Indonesia: Balancing Asian Power

Dr. Syed Mehboob    

http//: www.thenewslark.com

We are living in a multipolar world now. Global power is shifting from west to east, but tensions between superpowers have escalated, and a new sort of cold war has begun, especially in trade. It is challenging for countries to maintain their foreign policies with neutrality. Indonesia did this successfully. Superpowers need Indonesia’s cooperation.

Indonesia is a bridge between East and West and it believes cooperation among civilizations and rejects the narrative of clashes between civilizations. Indonesia straddles the Indian and Pacific Oceans which means it holds considerable sway over some of the world’s most important Maritime trade routes where 60% of global Maritime trade is done through these routes. Indonesia is an archipelago with over 17,000 Islands that finds itself at the center of high stakes. Both superpowers China and the United States of America give importance to Indonesia and recognize that Indonesia’s allegiance could determine the future of Asia-Pacific relations.

Indonesia’s astonishing economic growth, natural resources, and qualified young population are all sources of attraction for global investment. It has undergone a remarkable transformation since the 1997 financial crisis.

Today it is an emerging powerhouse reshaping the economic landscape of South East Asia. It’s economy has grown tenfold in just one and two decades.

Indonesian Economy

Population                                        : 282.7 million ( 2024)

GDP( Nominal US$ billion    : 1,492 ( 2025 estimated)

GDP ( PPP) US$ billion                   :4,983 ( 2025 estimated)

GDP Rank                              : 15^th( Nominal )

6^th( PPP)

GDP Growth                         

GDP Per Capita US$

Nominal               : 5,247 ( 2024)

PPP                      : 17,520 ( 2024)

GDP by sector

Exports US$ billion                : 298.2 (2023)

Export Partners

Imports US$ billion                : 268.3 billion ( 2023)

 Import Partners

FDI stock             : US$ 262.92 billion

Indonesia is a natural interlocutor between China and the West. Without Indonesia, there won’t be enough Nickel for energy storage and key technologies. President Widodo led the country since 2014 and Indonesia’s astonishing advancement is noticed by the USA, China, and Russia the world’s major powers and no country can ignore it. President Widodo took Indonesia on the path of development and progress and now it is moving from middle income to a high-income zone. Nickle has remained important globally for making stainless steel but nowadays it is highly important for lithium iron batteries, mobile phones, and electric vehicles.

 Nickle Production Worldwide 2023

Share of Global Nickle by Country

Indonesia is predicted to be the 4^th largest economy in the world by 2045. Till 2045 its GDP would be estimated at US$ 9,100 billion and its per capita would be US$ 29,000. 

Indonesia recently became the 10^th largest manufacturing nation in the world. The manufacturing sector is about 25% of its GDP and it is now larger than the UK, Russia, and Mexico.

With its rapidly growing middle class and competitive workforce, more foreign investors than ever before are taking advantage of Indonesia’s strong manufacturing sector. There are 50 million small businesses in Indonesia, with online usage growth of 48% in 2010.

List of 10 largest foreign investment origin countries in Indonesia in 2022

Indonesia remained neutral over the Ukraine and Russia conflict and kept it policy balanced. In June 2022, Jokowi traveled to Russia and Ukraine and attempted to engineer a detente between the warring parties. He succeeded in securing guarantees from Russian President Vladimir Putin on the safe delivery of food and fertilizer from the war zone. Jokowi said that he wanted Indonesia to be a “bridge of peace” between Ukraine and Russia. Indonesia envisions a global order that defends the rights of small and middle powers to freely determine their actions without external interference.

Indonesia’s vision for a peaceful international order has three key elements. First, all states must be respected as sovereign and fully independent. Secondly, all states must be equal under international law. Finally, states should be able to peacefully resolve conflict through multilateral and international cooperation. Strong regional and global institutions are therefore crucial.

There have been two major shifts in Indonesia’s foreign policy. The first is priorities. Former president Yudhoyono’s foreign policy priorities were to strengthen Indonesia’s democracy and restore its standing in international institutions. To do so, he branded the country as ‘ “ A model of Muslim Democracy” and even initiated the Bali Democracy Forum.

Widodo had different priorities. He seeks a foreign policy that drives Indonesia’s ambitious development projects, including capital relocation, infrastructure development, and connectivity projects, especially in eastern Indonesia. His foreign policy has focused more on democracy’s potential benefits for economic development. The second change relates to engagement with great powers, particularly China and the US. Under Yudhoyono, Indonesia engaged more closely with the US and other members of the liberal international order.President Widodo took a critical stance towards the US and criticized the failure of Western countries to reduce global inequalities and deliver development to the Global South. Widodo had also strengthened Indonesia’s cooperation with countries outside the West such as China, to obtain more economic benefits. Fellow ASEAN member states have supported Indonesia’s various initiatives to project democracy, particularly within ASEAN itself. Indonesia played an instrumental role in crafting the ASEAN Charter and including democracy and human rights as key principles within it. Indonesia also led the establishment of the ASEAN Intergovernmental Commission on Human Rights (AICHR), which promotes human rights protection in the region and is currently leading efforts to restore democracy in Myanmar.

Indonesia’s  Trade Agreements with various countries

There is a need for Pakistan should develop its long-term strategic relations with Indonesia and more students should be sent to get higher education in Indonesia Pakistani businessmen take advantage of Indonesian business-friendly policies similarly Indonesian business community should also take part in investment opportunities.