The Indonesian Miracle

BY RICHARD DOBBS, FRASER THOMPSON, ARIEF BUDIMAN

When most people think of Indonesia today, they think of beaches and temples or of its famously teeming cities, but this country of 240 million and counting is a much more modern, diversified, and dynamic economy than many international investors and companies assume. To make the most of Indonesia's vast potential, they're going to need to change the way they think about the archipelago -- and putting these five myths to bed is a good place to start.

"Indonesia's economy is unstable."

Hardly. Far from being unstable, Indonesia has been growing steadily at an impressive rate of 4 to 6 percent over the past 10 years -- less volatile than the economies of Brazil, Russia, India, and China, or any other developed country for that matter. Indonesian government debt has fallen by 70 percent in just a decade and is now at a level lower than in 85 percent of developed economies. Inflation, which was over 20 percent 10 years ago, now stands at 8 percent, comparable with more mature economies, such as South Africa and Turkey. Indonesia's overall economic management has also shown remarkable improvement. The World Economic Forum ranked Indonesia 25th out of 139 countries for macroeconomic stability in 2012, up sharply from 89th in 2007. For comparison, Brazil ranked 62nd and India ranked 99th.  

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