The Quiet Giant

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The year is 2009. After a relatively stable decade unmarred by either political or economic upheavals, Indonesia was touted as the largest economy in Southeast Asia. And it was not hyperbole.

There was a lot of back-patting over the fact that Indonesia could become the next ‘I’ in the Goldman Sachs-ordained BRIC economies. And in late 2010 and 2011, US President Barack Obama made two official trips to Indonesia and visited President Yudyohono, the former general who has emerged as the country’s benign two-term patriarch.

On both occasions Obama reiterated Indonesia’s indisputable position as a stabilizing force in emergent Asia. Meanwhile, America’s longest-standing Asian ally the Philippines has yet to enjoy the same favor.

At the beginning of 2012, ratings agencies like Moody’s and Fitch gave the dynamic archipelago higher investment grade ratings, inspiring further goodwill.

Thanks to its geographic spread and massive population, the structure of today’s post-globalized and incredibly fluid investment climate favors Indonesia very well. Its GDP growth mid-2012 is better than most of Europe, and only second to China. Efficient Singapore may be sleek, hyper-modern, and nimble, but Indonesia is just so huge, envisioning its potential is an investment analyst’s wet dream.

To call it the Indonesian ‘miracle’ would be too much, however. Modern Indonesia is not a product of calculated long-term foresight like the East Asian giants. Rather, it is in great shape for reasons either completely fortuitous or as a result of historical precedent. Or both.

In the case of the former, it is very much like the Philippines, where, for example, decades of unchecked population growth has produced a relatively young labor force. The parallels between the Philippines and Indonesia are so striking, in fact, that both countries seem to move in lockstep.

When it comes to historical precedents, Indonesia’s dark age under the reign of autocrats Sukarno and Suharto, coupled with the nightmare of the 1997 financial crisis, certified its role as a vital player in the region. When Indonesia is strong, its neighbors are wary. When it suffers, so does everyone else.

After all, everyone from Lee Kuan Yew to Nikita Krushchev to Henry Kissinger courted Indonesia’s leadership at some point. These historic ties, no matter how short lived, still bear fruit in the present.

Everybody’s Friend
Indonesia’s vitality is best illustrated by what transpired in the beginning of September 2012. Speaking to a room full of journalists, visiting US Secretary of State Hillary Clinton and her counterpart Foreign Minister Raden Mohammed Natalegawa exchanged pleasantries that highlighted how rosy the bilateral ties were. Clinton even trumpeted that “the Indonesian government has announced more than half a trillion dollars in planned infrastructure improvement.”

The rest of Clinton’s speech and the two questions from the press she fielded touched on the prominence of Indonesia’s membership in Asean; the importance of its continued economic growth and how much the US and Indonesia see eye to eye over what is happening in the Middle East.

Clinton’s remarks underscore what a golden opportunity Indonesia presents to the US. Rather than dwell on the expired script of religious tolerance, human rights, and anti- terrorism (although she perfunctorily addressed security when asked), her words focused on Indonesia being a dependable ally. Especially given that the US is now reasserting itself in Asia Pacific.

It is ironic that hardly three days later, after a short stop in China, Clinton was in Timor-Leste (previously East Timor) praising its coffee and transparent democratic process. Ironic because more than 30 years prior, another Secretary of State, Henry Kissinger, gave then Indonesian ruler Suharto the thumbs up to invade the fledgling country.

America’s newfound open- mindedness when it comes to Indonesia is not unique.

Even China is on its best behavior with the world’s largest Muslim state. Since Indonesia has no claims in the much disputed fringes of the South China Sea, China has been very proactively improving ties with the nation in the last several years.

Despite a past relationship best described as cool, both countries have approached each other with clean slates and, perhaps, clear consciences. To be more precise, since Indonesia is the world’s largest exporter of tin and coal, China has eagerly bought so much that it is now considered a friendly relation.

Another very good barometer of Indonesia’s role as a regional heavyweight is to examine its arms purchases.At the start of 2012, the government approved a very substantial defense budget to re-equip the armed forces.

The interesting part is when the Indonesian military needs fighter jets, it looks to Russia. If it needs small arms, it turns to Europe. Helicopters? The US. Then it goes right ahead and conducts military exercises with both the US Navy and the Chinese Army. Like its roster of allies, Indonesia enjoys having flexible choices.

The bottom line is, no matter which way the geopolitical winds blow, Indonesia can accommodate whoever is jostling for leverage in its immediate vicinity.

If its leaders play their cards right, this advantage becomes a powerful asset very few countries in the world possess.

Print ed: 10/12

 

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