Indonesia, and the Rise of Asia

One of the Indonesian airlines, Lion Air, has firmed up its agreement to buy 201 Boeing aircrafts in a $22.4 billion. The agreement reached in November last year between the two companies is perhaps the biggest civil aircraft order in history and the amount involved on this transaction is bigger than the national economy of many poor countries.

And last December, in CNN Fareed Zakaria, the acclaimed Indian American journalist honored with the Padma Bhushan by Indian government for his contribution to journalism explaining the continued deterioration of Indian economy observed that that ” the “I” in BRIC might stand for Indonesia, not India”.


In fact, the ‘success succeeds’ has come true with Indonesia – the land of “Pancha Sheel” derived from Sanskrit. In Indonesian language called the Pancasila – the five principles that have been accepted as the state philosophy since the country was declared independent. The Pancasila included the belief in the God, just and civilized humanity, the unity of the country, democracy and social justice for all the people of Indonesia.

With an economic growth that is the highest in South East Asia is followed by low inflation rate, well managed fiscal policy, relatively healthy budget deficits and proportionately adjusted balance of payments together have left Indonesia unscathed from the recent global financial crisis. This has helped Indonesia buy many admirers in international arena including Zakaria.

Similar is the case with leaders of the World’s most advanced economies. Indonesian President Dr.Susilo Bambang Yudhoyono known as SBY, received much plaudit from the world leaders when addressed the G20 summit in Los Cabos, Mexico, in last June on the overall health of Indonesian economy, his country’s experiences with Asian financial crises and his agendas for the summit focused especially on euro zone crisis.

Later, talking with senior editors after the summit the highlighted Indonesia’s economic strengths, opportunities available to maximize Indonesia’s growth potential and the urgency of all with the combined efforts of its stakeholders to drive its economy to boom in spite of some challenges. Good diplomacy, good national image, and good business opportunities according to SBY “played a major role for Indonesian economic success.”

Mari Pangestu the Minister of Tourism and Creative Economy of Indonesia says that the vision for Indonesia in unleashing this fourth wave of economic development is based on the input contributing the more value added economic output. The first wave of Indonesian development used land and labor to increase agriculture products for domestic as well as export markets. The second wave came with more skilled labor, capital, production technology and innovation to produce industrial goods. Then the third wave came with knowledge and information based productions of quality goods and services. Then the fourth wave as Pangestu stated “utilizes creativity and ideas to turn that knowledge and information to higher value added or new forms”.

Miracle In The Arc Of Instability

Saul Bernard Cohen has quoted Indonesia as an “Arc of Instability” and Parag Khanna has stated that “it is miracle that Indonesia exists at all, and it will be a great miracle if it survives in its present form.” And the miracle has occurred in a country of more than 17,500 islands, with an area of 2 million sq. km. and covering a maritime area of 7,900,000 sq. km. The vast territories acknowledged as world’s largest archipelago with 240 million populations – the World’s fourth largest and the territories that is extended from India’s Andaman Nicobar isles in the Indian Ocean to Papua New Guinea in Pacific Ocean. The country called as a “sleeping giant”, but according to Parag Khanna the giant was born with an irony that when it sleeps “is being hacked to pieces.”

Since independent in 1945, Indonesia missed many opportunities during Sukarno’s and General Suharto’s authoritarian rule. But when the popular unrest generated by the Asian financial and economic crisis and the worst drought in 50 years forced General Suharto – the man who had been ruling the country with iron fist since 1965 resigned in 1998. Suharto’s confidant – B.J. Habibie, the Vice president succeeded him as the third President of Indonesia.

Thereafter, with the support of donor’s community, Indonesian economy was stabilized and liberalized. Habibie made a deal with the UN and the leaders of East Timorese Independence movement for a referendum. The overwhelming majority of registered voters chose the independence of East Timor over continued integration with Indonesia. Habibie paid it dearly in the election held in 1999.

The national and provincial parliamentary elections held in 1999 was followed by a period of political instability with two weak governments one led by Abdurrahman Wahid and the other by Megawati Sukarnoputri. Unfortunately, during their time the country turned into a safe haven for Islamic terrorist organization – Jemaah Islamiyah, an Al Qaeda affiliate.

From decades’ long one party authoritarian rule, military dictatorship and thereafter political instability and uncertainty, the country was on the brink of collapse. But the election of September 2004 gave Indonesia a new president in the name of SBY, who with his sense of national purpose, confidence, commitment to change that responds the aspirations of people and a meaningful democracy – that could be reflected into the life of people, really led Indonesia to a new destination. A country ignored or little known in world community until the end of last century has now become the 17th largest economy of the world with a GDP of more than $700 billion. According to some projections, by 2030 it will be a $ 9.3 trillion economy and by 2045 it will be the world’s fourth largest economy.

President SBY is more than right when he said “There are only handful countries that have experienced what Indonesia has endured: financial crisis, political instability, separatism, ethnic conflicts, terrorism, and natural disasters. Given the array of challenges that confronted us, what Indonesia has become today is nothing short of remarkable.”

Indonesia And The New Strategic Dynamics In Asia- Pacific

The presence of China and India as the two outstanding emerging economic powers has significantly transformed the global strategic architecture that was later reinforced by the similar rise of Indonesia since the late 1990s.

This way, Indonesian entry in world arena as a promising economy and a vibrant democracy has stirred up the strategic environment of the whole region. The centrality of Indonesia has emerged in Indo-Pacific politico-security dynamics after American pivot to Asia and all the major powers whether it is USA, Russia, China, India, Japan or Australia, are busy in developing a well crafted strategic partnership with World’s largest archipelago and redefining their policy engagements among themselves in the light of growing economic, political and military clout of Indonesia in Asia- Pacific.

Last year, Jakarta Post reported that Indonesia and China were set to begin a partnership in military arms production and technology transfer agreement. Indonesia was also procuring C-907 missiles from China particularly because the country had already bought the Chinese product in the previous years. C-907 missiles are part of the weaponry of Russian Sukhoi jet fighters that Indonesia owns and is planning to buy more.

In addition to this Indonesia is negotiating a joint-production agreement with South Korea to develop and procure FSX jet fighters – that will have a better striking capacity than the world renowned American F 16 but somehow lower in class than the most advanced F 35.

Early this year, according to The Diplomat – a Tokyo-based, prominent online current affairs magazine, Indonesian Defense Minister Purnomo Yusgiantoro, spelled out his 2012 wish list, that includes tanks, multiple launch rocket systems, a guided missile destroyer and retrofits for ex-U.S. F-16s and ex-Australian C-130 transport planes and new South Korean submarines.

The Diplomat further reported that Jakarta’s defense budget this year is of $7.9 billion that is around 1 percent of its GDP and by 2015 it is going to elevate it to 1.5 percent that will make about $ 15 billion with its 6-7 percent annual growth rate. This by and large will make Indonesia the largest defense spender in ASEAN.

And surprisingly no eyes are raised in the region against this increasing defense budget and procurements of the most advanced arms. Besides every country in the region and its neighborhood- be it Australia, Russia, South Korea, the United States or China are taking it naturally and are opening up their arsenals to Indonesia with impressive offers – a prerogatives perhaps no other country in the world has enjoyed from so divergent sources.

In addition, Indonesia’s vibrant democracy, economy and its growing military power is seen as a great asset by the countries in the region and are looking with satisfaction towards Indonesia and making policy adjustment to align with Indonesia in their strategic interest and meet the challenge jointly that they may cope with growing threat from China – a dominating economic, military power with a firm political will to assert its authority over the region but with only a few allies like Laos, Cambodia and North Korea.

Besides, Indonesia’s success in bringing peace among powerful insurgencies, violent Islamic militancy and separatist movements in different regions and ensuring a lively democracy and economic dynamism in the World’s largest Muslim country has also been seen as a new experiences for maintaining peace and order in countries like the Philippines and Myanmar facing similar challenges under the threat of Islamic fundamentalism and in other countries in Asia.

This article appeared in The Reporter (weekly) July30-August 5, 2012, and is reprinted with permission

About the author:

Keshav Prasad Bhattarai

Keshav Prasad Bhattarai is the former President of Nepal Teachers’ Association,Teachers’ Union of Nepal and General Secretary of SAARC Teachers’ Federation. Currently a columnist in an English language weekly from Nepal – ‘The Reporter’.

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  1. TONY

    8 / 30 / 2012 7:23 am

    i m one of those who believe that indonesia will be one one of the world powerS along with CHINA,INDIA,BRAZIL AND RUSSIA,


  2. morko

    8 / 30 / 2012 12:41 pm

    This article with regards to military news, warrant several corrections.

    1. There is joint production agreement between Indonesia and China for manufacturing C-705 short range SSM with the agreeable conditions that Indonesia would buy at least 50 of the said SSM annually.
    But not with the type C-907.

    2. The new stealth or semi stealth fighter, Indonesia and South Korean are going to joint manufacture is coded as KFX not FSX

    3. C-705 capability to used Su-27SKM or Su-30 MK2 as a launching platform is rather far fetched and rather thin chance it would have happening. The Russian were using Kh-31 and Kh-35 among their other more potent aircraft launched SSM for this. That said, it comes without saying that the Russian are not going to let other than their own weapons system let alone an SSM to be launched from their Sukhois.


  3. Cerita motivasi

    8 / 31 / 2012 6:24 pm

    Indonesia once was called an “Asian Tiger” following other nations of Asia pacific which parts of Asia Miracle. Nowadays why not we call Indonesia Miracle since we have all we need to be not only an “Asian Tiger” but a “World Eagle”.





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