Wed, 29 Jul 2015

I have lived in Jakarta for quite a while now. I guess I was always naive and thought that Indonesia would be like Singapore; blossoming into a Western liberal democracy. But the pixels are starting to come together and form a totally different picture.

It really looks like they have no intention of becoming one, and what’s more; they never had any intention in the first place. The real plan is to be a nation like Japan or Korea: slightly xenophobic, closed and nationalistic. This war on alcohol is just another piece in the puzzle.

However, the only problem is that Indonesians are not Japanese. They are not ready to explode off their islands and take over the world. They are very good people, but not the world-shakers that the Japanese are. And so they need foreign investment and human capital to advance. So they open the door a crack to let in some foreign investment, experts and so on, but as soon as things seem to be going well, they immediately slam the door shut by changing the rules of the game, moving the goalposts, etc.

I really don’t know what will become of Indonesia. It could be a superpower, another China or Japan, but I don’t see that happening. They are not following the Singapore free market path and they don’t have the means to contend with the major players on their own terms. I think Indonesia will continue to muddle forward, but it is a shame given the incredible potential this country has.

Some think this runaway growth will continue year after year, but now we are seeing that it was only attributable to the “low base effect”, and things are going to slow down from now on. The banking system lacks the strong base to propel the economy forward.

The legal system does not allow for honoring business agreements; the insurance industry is not set up to provide protection to the people or fund sustainable growth; the education system needs a major overhaul, but the elite here refuse to “Westernize” it.

All in all, I see a slow slide downwards until the above problems are fixed. I really hope I’m wrong, but I don’t think we have to guess about such things; the case studies are all around us if we look at economic policy and results around the world.

Chris Jakarta