Why Indonesia Is Quietly Becoming Asia's Next Superpower

Summary

Indonesia is rapidly emerging as Asia's third economic superpower, with its GDP growing tenfold in the past two decades. Leveraging its resource wealth, particularly nickel, and developing industries like e-commerce and fintech, Indonesia is transforming its economy. However, geopolitical challenges and the need for improved infrastructure could impact its continued growth.

Takeaways

• 🌏 Indonesia is emerging as a symbol of economic success in Asia, growing faster and becoming larger than traditionally recognized economies like Singapore, South Korea, and Japan.
• 📈 The Indonesian economy has expanded tenfold in the past two decades, making it a significant player in the global economy that has been overlooked.
• 🛑 Just 20 years ago, Indonesia faced a severe economic crisis with skyrocketing inflation, a collapsing currency, and political instability.
• 🛠️ Indonesia's initial growth spurt in the early 2000s was driven by commodity exports, particularly oil, which benefited from a rise in global commodity prices.
• 🔄 The country has managed to diversify its economy, moving away from reliance on natural resources by developing new industries, such as nickel processing for the electric vehicle (EV) industry.
• 🚗 Indonesia has the world's largest nickel reserves and is focusing on creating a battery-making industry to capitalize on the global shift towards green energy and EVs.
• 💻 The digital economy, particularly e-commerce and fintech, is another major driver of Indonesia's growth, with the country becoming a regional leader in these sectors.
• 🏙️ Indonesia's economic growth has been inclusive, leading to the expansion of a strong middle class and a large domestic market conducive to tech startups and e-commerce.
• 🌟 The country is home to 15 startups valued at over $1 billion, making it a tech powerhouse in Southeast Asia, second only to Singapore.
• 🔮 Predictions suggest that Indonesia will become the seventh-largest economy by 2030 and the fourth-largest by 2050, after the United States, China, and India.
• 🕊️ Indonesia aims to maintain a neutral stance in geopolitical tensions, balancing relations with both China and the United States while increasing its own influence.

Q & A

Which country in Asia is becoming a symbol of economic success and a major technological hub?

Indonesia is becoming a symbol of economic success and a major technological hub in Asia.

How has Indonesia's economy changed in the last two decades?

Indonesia's economy has grown tenfold in the last two decades, transforming from a struggling economy to one of the largest in the world.

What were the economic conditions in Indonesia at the beginning of the 21st century?

At the beginning of the 21st century, Indonesia was experiencing economic chaos with skyrocketing inflation, a collapsing currency, and political instability.

What was the impact of the Asian financial crisis on Indonesia?

The Asian financial crisis in the late 1990s hit Indonesia harder than any other country, causing its economy to contract by nearly 14%, inflation to reach 65%, and the currency to lose 70% of its value.

How did Indonesia's economic growth change in the 1970s?

In the 1970s, Indonesia's economic growth improved as the country started mass exporting crude oil and used the revenue to invest in infrastructure and other sectors of the economy.

What strategy has Indonesia used to diversify its economy beyond relying on resources?

Indonesia has used the revenue from its resources to build other industries and sectors, focusing on transforming its economy and moving away from just relying on resources.

Why is Indonesia focusing on the nickel industry?

Indonesia is focusing on the nickel industry because it is essential for the electrical cars industry and the shift towards green energy, and Indonesia has the largest supplies of nickel in the world.

What policy has Indonesia implemented regarding its nickel exports?

Indonesia has banned all of its nickel exports to build an entire processing and battery-making industry around it, aiming to maximize the value it can get out of its resources.

How has Indonesia's digital economy contributed to its economic growth?

Indonesia's digital economy, specifically e-commerce and fintech, has become a major driver of its economic growth, with the country having the largest e-commerce industry in Southeast Asia.

What are the potential geopolitical challenges Indonesia might face in maintaining its non-alignment?

Indonesia might face challenges in maintaining its non-alignment due to increasing tensions in the region, particularly between China and the United States, which could force Indonesia to choose sides.

What are the future economic predictions for Indonesia according to Kenzie and Goldman Sachs?

According to Kenzie, Indonesia should become the seventh-largest economy by 2030, overtaking the UK and Germany, and Goldman Sachs predicts it will become the fourth-largest economy after the United States, China, and India by 2050.