Indonesia – a new emerging regional player?



New Hotel Complex recently opened in Jakarta

Indonesia has a population of around 240m making it the fouth most populous country in the world after China, India and the US, with a bigger population than Brazil. Indonesia has been one of the best performing economies of the G20 over the last few years. Last year alone it had growth of 6pc. It is the giant of South-East Asia.

As a democratic Muslim-majority, but not Islamic state, Indonesia is a key bridge for anyone to the Muslim world. Indonesia has managed to silence the separatist campaigners from recruiting new followers through a successful counter- ideological campaign during recent years. What is truly remarkable is that the antiterrorist efforts are taking place in the absence of the draconian laws that once underpinned the Soeharto regime.

Leading role in ASEAN

Indonesia is the biggest and most influential member of the ten-member Association of South-East Asian Nations (ASEAN). For the last year it has held the presidency of ASEAN and has sucessfully chaired and won consensus over various tricky security questions such as claims to the South China Sea and guidelines for conduct on the implementation of the 2002 declaration on the South China Sea.

Indonesia's new middle class

According to research cited by The Economist and carried out by Nomura, a Japanese Bank, Indonesia is creating a new middle class. In 2004 it numbered around 1.6m, in 2011, it now has around 50m people. For the purposes of its research, Nomura defined “middleclass” as a someone with a disposable income of over $3,000 per year. If growth continues at the current rates, the Indonesian middleclass could soon reach almost 150m by 2014 putting it on par with countries like India. This would be a stunning achievement compared with a decade earlier.

With new found wealth, affluent Indonesians are able to invest in new consumer goods. In Jakarta the object of choice at present is a scooter. Last year 8m alone were sold. Piaggio, an exclusive Italian brand has just re-entered the market selling a much more upmarket bike in Jakarta to cater to the more sophisticated tastes of the new middle-class.

Will Indonesia be taken seriously?

If population is destiny then Indonesia is well on its way to becoming a successful regional emerging player and perhaps even a BRIC. What Indonesia appears to be really seeking is recognition of its rise by other international players.

Although Indonesia is also hoping to maintain strategic relations with both the US and China. An Op-Ed in the Jakarta Post ahead of President Obama's visit towards the end of 2010 put it this way: 

"...Indonesia has always prized itself on the autonomy with which it has conducted its international dealings, it will be balanced in reaching out to America while retaining its prized relationship with Beijing."