Indonesia stands out among the world’s 20 biggest economies on the back of the stability it has maintained through harmony among its myriad ethnicities and linguistic groups decades after its crony-capitalist system collapsed in the face of the 1997 Asian financial crisis
In August 1945, Indonesian nationalists proclaimed independence under President Sukarno’s leadership. They rallied Indonesians across political, social, and sectarian lines to frustrate the Dutch attempt to re-establish their rule. An armed struggle forced the Dutch to recognise Indonesia’s independence in December 1949. Over a decade later, Indonesia faced a major upheaval when Major General Suharto’s anti-communist purge left hundreds of thousands dead. Suharto wrested power in March 1968 and oversaw economic growth over the next three decades.
Growth proved fragile over the decades. The Indonesian economy could not withstand the 1997 Asian financial crisis, which hit Indonesia hardest and collapsed its crony capitalist system. The mayhem that followed ended Suharto’s 32-year-long dictatorship in 1998. Indonesia faced another major blow when East Timor seceded in 1999.
The end of Suharto’s rule offered Indonesia a second chance, which it grabbed with both hands by rebuilding the country on the pillars that sustain the most advanced countries. Indonesia strengthened democracy, and harmony, besides enhancing regional autonomy to lay the foundation for its strong economic revival. In 2004, the country elected its first president after the inaugural direct presidential election.
Indonesia ended an armed separatist insurgency in Aceh in 2005. It overcame instability, promoted harmony among its myriad ethnicities and linguistic groups, and has since reaped benefits. Indonesia now stands out among the world’s 20 biggest economies. The International Monetary Fund has forecast that it will be the fastest-growing top-20 economy in 2023 and the subsequent five years.
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Former Indonesian president Joko Widodo, whose coalition government included his former opponents and eight of the 10 parliamentary parties, oversaw GDP expansion by 52% over the last decade. As many as 18 ports, 21 airports, and 1,700km of toll roads were built after Jokowi, who has been hailed for his inclusive policies and pluralist approach, took office in 2014.
Indonesia’s gross national income per person in 2024 was $4,180 up from $3600 in 2014. Only four percent of Indonesians lived on $2.15 a day or less, which was three-quarters less than those in 2012. Global demand for commodities such as nickel due to the energy transition was expected to benefit Indonesia, which is projected to be the world’s fourth-largest producer of green commodities used in batteries and grids by 2030.
A fifth of global reserves of nickel used in batteries makes Indonesia key to the electric-vehicle supply chains. Indonesia has banned the export of raw materials to force global firms to build factories locally and secured over $20bn of investment in return. Carmaker Hyundai last year started manufacturing electric cars in Indonesia.
Indonesia, the world’s most populous Muslim country and home to 12.7 percent of Muslims globally, is the sixth-biggest emerging market by GDP. It has grown faster than other $1 trillion-plus economies save China and India over the past decade as it has combined democracy with economic reform and social harmony.
The emphasis was reflected when Widodo presided over the ceremony for the inauguration of the world’s tallest Hindu statue (Garuda Vishnu Kencana) in Bali in the presence of the country’s top leaders in September 2018. Thousands including former president Megawati Soekarnoputri attended the ceremony for the celebration of Indonesian multiculturalism in Bali, a Hindu enclave. Hindus form two percent of the country’s population and 90 percent of them—around 3.4 million—are concentrated in Bali.
Indonesia is a secular country with full rights for religious minorities. It is the world’s third-largest democracy governed by five foundational principles called Pancasila (belief in God, humanitarianism, national unity, democracy, and social justice). Indonesia-based Nahdlatul Ulama (Reawakening of the Islamic Scholars), the world’s biggest Islamic organization, has played a key role in promoting social harmony in the country. The organization endorses pluralism, the United Nations Charter, and the Universal Declaration of Human Rights.
Nahdlatul Ulama has sought to develop a new discourse regarding Islamic jurisprudence. It has worked to prevent the weaponisation of identity and communal hatred. It seeks to promote solidarity and respect among diverse peoples, cultures, and nations by refocusing on the Islamic mandate for love and compassion. Nahdlatul Ulama embraces spirituality, and cultural traditions, and supports equal citizenship while rejecting the distinction between Muslims and non-Muslims as legal categories.
Nahdlatul Ulama embodies Indonesia’s inclusive national ethos, which has been key to Indonesia’s steady growth. In a paper on the Islamic roots of Indonesia’s pluralism, scholar Azyumardi Azra wrote Southeast Asian—or particularly Indonesian—Islam has long adopted the Islamic paradigm of ‘middle path (ummah wasat)’, which translated into the adoption of the national ideology of Pancasila in 1945. “…[Pancasila] has been…the common platform among peoples of different religious, social, and cultural backgrounds in the country.’
With Indonesia on the cusp of becoming one of the world’s 10 biggest economies, it has set an example for other nations to follow.
