Indonesia Leading the Middle Order
By Steve Olson
If the Indonesian leadership continues to demonstrate deft handling of its
international relations and manages to avoid a major economic recoil, there is an opportunity for it to play a more formidable role on the global stage, according to Stephen Olson.
By virtue of its extremely large domestic market, low labour costs, impressive growth, expanding middle class, and preferential access to ASEAN and China, Indonesia has become a highly significant market in its own right, a logical springboard into China, and a leader amongst it ASEAN brethren
With its steadily increasing economic might and strategic influence, the Southeast Asian island archipelago of Indonesia has moved itself front and centre on the global stage. Indonesia’s hosting of this year’s Asia Pacific Economic Council (APEC) forum was hailed by the leader of at least one Asia Pacific country in attendance for producing the “best APEC” meeting ever. And with Chinese President Xi capitalising effectively on the absence of his American counterpart, the meeting garnered worldwide headlines and attention for the commentary it provided on the US and Chinese competition for influence in the Asia Pacific.
Little more than a month later, Indonesia was once again at the epicentre of global economic diplomacy, as the Ministerial Meeting of the World Trade Organisation (WTO) convened in Bali. After almost a dozen years of futile negotiations to bring the Doha Round of global trade negotiations to a successful conclusion, the Bali negotiations were finally able to salvage a scaled-down package of trade liberalisation measures – the so-called “Bali Package”. While far less ambitious than the originally conceived Doha Round agenda, these measures are nonetheless expected to deliver a considerable boost to the global economy of as much as $1 trillion. Indonesian President Yudhoyono and Trade Minister Gita Wirjawan were both given high marks for their stewardship and their efforts to bring the negotiations to a successful conclusion.
While the hosting of these two major international diplomatic and economic events within such short order was largely coincidental, they do serve to symbolise Indonesia’s growing heft and presence on the international stage. How has Indonesia – a country convulsed by political upheaval and economic crisis less than 15 years ago – managed to carve out such a central role for itself? The answer is – Strong economic growth, a favourable set of global strategic circumstances, competent leadership, and a fair amount of good luck.
Start with the basics: Indonesia is big. With a population of over 250 million, Indonesia is the fourth most populous nation in the world, and the largest economy in the Southeast Asia. Indonesia’s large population provides both an abundant pool of cost-completive labour to help drive exports, as well as a substantial source of local demand.
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