Why Isn’t Indonesia a Superpower?

President Joko Widodo greets the Indonesian navy at a base in the Riau Islands. Credit: The Jakarta Post

Indonesia is an enormous - and enormously important - country in more than one sense. The Southeast Asian archipelago boasts a population of 280 million with a life expectancy only slightly below average, with an economy of over USD $1 trillion that has been growing at a staggering 5% on average nearly every year since 2000 - more than twice as fast as the United Kingdom during the same time period. Indonesia also holds its own reserves of fuel and valuable minerals, has access to the coast, and is a (mostly) democratic country more or less aligned with Europe, Australia, the USA, and its own most immediate neighbours.

So, with so many favourable conditions and strong foundations, why isn’t Indonesia a superpower that can realistically be compared to its allies?

The first reason is that Indonesia is rife with corruption, and an estimated 92% of Indonesians believe that government corruption is a major issue. There are two main challenges which stand in the way of combatting corruption: the first is the deeply cultural outlook on exchanging money for services being seen not as corruption, but as a form of patronage in which people are simply making a trade. The other main challenge is the underequipping and underfunding of oversight institutions. The low regulatory quality means that cases of corruption often go unenforced - if noticed at all.

Poor handling of public funds is a further issue, even with a skyrocketing amount of them to be invested. With tax revenues contributing to barely 10% of GDP, Indonesia’s rate is the second-lowest in the region, and even below average for the least developed countries in the world. A consequential lack of investment into critical infrastructure is another cause for alarming statistics - including the fact that an estimated 305 out of every 100,000 mothers do not survive childbirth.

The country is also rapidly urbanising. From 2011 to 2021, nearly 7% of all Indonesians moved into urban areas - a figure equivalent to roughly 20 million people in just ten years. Rapid and intense urbanisation can place serious pressures on existing infrastructure, such as sewage, housing, electricity, transportation, and more. Alleviation of these burdens - as well as a handful of other reasons - are why Indonesia is actually moving its capital away from Jakarta in the coming decades.

Lastly, Indonesia remains extremely vulnerable to the effects of climate change. In addition to the archipelago being naturally exposed to rising sea levels, Indonesia also suffers from shifting rainfall patterns causing flooding in some areas, and droughts in others. These disasters will also occur alongside less manmade ones, such as earthquakes, volcanic eruptions, and tsunamis. Without proper investment into infrastructure, prevention, and relief, these disasters will have magnified effects on Indonesia’s population.

But it’s not impossible for Indonesia to become a major power. The reformations taken in the past two decades - largely due to the aftermath of the Asian Financial Crisis - have led to Indonesia slowly climbing the ladder of major economies. Analysts and consultants from the IMF, PwC, and Worldbox Business Intelligence all predict that Indonesia will eventually become a much larger presence on the world stage than it currently is. Its enormous manufacturing capabilities also make it attractive to countries seeking to reduce production reliance on China, and the current president is visibly committed to tackling Indonesia’s greatest issues. Whether these solutions bear fruit, however, will take years - if not decades - to determine.

TAI Score: Degree 2. Although it has been proven many times over that underdevelopment and conflict are tied to one another, the likelihood of Indonesia’s stunted development resulting in anything moderate or severe is unlikely. Despite this, relevant business and government actors should remain wary of corruption and questionable business practices taking place.