News / Asia

Indonesia on Verge of Becoming an Economic Power

A crew stands at the door of a public bus during rush hour at the main business district in Jakarta, Indonesia (file photo)
A crew stands at the door of a public bus during rush hour at the main business district in Jakarta, Indonesia (file photo)

Multimedia

Audio
Brian Padden

Some economists say Indonesia is poised to become an emerging economic power similar to China and India. Economic growth slowed slightly during the worst of the global economic crisis, but now it is again expanding at a rate of over six percent a year, and Indonesia has the second-best performing stock market in Asia.

An expanding manufacturing base, an abundance of natural resources, a growing domestic market, a sound financial sector and a stable political climate all contribute to make Indonesia's economy one of the strongest in the world.

Emerging economy

Milan Zavadjil the International Monetary Fund's representative in Indonesia, says it ranks just below China and India in attracting foreign investment.

"Various investor surveys have it jumping up the rankings," Zavadjil said. "And an interesting survey puts it as the fourth most likely place for investment over the next several years among emerging markets."

The Asian Development Bank recently forecast that Indonesia will see gross domestic product growth of 6.1 percent this year, and 6.3 percent in 2011.

Zavadjil says Indonesia's financial sector was not sophisticated enough to get involved in the complicated and ultimately disastrous investments that contributed to the global economic crisis in 2008. So while much of the world was thrown into recession, the fundamentals of Indonesia's economy remained strong.

"Indonesia had a very small fiscal deficit, very small borrowing requirements, a low external government and consumer debt, adequate foreign exchange reserves," he added. "The banks were well capitalized and liquid."

Optimism for businesses

For investors, last year's peaceful presidential election is seen as ushering in a new era of political stability and optimism. Despite the bombings of two Jakarta hotels in July of 2009, government efforts to prevent terrorism have reassured the business community.

Indonesian Finance Minister Agus Martowardojo says the government's conservative fiscal policies protect investments by keeping down inflation.

"Most important we would like to manage our budget," said Martowardojo. "Yes, we will provide stimulus but we will not have a budget deficit [of] more than 1.7 percent. And I believe that is the strength of Indonesia."

Increased exports

Continued economic reforms and free trade agreements with China and other Asian countries have increased exports of commodities such as timber, coal and silver. And in some industries, such as shoe manufacturing, companies are moving factories and jobs from China to Indonesia.

Not all labor organizations agree with the country's free trade policies. Baso Rukmana, head of Indonesia's National Workers Union, says clothing manufacturers in particular are losing jobs because the government makes it too hard to compete.

Need to improve infrastructure

He says the infrastructure is not ready, the roads are not enough and there is an added cost to production, something they call under-the-table money.

Corruption remains a significant problem, and some surveys of business managers show it discourages growth. However, the IMF's Zavadjil says it is no worse than in some other Asian countries.

The finance minister says weak infrastructure, particularly the country's air and sea ports, is the most glaring problem inhibiting growth. He says the government has acted to insure that private investments in infrastructure projects that require years to complete would be secure.

"If there is any change in the policy, if there is any change of license, if there is any change of administration, will we guarantee them?. I can say now, Ministry of Finance, we are ready. We are ready to guarantee," Martowardojo said.

Although Indonesia's stock market is at record levels, the finance minister notes that other asset prices are not rising quickly, so there is little risk the economy will overheat. He says, and many economists agree, the country is likely to see annual growth of over six percent for the next few years.

You May Like

Will Cuba Follow the Southeast Asia Model?

Decision to restore ties between US and Cuba has some debating whether it will lead to enhancement or regression of democracy for Communist island nation More

Kenyan Designer Finds Her Niche in Fashion Industry

‘Made in China’ fabrics underlie her success More

Report: CIA, Israel's Mossad Killed Senior Hezbollah Commander

The Washington Post story says Imad Mughniyah was killed instantly by a bomb "triggered remotely" from Tel Aviv by Mossad agents More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Jefferson's Library Continues to Impress, 200 Years Lateri
X
Deborah Block
January 31, 2015 12:12 AM
Two hundred years after the U.S. Congress purchased a huge collection of books belonging to former President Thomas Jefferson, it remains one of America’s greatest literal treasures and has become the centerpiece of Washington’s Library of Congress. VOA’s Deborah Block reports.
Video

Video Jefferson's Library Continues to Impress, 200 Years Later

Two hundred years after the U.S. Congress purchased a huge collection of books belonging to former President Thomas Jefferson, it remains one of America’s greatest literal treasures and has become the centerpiece of Washington’s Library of Congress. VOA’s Deborah Block reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid