The next China? Indonesia emerging as a new Asian powerhouse

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Indonesian President Joko Widodo speaks to the media with his cabinet members at Merdeka Palace in Jakarta. Associated Press
Mahni Suyoso sits beaming in the passenger seat of a bright red pickup truck as it rolls slowly through the bustling streets of central Jakarta.

She’s in a parade featuring jubilant brass bands and volunteers throwing out water and treats to the crowd, mostly local office workers. In the back of the truck is a 1.8-metre-tall pyramid of wired-together eggplants, carrots, snake beans, cabbages, tomatoes, corn and a pile of yellow rice – along with the national flag.

It’s the celebration of a new Indonesia.

Ms. Mahni, an entrepreneur with eight restaurants, had the vegetables dug from her farm to showcase rural prosperity, and then piled into the vehicle with her employees to drive a day and a half across Java from the small city of Wonosobo. Indonesia was finally inaugurating a president they thought was worth honouring: Joko Widodo, known to all as Jokowi.

Ms. Mahni is elated, she explains, because Jokowi is a successful, hard-working business person from a small city, just like her – not part of the old Jakarta elite who have dominated politics since the fall of Suharto in 1998.

“I’m from the village, I don’t have any education, but I know money,” says Ms. Mahni, 42, as she secures a Jokowi headband around her turquoise head scarf. “He became successful from business, not from corruption. Jokowi knows how to make us prosper.”

Indonesia is experiencing a burst of unprecedented economic and political optimism. The world’s fourth most populous country, with some 250 million people, is emerging as a powerhouse of Southeast Asia, at the dawn of an awakening that many compare to pre-boom China three decades ago.

After decades of dictatorship and corruption, the country is quickly shifting course with the election of a political outsider that many think will usher in a new era of sustainable economic growth.

Global companies, eager to get in on the ground floor, are racing to invest and sell consumer goods to Indonesia’s rapidly-growing middle class.

Ottawa-based billionaire investor Sir Terence Matthews compares Indonesia to China in the late 1980s. He just opened a Jakarta office for his investment firm Wesley Clover, which has extensive holdings in technology and real estate.

Sir Terence struck his first joint venture in Beijing in 1980. “I’ve been doing business in this region for well over 30 years and I generally avoided deals in Indonesia,” he says in an interview.

But that has now changed. “Timing in life is almost everything – I don’t care whether it’s sex, a new market or a new product,” Sir Terence says. “We think timing for Indonesia is good. The government feels the same way.”

The country is still vulnerable to sudden capital outflows, and there are lingering concerns about the regulatory and legal framework. But with Jokowi as President, business people and foreign investors – as well as ordinary citizens – are hopeful his reformist government will build desperately-needed infrastructure, clamp down on corruption and liberate the country’s vast potential.

Cameron Tough, a Canadian who works in investor relations for PT Adaro Energy, a major coal miner, says “Indonesia in the next 10 years will blow us all away.”


Indonesian President Joko Widodo, popularly known as ‘Jokowi.’ Wong Maye-E/Associated Press
Targeting corruption
Indonesia’s economy, the biggest of the various Association of Southeast Asian Nations (ASEAN) countries, has posted growth on average of about 5 per cent a year for a decade, and exports doubled to $204-billion in the five years leading up to 2011.

The country has an abundance of natural resources, and boomed as China gobbl

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