Economy of Indonesia — Asia’s Emerging Market
Despite of its limited natural resources and geographical location, Indonesia has played a minor part in the global economy since the mid-twentieth century, and its significance has been substantially less than its size, resources, and geographic location would suggest.
Aside from crude oil and natural gas, the country is a significant exporter of natural gas, according to the United Nations. Aside from that, Indonesia is a large producer of a range of commodities, including sugar, tea, tobacco, copra, and spices, as well as a big exporter of rubber and other natural rubber-based products. The vast bulk of items manufactured throughout the world are produced on enormous estates. The extensive search for oil and other mineral resources has resulted in the foundation of a number of large-scale businesses that have made major contributions to the government’s budget for general development and infrastructure.
Moreover, having overcome the Asian financial crisis in the late 1990s, Indonesia has grown Southeast Asia’s largest economy, home to more than 300 ethnic group spread across an archipelago of 17,000 islands. Indonesia is now the world’s fourth most populous country, with a purchasing power parity ranking of the world’s 10th largest economy and a G-20 member. Consequently, 19 countries and the European Union are represented in the G20 or Group of Twenty intergovernmental conferences. Global economic challenges like financial stability, climate change mitigation, and sustainable development focus on the organization’s efforts.
Thereupon, Indonesia’s economic history was shaped by its geographic location, natural resources, and the people who inhabited the archipelago. The Indonesian archipelago was shaped and sealed by foreign contact and trade, as seen by Indians, Chinese, and Arabs. When the Age of Exploration began, European traders started to come. They engaged in conflict and conquest as well as the spice trade. In the early 17th century, the Dutch East India Company, one of the world’s earliest multinational enterprises, established a base in the archipelago. Coffee, tea, quinine, rubber, and palm oil were among the colony’s cash crop trades by 1800, as were oil, coal, tin, and copper mining. Early in the twenty-first century, Indonesia became Southeast Asia’s largest economy and a G-20 member. It’s a country that’s only recently begun to industrialize.
Furthermore, Indonesia has achieved significant strides in poverty reduction, having reduced the poverty rate by more than half since 1999, with the rate expected to reach 9.78 percent by 2020. The Indonesian economy had been growing steadily prior to the COVID-19 crisis, and the country has recently qualified to be classified as an upper-middle-income country.
Henceforth, Indonesia’s economic policy is guided by a 20-year plan that runs from 2005 to 2025. The five-year medium-term plans of the Rencana Pembangunan Jangka Menengah Nasional (RPJMN) each have their own set of development priorities outlined in the RPJMN’s development priorities document. According to the schedule, the current medium-term development plans will be implemented from 2020 to 2024, which will be the penultimate stage of the long-term plan. In order to increase the economy of Indonesia, the government is working on improving human capital and global competitiveness.
Indonesia is confronted with a slew of development issues. Because to the COVID-19 outbreak, Indonesia’s growth plans have been made more difficult. According to official figures, the national poverty rate increased from March to September of 2020, undoing three years of progress in the elimination of poverty. Even if stunting is down in Indonesia, more needs to be done. The human capital of Indonesia depends on such initiatives. Human Capital Index data from the World Bank shows that even with complete access to health and education, Indonesia’s next generation will only be 54% effective. During this epidemic, the government introduced emergency fiscal packages to address health issues, provide assistance to individuals and small enterprises, as well as assist in the vaccination effort. Indonesia’s response to the COVID-19 tragedy involves strengthening social assistance and health care institutions, as well as the financial sector’s resistance to shocks and turbulence.
