Despite only 70 years of independence, Indonesia has seen dramatic changes befitting a much older nation. On the one hand, in the present reform era, the nation’s government is more democratic, political parties are free of state control and there are more equitable educational opportunities and higher per capita incomes. On the other hand, there have been setbacks: poverty and social inequality are increasing, the quality of education is in decline, rampant corruption remains, the levels of environmental degradation are shocking and there is a disturbing lack of competitiveness in industry. Moreover, the central government in Jakarta is weak, unable to address acts of anarchy and conflicts in the regions, and infrastructure development is still lacking.

The Indonesia Forum Foundation, an organization led by the Indonesian Economists Association, utilizing studies by several universities in Indonesia and the Indonesian Institute of Sciences, set a goal of an $18,000 per capita income in the Indonesian Vision 2030. And why not? According to the World Bank, Indonesia has the 10th-largest economy in the world, and other estimates have it going as high as seventh in the coming decades, behind the likes of China, the United States and India.

Globalization challenges

Wealthy, developed countries can take advantage of, and benefit from, globalization. Developing countries are not yet ready to face globalization, however, and it is perceived more as a threat than an opportunity. There are always exceptions, with China and India being able to compete globally. The consequence of globalization is the emergence of free trade – competition – and in the case of Indonesia that is the implementation of the Association of Southeast Asian Nations Economic Community that came into force on New Year’s Eve.

According to a 2008 Time magazine article on Indonesia: “The country has all the ingredients for success: a stable democracy, a wealth of natural resources and a large consumer market. But Indonesia is not keeping pace with Asia’s [other] booming economies.” Indonesia may be rich in natural resources, but the Indonesian people still have low per capita income. Indonesia is still considered a developing country, while nations such as Japan, South Korea and Switzerland are examples of countries with limited natural resources that still managed to increase social welfare.

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