Indonesia’s economic miracle & lessons for Pakistan | By Dr Mehmood-ul-Hassan Khan


Indonesia’s economic miracle & lessons for Pakistan

INDONESIA is among the “leading” trading partners of Pakistan.It is the largest economy in Southeast Asia, which is a diverse archipelago nation of more than 300 ethnic groups.

It has constant impressive economic growth since overcoming the Asian financial crisis of the late 1990s.Indonesia is the “pioneer” of commercial diplomacy in Southeast Asian region.

Economic liberalization, privatization, development of private sector, foreign direct investment (FDIs), joint venture and digitalization are playing important role in the socio-economic progress of Indonesia which is the “champion” of structural reforms in the region and actually “outperformed” all the regional economies in achieving and sustaining high ratios of GDPs and GNPs.

Statistical data confirms that Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20.

It now holds the “chairmanship” of G20 which is indeed “recognition” of its economic potential, visionary leadership and healthy future prospects of its national economy.

Pakistan has unique relations with Indonesia which are “spiritual”, “sparking” and “sentimental”.

On its part, Pakistan played important role during the Indonesian struggle of “independence” and massive “revolt” against Dutch colonized forces.

Muhamamd Ali Jinnah, the founder of Pakistan pressed Muslim soldiers serving in British army to extend their crucial support to struggling Indonesians in their fight against the Dutch.

Resultantly, 600 Muslim soldiers left the colonial forces and joined Indonesians.Out of these 600 soldiers, 500 were killed during the Independence War.

So “holy connection” blended with blood of “martyrs” has not been “overshadowed” by the “dust of history”, “uneasiness of politics”, “unevenness economy” and “unwillingness” of society.

The incumbent Indonesian Ambassador to Pakistan H.E.Mr.Adam M.Tugio has been working hard to reinforce bilateral ties in terms of greater socio-economic integration, food & energy cooperation, tourism, education, culture cooperation and military cooperation.

He has been initiating a series of spells of commercial, culture and people-to-people diplomacy in Pakistan which is now making bridges of greater trust, cooperation, better social, political and economic understanding between Pakistan and Indonesia.

It has holistic approach for “conflict resolution” which is based on “consultation”, “consensus”, and non-interference due to which it succeeded to maintain ethnic diversity, multiculturalism and interfaith harmony.

It has now become iconic symbol of conflict resolution which even other countries literally borrowed to settle disputes in their countries.

Thailand, Philippine, Cambodia and Myanmar sought help from Indonesian government to defuse “tensions”, “tussles” and “tendentious” matters in their own countries.

Its journey from authoritarianism to gradual multiparty democracy to liberalized economy has been swing between “hawks and doves”, “conflicts and concessions”, “conspiracies and commitments” and “contradictions and compromises” and ultimately it has become an ideal model of democracy in the region and rest of the world.

Even its model of good governance vividly reflects its strong commitment against corruption, undue discretion, unwanted bureaucratic fuss, administrative centralization, unfriendly economic and people’s policies, unjustified monopolies, ugly cartels, ethnic exploitation and, above all, hatred, bigotry, discrimination and genocides.

That is why it is champion of “enlightenment”, “women empowerment”, “guarantor” of human rights and hub of financial integration and economic investment.

Moreover, it has rich services in the conflict resolution and peacekeeping efforts in Afghanistan.

It adopted a holistic policy of conflict resolution ideally blended with religious moderation, clergy diplomacy, humanitarian assistance and social development.

Now Indonesia’s macro-economy has been geared up with the constant upward development of its domestic factors and healthy contribution of channel of production since its inception.

It has been blended its natural resources, tourism potential, widespread of SMEs, service sector and last but not the least nationalistic private sector to achieve numerous socio-economic miracles.

It has been succeeding to achieve its desired goals of constant socio-economic prosperity, qualitative life, eradication of poverty, social networking and political stability because of supremacy of doctrine of a balanced and holistic approach between “growth” and “stability” which should be learned by the policy makers of Pakistan.

Indonesia has its own unique economic model which heavily relies on domestic production, savings, investments, proper mobilization and channelization of local resources, nurturing of human capital core and last but not the least, positive domestic consumption.

Pakistan is struggling to main strategic equilibrium in its economic priorities and political compulsions which should be learnt from Indonesia.

According to its national data its government implemented emergency fiscal packages equivalent to 3.8 per cent of GDP in 2020 and to 4.2 per cent of GDP in 2021, to deal with the health impact, provide relief to households and firms, and support the vaccine roll-out, and the recovery.

Despite COVID-19 it still holds great economic potential.The central government supported to curb Indonesia’s traditional reliance on raw commodity exports, while raising the role of the manufacturing industry within the national economy.

Infrastructure development is also a key goal of the government, and one that should cause a multiplier effect within the economy with lots of multiplier effects.

The Indonesian government under the visionary leadership of Joko Widodo has already initiated numerous structural reforms aiming at long-term growth.

The government rates high priority on infrastructure development and on investment and fiscal incentives that are offered to private investors.

Moreover future of its macro-economy is healthy, productive and positive because of having abundant and diverse natural resources with young, large and burgeoning population, immense political stability, institutionalization of prudent fiscal management since the late 1990s.

Diplomatic relations between Pakistan and Indonesia are strong and people of both nations support and help each other over the period in different ways and situations.

In recent years, Indonesia-Pakistan bilateral relations have seen significant development as the two countries continuously endeavour to expand their all-round cooperation including in the areas of trade & economy and educational cooperation.

Both countries are also cooperating in the spheres of global and regional security, terrorism, narcotics, maritime security, and human trafficking.

Holding of various Strategic Forums has further strengthened cooperation between the two countries and identified new areas of cooperation related to security issues of concern and agreement between the two countries.

Indonesia has valuable experience in tourism, Islamic banking, and insurance, food-processing and fruit-canning which could be of translated and transmitted to Pakistan.

The present low level of trade and ties between Pakistan and Indonesia may be expanded with the inclusion of private sector, formation of corridor of knowledge, joint venture, FDI, banking & financial integration, cooperation in Islamic banking, SMEs, digitalization, ICT, Artificial Intelligence, tourism, culture and above all provision of trade houses and special economic zones on reciprocal basis.

—The writer is Director: Geopolitics/Economics, Regional Expert: Uzbekistan & CIS, Member Board of Expert: Centre for South Asia & International Studies (CSAIS), Islamabad


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