After several decades of hibernation, Indonesia is finally back and fully encapsulated in the long history of Asian success. Economic growth is just a representation of the broader expansion of Indonesian society, which cannot be measured with a mere 6% annual increase of its GDP.
The Suharto era – ended in 1998 after 33 years of uninterrupted rule – was replaced with a more dynamic movement. Suharto’s rigid, paternalistic approach was useful to the western world only so long as the Cold War was threatening to go hot. For too many years his regime was built on fragile foundations, with the export of its raw materials supporting the rest of the economy. When the painful Asian crisis hit Indonesia, the cracks in the regime broke wide open. A powerful and resource-rich country was unable to join the Asian tigers’ experience, where the combination of public policy and private sector was crucial to defeat underdevelopment.
Indonesia was a bastion of anti-Soviet and anti-Chinese positions in the past. Its main ally, the USA, was a guarantor of stability and investment. An alliance between the military, Muslim clerics, and the Chinese-Indonesian capitalists was the source of slow but consistent growth. It was enough to save the country, but not as rapidly as expected.
With the advent of globalization, and subsequent lack of ideological enemies, the stagnant Indonesia became no longer necessary. During the 1998 crisis, the Indonesian rupee was greatly devaluated in just a few weeks. Capital fled the country, separatist guerrillas began to threaten some regions, and industrial production suffered because of weak demand; the old regime collapsed among tensions, repression, and violence against the Chinese community.
A new Indonesia has emerged from the ashes of the Suharto regime. The nightmare of political and social bankruptcy was real, but soon overcome. Democracy saved the country from collapse and disintegration, and the new government began with substantial reforms: the army resisted the temptation to replace the politicians, a new financial system was created, the freedom of press was established, and certain basic human rights were finally guaranteed.
International investments flocked in, attracted by a more complete legal system. China, previously relegated to a marginal position, is now one of Indonesia’s biggest investors. A more modern industry is developing, while the processing of raw materials’ is finally taking place domestically, and Indonesia is no longer compelled to export its minerals to import manufactured goods.
In a continent where democracy has often been neglected in favor of pure economic growth, where individual freedom was often considered a hindrance, Indonesia proved that so-called “western values” might be useful in bringing prosperity after all.