Indonesian economy will soon be up to Bric standards

Is it time for Indonesia to take its place among the emerging markets?

It is the fourth most-populated country in the world, but none of the major economies fear being overtaken by Indonesia.

Even the US, the third-most populated country in the world, is afraid of being surpassed by China and India, the countries with the largest and second-largest populations in the world.

Indonesia has a population of about 240 million, ahead of Brazil with its 190 million.

But the South American economy has been found worthy of inclusion in a group of emerging countries that are growing faster than the developed countries, and therefore, the analysts say, are destined to take over the lead.

Indonesia may not be represented in the acronym Bric - Brazil, Russia, India and China - but some of its policymakers want to become a member of the club.

Bric is not an official body. It was just a clever idea thought up by a British economist working for Goldman Sachs who was trying to group together disparate countries in different continents, united only by fast economic growth.

So a stroke of the pen could make Indonesia a member - no campaigning or voting is necessary.

Indonesia, however, does not have the double-digit or even high single-digit growth of the Bric countries. It has averaged about 5 per cent in recent years and on occasion touched 7 per cent, but its economy is not a dynamo in industry, like China, or in the services sector, like India.

Indonesia remains a commodity-producing and agrarian economy with only a small industrial sector. This is not necessarily a bad thing. The country is, after all, the largest South East Asian economy and a country with an annual per capita income that exceeds US$1,200 (Dh4,407).

Palm oil, which goes into many food products and cosmetics, is like gold that grows on trees, and Indonesia is its largest producer. China and India are demanding more and more of the oil, as they are the high-quality coal Indonesia produces.

Being so close to China and India means Indonesia also has a ready market for its agrarian products.

While Indonesia is blessed with a lot of things, such as an equatorial climate that is ideal for farming, it lacks skilled manpower, particularly in engineering. A lot of Nike shoes are produced in Indonesia under contract, but the managers and senior engineers of such factories are usually imported from places such as Korea.

This lack of manpower impedes industrialisation, high wages and improved economic growth, thus preventing Indonesia from becoming a member of the Bric club.

There are signs of positive developments on all fronts in Indonesia but it may be decades before the "critical mass" is reached for it to take off as another Bric-style economy.

Cultural factors may also be at play. Indonesia is dominated in business and politics by the people of the archipelago's most populated island, Java. Javanese culture is one that values polite behaviour, rather than shouting to become a member of this or that club.

There were exceptions to this in the rule of the country's first president, Sukarno, in the 1950s and 1960s, but Indonesia does not usually punch above its weight in international forums. It has been loath to flex its muscles even in South East Asian diplomatic forums.

But as it plods along its "middle-income" path, it seems only a matter of time before someone declares Indonesia a member of Bric.

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