Indonesia’s Population: Challenge and Opportunity

Experts call it window of opportunity. In 2020s, Indonesia population structure gives the best opportunity to prosperity. In that golden era, the dependency ratio will land the lowest point which means the maximum number of productive people (15 – 65 years old) carrying the burden of minimum number of unproductive people (0-14 and 65+ years old).

Thank to this kind of opportunity, coupled with the right economic policy, China can spur its development with double-digit growth for 3 decades. China enjoyed its last advantage in 2010 before the dependency ratio will rise and growing the economy will be harder.

Can Indonesia benefit from the very opportunity?

Unfortunately, Indonesia’s reformation era was too late. If China needs 30 years to get the momentum, then the reformation should have taken place in early 1980s. Ten years would be taken for political consolidation and stability, before starting the “real” development in 1990s. The next 30 years would be spent for “what China has done” – adopt the western-proven economic system with China characteristic, build world class infrastructure for economic zone, invite foreign investment and learn how to make good products, invest much money on education, adore meritocracy in selecting leaders and groom the national companies to be the top-notch ones. And the Indonesia’s golden era 0f 2020s would be achieved. I am dreaming!

Indonesia seems not to follow China’s track. However, as a citizen I only hope for change. The die is cast. Whatever our condition – getting busy with wasting-time of political bickering, ineffective leadership and no ambitious goal to make China-like neck-breaking economic growth – the window of opportunity should be grasped. At least it becomes our national awareness.

Besides political disarray and disintegrated development, another big challenge is the structure of labor force numbered 114.9 millions in 2010. The agriculture sector’s workers account for 42.1%, whereas industry and services make up 18.6% and 39.3%, respectively. There are too many farmers! Since the farmers sell commodities which priced lower than value added manufacturing goods, the national income per capita also remains lower than the highly industrialized country.

Indonesia had ever been touted as one of Asian Tiger due to rapid and dynamic industrialization. But now the Tiger looks very sick; Indonesia is experiencing deindustrialization which the share of industry sector to GDP declining.

Industrialization – as a vital source absorbing workers – runs out of steam. Industries can no longer hire more workers. There are 4.5 low-skilled migrant workers. Likewise the high-skilled ones fled this country. Habibie fretted that during his stint Indonesia had more than 48.000 experts of high-tech industry whom 16.000 were employed by IPTN. The current number of IPTN’s workforce is less than 3.000. In robust economy, these experts should strengthen local industries to compete with foreign ones.

Finally, given those facts, Indonesia can be dubbed as a country with the specialization of (i) wasting natural resources – prefer to selling them abroad instead of harnessing for domestic use, (ii) wasting time by unrelenting political spat, (iii) if not well managed, wasting its demographic dividend.

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