Peer reviewed analysis from world leading experts

Indonesia's choices

Volume 5, No 4: October - December, 2013

What next for Indonesia? By any measure, the past 15 years has been a period of extraordinary progress. Yet for all the impressive gains, there is a widespread sense—especially inside Indonesia—that the early pace of progress has fallen away; even that the country is now just marking time and waiting for whatever the 2014 electoral cycle might yield.The essays in this EAFQ reflect the unease about the chances of being able to keep on the right track. Indonesia is an unambiguous economic success story. Sustained growth has lifted living standards, lowered the incidence of poverty, and underpinned social stability and political reform. But there is mounting concern that Indonesia is becoming mired in sticky ‘middle income mud’.The country now faces increasingly acute bottlenecks in key areas of economic infrastructure. The grand plans for upgrading infrastructure trumpeted over the past decade have not been realised. maritime transportation—vital for an archipelagic nation—is woefully underdeveloped. Inadequate capacity for generating electricity is emerging as a major constraint in many areas. And the education system is falling further behind in the fundamental task of producing an adequately skilled workforce. Indonesia’s next president and next parliament will need to address these problems squarely, or economic momentum will ebb away. The good news is that they will do so from within the context of a relatively established democratic system of government. The bad news is that Indonesia's system of government is unwieldy, with authority and responsibility blurred between the executive and legislature, and between the national and local levels of government. Whatever the policy agenda, whoever the leaders, this is a difficult system to operate. Internationally, Indonesia has emerged as an active and effective player on the regional and even global diplomatic stages. Although it is likely the next president will be, either by temperament or necessity, more domestically oriented, Indonesia will remain pivotal to regional affairs. Other countries—and none more so than Australia—need to recalibrate their mindsets about Indonesia. Even if Jakarta’s new-found pride and confidence periodically exceed its capacities, other countries—and, again, none more so than Australia—will find the costs of underestimating Indonesia increasingly painful.
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What next for Indonesia? By any measure, the past 15 years has been a period of extraordinary progress. Yet for all the impressive gains, there is a widespread sense—especially inside Indonesia—that the early pace of progress has fallen away; even that the country is now just marking time and waiting for whatever the 2014 electoral cycle might yield.The essays in this EAFQ reflect the unease about the chances of being able to keep on the right track. Indonesia is an unambiguous economic success story. Sustained growth has lifted living standards, lowered the incidence of poverty, and underpinned social stability and political reform. But there is mounting concern that Indonesia is becoming mired in sticky ‘middle income mud’.The country now faces increasingly acute bottlenecks in key areas of economic infrastructure. The grand plans for upgrading infrastructure trumpeted over the past decade have not been realised. maritime transportation—vital for an archipelagic nation—is woefully underdeveloped. Inadequate capacity for generating electricity is emerging as a major constraint in many areas. And the education system is falling further behind in the fundamental task of producing an adequately skilled workforce. Indonesia’s next president and next parliament will need to address these problems squarely, or economic momentum will ebb away. The good news is that they will do so from within the context of a relatively established democratic system of government. The bad news is that Indonesia's system of government is unwieldy, with authority and responsibility blurred between the executive and legislature, and between the national and local levels of government. Whatever the policy agenda, whoever the leaders, this is a difficult system to operate. Internationally, Indonesia has emerged as an active and effective player on the regional and even global diplomatic stages. Although it is likely the next president will be, either by temperament or necessity, more domestically oriented, Indonesia will remain pivotal to regional affairs. Other countries—and none more so than Australia—need to recalibrate their mindsets about Indonesia. Even if Jakarta’s new-found pride and confidence periodically exceed its capacities, other countries—and, again, none more so than Australia—will find the costs of underestimating Indonesia increasingly painful.

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