, a number of US analysts stated that the BRIC economies, which consist of Brazil, Russia, India, and China, must now include Indonesia (Ichsan, 2009). At the same time, a securities house has labeled Indonesia as one of the three Asia’s economic barricades, alongside with China and India (Ichsan, 2009). Indonesia is also included in the Next Eleven (N-11), 11 countries grouped by the Goldman Sachs according to its high potential in becoming the world’s most significant economies in this century (O’Neill et al., 2005).

Nevertheless, we still cannot ignore the fact that Indonesia was the country that suffered the most when Asia had to go through the regional financial crisis over a decade ago. In that period, the value of Rupiah was lessened by 35 percent in 24 hours. The exchange rate of US Dollars elated from around IDR 3,000 to 16,800 in 1998. According the World Bank’s data, the economy shriveled by 13% due to the fall of Suharto’s regime. Both the regional crisis and the political instability became the reasons why investors deserted the country. Hence, there are still plenty of things that ought to be done to realise the plan, other than the ambiguous “hard work and collaboration by all of Indonesia’s people”, which became Tanjung’s answer when he was asked on how to realise the ambitious “Visi Indonesia 2030”.

It is not exaggerated at all to say that Indonesia already has all of the potentials to emerge into a regional economic powerhouse, but at the same time, it still has millions of people living below the $1.50 poverty line everyday. Where did all the money go? What has all of the profit of selling extracted natural resources turned into? One of the most unfortunate facts of Indonesia is that it is notorious for the corruption, which exists in almost any foundation. Corruption has soaked into both Indonesia’s culture and system, which makes it more or less related to the weak bureaucracy system. So, in order to realise its goal on becoming Asia’s economic powerhouse in 2030, Indonesia should optimise its potentials by eradicating corruption and conducting bureaucracy reform.

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