Indonesia Could Be 10th Largest Economy: But here are the Challenges

Indonesia Could Be 10th Largest Economy: But here are the Challenges

growing middle class. As such, if Australia wants to engage further with South-East Asia, ramping up its trade with the region’s emerging powerhouse will be of great importance. While Australia and Indonesia share strong ties in many areas, trade continues to lag.

The importance of trade to Indonesia cannot be understated. Indonesia’s former trade minister Mari Pangestu was a key contender for the role of Director-General of the World Trade Organisation. Had her candidacy progressed and she secured the top job, it would have further lifted Indonesia’s trade credentials and been confirmation of Indonesia’s emerging global profile.


Indonesia’s foreign policy, trade and defence involvement with key states active in the Indo-Pacific region is complex, with Jakarta balancing its interests among many players. Indonesia’s history of non-alignment is now serving it well, enabling it to strengthen ties with all the key actors in the region. In fact, as Indonesia rises in prominence, its value to India, China, the United States and Australia will increase.

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For India, Indonesia has economic, military and cultural significance. For China, Indonesia’s location on the Malacca Strait is an important consideration in ensuring the free flow of traffic through the waterway. The US sees Indonesia in the geopolitical perspective of having an ally that could, through its leading role in the ASEAN regional architecture, help to peacefully channel China’s aspirations in the region. For Australia, Indonesia’s growth has reciprocal economic and security benefits. Barring unforeseen events, Indonesia’s economic success, its emerging middle class and growing presence as force for regional stability, represent a highly beneficial dynamic that will enhance not only the bilateral relationship, but also the wider region.

“Indonesia Could Be 10th Largest Economy by 2025: But here are the Challenges is republished with permission of Stratfor.”

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