Asia’s Economic Promise and Challenges

Last Updated: 31 Mar 2023
Pages: 17 Views: 75

Asia has been one of the world’s economically promising continents. According to James Chan, during the Middle Ages, Asia was the most developed part of the world. In Asia, you can find famous textiles, silverwares, spices, porcelains, silks. Today, however, the Asia Pacific region comprises developed, developing, and underdeveloped contact centre markets and as these markets progress, the demand for better customer service is expected to drive growth in this region. (Frost & Sullivan, 2005) Except for countries like USSR, Japan, Israel and other parts of Southwest Asia that is rich of oil, most Asian countries are now part of the developing world.

Nowadays, most people living in Asian countries are so close to the survival limits. Developing countries in the Asia-Pacific region are facing three challenges, namely reducing poverty, addressing environmental degradation and promoting regional cooperation, said Tadao Chino, President of the Asian Development Bank (ADB), at the opening ceremony of ADB's annual meeting. (Xinhuanet, May 2002)

One of Asia’s promising countries is Indonesia. Due to the country’s abundant natural resources and increased manufacturing and servicing sectors, Indonesia’s middle class population grew into a higher level together with its booming economy during the 1980’s up to its most tremendous economic contribution in the 1990’s.

Order custom essay Asia’s Economic Promise and Challenges with free plagiarism report

feat icon 450+ experts on 30 subjects feat icon Starting from 3 hours delivery
Get Essay Help

Poverty and unemployment practically started when the economic crisis started in 1997 which also led to political crisis. Much has changed in the archipelago since the dictator Soeharto has been forced out of office by thousands of Indonesian demonstrators in May 1998. The country is no longer under an authoritarian rule, for one. It has since then adopted a democratic government and a presidential system with some parliamentary characteristics. There is a limited separation of powers into three branches: executive power by the government; legislative power in the government and the People’s Representative Councils or the Dewan Perwakilan Rakyat (DPR); and the independent judiciary.

For the first time in over four decades, free elections were held in 1999, and again in 2004. Both elections are largely perceived to be fair by Indonesians. Restrictions on the functions and the formation of non-government organizations, labor unions, religious groups and political parties were also lifted. The press experienced new-found liberty. Indonesians now felt more comfortable voicing their opinions and criticisms of the government after decades of being gagged. And political decision-making has also been shifted to the local officials.

You may also be interested in Old Navy mission statement

Notable though these changes may be, a lot more is still left to be done in order to fully dismantle the political system that has, for so long, bolstered Soeharto’s authoritarian rule. Not surprisingly, the remnants of this era are proving to be difficult to wipe out. Many of the political elite who had grown powerful through the dictatorship are still in positions of influence in the government such as Hu Juntao of China and Ferdinand Marcos of the Philipines. The armed forces or the Tentera Nasional Indonesia (TNI) is still as politicized as ever. Military men who have gained considerable influence during the Soeharto era are still holding positions in government or else wielding influence on civilian leaders. The strong system of patronage still fuels corruption in the bureaucracy. And lastly, the people themselves, already depoliticized by decades of authoritarian rule, are torn between keeping their new-found freedom and seeking the stability of the Soeharto regime.

Nearly a decade after the fall of the 32-year old dictatorship, Indonesia still finds itself stuck in a tentative, nascent democracy. While democratic institutions are already established, the legacies of the three decade-old authoritarianism, entrenched in the culture of its people, hinder the growth of a real participative democracy in the archipelago.

This thesis describes the road to Indonesias democratization which will be long and hard for a nation whose leaders and people have been born and have aged in a period that knew no other system but that of Soeharto’s. Democracy remains strange and an irregularity for them who had grown so used to having a dictator.

Review of Literature

 It was then President Sukarno who instituted authoritarian rule in the archipelago in the mid-1950s. Way (2007) defines Authoritarian or Autocracy as:

“unchecked and overriding political power is lodged in one person occupying a single high office. The power of government is absolute (i.e., unlimited) and is concentrated in the hands of the autocrat, who reserves to himself the right to make the final decisions of government. In the final analysis, one person makes the important decisions regarding public policy and its implementation.”(pg. C3)

 He puts the 235 million people in the world’s fourth most populous country in a system he calls “guided democracy.” According to Markin (2004) taking advantage of the public’s frustrations on their political leaders, their disillusionment on the system brought about by the dismal economic situation and the national instability caused by separatist and religious pressures, Sukarno started putting into place an authoritarian system that was to last for four decades.

In 1967 the armed forces were unified and placed under the Ministry of Defense and Security as Soeharto, who was then an army general, came to power.  Soeharto brought order to Indonesia in the mid-1960’s, coming to power in 1966 after “an extremely bloody suppression of an alleged Communist coup attempt”

This ushered in the era of Soeharto’s New Order – a name he coined to distinguish his regime from that of Sukarno’s.

An unprecedented level of freedom and excitement erupted in Indonesia after the demise of the dictatorship. Come election time, many politicians vie for a position in the government where people would vote and select their government officials. This is a situation on how a democratic government works. President Soeharto finally fell from power in May 1998. The first free elections after four decades were held in 1999 as Indonesians voted for seats in the national, provincial and regional parliaments. The first presidential elections directly voted by the public, meanwhile, were conducted in 2004.

Democracy is often implemented as a form of government in which policy is decided by the preference of the real majority (as opposed to a partial or relative majority of the demos/citizens) in a decision-making process, usually elections or referenda, open to all or most citizens. (Wikipedia) In 1999, the general public of Indonesia finally practiced a freedom where everybody can participate in making a decision especially in selecting a leader who will guide and rule the nation. In both elections, the people were able to choose from different political parties other than that of the administration, Golkar or the Partai Golongan Karya (Party of the Functional Groups).

With that, Indonesia had finally installed a new government ending Soeharta's  32-year-long rule.

Political Parties and Pressure Groups

Political parties are groups or organizations which aim for certain goals and have their own political ideologies and policies. They seek to attain political power in the government by electing a leader and running in the election in order for these political ideologies and policies to be implemented. When Suharto came to power in 1967, the  Military power was consolidated under his influence. According to Forbes (2006) Soeharto unified the armed forces and placed them under the Ministry of Defense and Security. The total strength of the armed forces was:

“302,000, including 233,000 in the army, 45,000 in the navy, and 24,000 in the air force. In addition, paramilitary forces have 174,000 police and 1.5 million members of peoples’ security units (Hansip), which operate at the village level. All citizens are required to serve two years in the armed forces, but because of limited job opportunities in the country volunteers fill the vast majority of military positions.”

According to Jack L. Davies (2001), political parties can be organized by anyone, can select their own membership and leadership any way they want, and can define any political positions that they want without consulting with anyone else.  However, they do not represent any citizens, other than the members of the party itself.  They must then present their candidates for election and political positions for approval by referenda as appropriate before their political agenda has any real relevance.

Markin talk about Soeharto’s regime was marked by “orchestrated elections, muzzled media, tightly controlled labor unions, closely monitored religious groups, and a palpable sense of fear among the public about openly criticizing the regime.”

According to Antlov (2003) there was a massive patronage system in place. Budget allocations were determined by how close the local governments are to the central government. Budget allocations were awarded in exchange for loyalty. No considerations were given for performance or need. This system created a generation of political officials who find themselves accountable to the government instead of to their constituencies.

There was also unprecedented freedom of the press, expression, and assembly after Soeharto’s fall. Non-government organizations found themselves able to recruit members, engage in politics and influence policies. Political prisoners were also released.

Some of these reforms have already been enshrined in the 1945 Constitution, which has already undergone several piecemeal revisions by the MPR or the Majelis Permusyawaratan Rakyat (People’s Consultative Assembly), the upper house of parliament. Among the recent amendments are the inclusion of the Bill of Rights and a landmark revision done in July 2002 allowing the direct election of the president and removing parliament seats allotted to the military.

In the beginning of the post-Soeharto years, the military faced public condemnation for the countless human rights abuses they have committed, including the killing of three Papuan students and the torture of over a hundred others.[5] (Ibid) Some reforms were initiated – such as reducing the number of seats allotted to them in parliament. Budjardjo (2003) said that during the 15-month presidency of Abdurrahman Wahid, serious efforts were seen to push for these reforms. But when he was replaced by Megawati, daughter of Sukarno, the armed forces found new life and is again enjoying a portion of its political clout under Soeharto.Military representation in the DPR was ended in 2004, while their representation in the MPR will end in 2009.

Another major change in the political environment of Indonesia after Soeharto’s fall was the government’s decentralization, now enshrined in the Constitution. For half a century, Indonesia has had a highly centralized government. It effectively limited political activity and decision-making to the national parliament, and alienated the citizenry from political participation. Now, Antlov (2003) stated that regional authorities have been given local autonomy, calling for democratically elected local legislatures at the provincial, city, district and municipality levels through Law No. 22 of 1999. In addition, the new law has given the 400 districts and cities in the 30 provinces full autonomy in the management of services and duties.This reform is a major move towards democratization because it enables the citizens to participate in policy-making and decision-making.

With national conditions aggravated by the 1997 Asian economic crisis, criticisms against the regime intensified.

During the fall of Soeharto, Soeharto had allowed the existence of two other political parties during the New Order, but they were only symbolic and are generally kept weak and inconsequential.

Indonesians and Ethnic Groups

The separatist provinces of Aceh and Papua have learned the hard way that the government could disregard individual rights and liberty in its “determination to hold the country together.”[8] (Markin, 2003)

Initial figures from the military offensive in Aceh that started in May 2004 revealed that there had already been more than 1,200 deaths and tens of thousands of civilians being forcibly placed in relocation camps in the early months of the operations. In July 2004, a court in Aceh sentenced a political activist to five years in jail, a sentence acknowledged as “the harshest punishment for peaceful expression of political views anywhere in the country since the end of the Soeharto regime.” (Markin, 2004)

“In Papua, authorities are backtracking on an earlier promise to allow the formation of a native assembly; moreover, when the National Human Rights Commission announced it would investigate an attack there in August 2002 that many believe was orchestrated by the military and left two Americans dead, an Army general pointedly warned the semi-official watchdog group not to say anything that could damage the country’s credibility in the international community – a move that may have had a chilling effect on other groups tempted to speak out.”

With 45% of Indonesia's population consisted with different ethnic groups, Forbes (2006) highlighted that:

“movement of many Javanese to Papua under the transmigration program has created tensions with native residents there. Many Indonesians have also come into conflict with residents of Chinese origin, who have been historically successful in business ventures and generally enjoy a higher standard of living than Indonesians of Malay descent (...) which led to riots in towns and cities on Java and other parts of Indonesia, particularly in 1997 and 1998 when the Chinese were blamed for Indonesia’s economic problems.”

Indonesia is the largest Islamic country in the world making up 87 percent of the population. They arrived in Indonesia as merchants and in the 13th century, the coastal states of northern Sumatra were beginning to accept the new religion,  spreading slowly until the rise of the sultanate of Malacca (Melaka) on peninsular Malaysia’s western coast in the early 15th century. Malacca gained commercial and political power and also became the major center in Southeast Asia for the spread of Islam. Muslims became powerful after gaining commercial power and many merchants had converted into Islam. Malaccan princes in turn became powerful from their trade connections and began exerting commercial and military pressure on Majapahit. In the 16th century, Muslim kingdom of Mataram arose in central Java and began to absorb many of Java’s maritime principalities.

Politics and Economic Status: Before and After

What has undermines the electoral process and other democratic institution is that governance was viewed as an administrative process, rather than a political one. Political parties were viewed as destabilizing by the dominant bureaucratic-military elite and their power was limited. Self-serving, fractious behavior by politicians reinforced the elite’s biases. Increasingly, the new state’s power was exercised from outside Parliament; the role of elected representatives was marginalized.

Soeharto prioritized stability and economic development. Under his rule, the military gained unsurpassed power – defining their role in society as dwi fungsi or a dual political-social function. The pervasive armed forces exercised control and influence, not just in the top bureaucracy, but also in the regional and district levels where they established headquarters similar to civil government. The military was also central in the national economy through military-managed enterprises.(Indonesia: The New Order Under Suharto, 1992, par. 3)

Aside from avenues for people’s participation in politics, another important institution of democracy is the mechanism to hold public officials accountable.

At the fall of the Soeharto regime and at the start of the establishment of democracy, it should be expected that the various accusations of corruption and human rights abuses of Soeharto and the military should be investigated and, afterwards, punished. It is very important, if the legacies of the dictatorship are to be dismantled completely, that the military and the other officials of the New Order be held accountable for the human rights violations and their share in corruption.

It is highly telling that, immediately after the fall of Soeharto, investigations conducted by the Habibie administration into the human rights abuses and corruption charges against the dictatorship did not lead to any prosecutions. Habibie, who was Soeharto’s vice president and took over after he resigned, was after all a product of the authoritarian regime and was loyal to Soeharto. The MPR-ordered investigation got nowhere partly because the head, Attorney General Andi Ghalib, was himself suspected of corruption. Also and more importantly, Habibie and Ghalib were not at all serious in pursuing the charges in the first place – a revelation found through an intercepted conversation between Habibie and Ghalib.[12] (Indonesia and East Timor, 2005, Human Rights Development section, par.23)

Antlov (2003) said that “In practice, participation, as far as the government goes, is nothing but mobilization, the forced partaking in government programs. And sosialisasi, sorry consultations, seldom amount to anything more than presenting, in monologue form, with a brief Q and A session, the latest government blueprint. Civil society organizations themselves also have yet to present a credible alternative to the top-down, elite-oriented planning of the government.”(p. 163)

Real democracy needs to be participatory to involve as many people as possible in policy formulations, program implementation, and outcome evaluations, to overcome the distrust in government and the crisis of legitimacy of the state. This means that legally mandated forms of citizen participation in the creation of policies and mechanisms for getting officials accountable should be in place and implemented. Grassroots democracy is needed to sustain national democracy because it is from below that the mass of social forces can be found. According to Antlov:

“Popular participation can be driven by innovative and committed citizens demanding their voices to be heard. It can also be provided by state agencies as a way to overcome the distrust in government and to empower local communities.”(p. 142)

There were many non-government organizations during the New Order, but they were unable to join the political arena. They existed under heavy regulation, repression and restrictions, thus limiting their political activity. Sectors such as workers and farmers were not allowed to organize, leaving only the middle-class and non-membership based NGOs to form in the New Order Indonesia. (Antlov, 2003, p.147)

But as the 1990s proceeded, growing dissatisfaction towards the Soeharto government and its policies of oppression enabled the radical NGOs who went underground before to resurface. Antlove (2003) stated that they became quite instrumental to the intensified campaign leading to Soeharto’s resignation. They were active in criticizing the human rights, environment and economic policies of government, as well as in building a critical consciousness among the students and the urban middle class.(p. 148)

Following the fall of Soeharto, a multitude of new and old NGOs emerged giving new life to civil society. There were groups organizing farmers, workers and the urban poor. Others had intensified their advocacy on policy issues. More went into local governance work. Even small towns have governance-oriented organizations, with functions ranging from government watchdogs to multi-stakeholder citizens forums. (p. 148)

During the 1999 elections, civil society organizations were also present to monitor almost all of the 600,000 polling stations. They guarded against cheating and cross-tabulated the results, immediately reporting to their respective offices.(Ibid)

NGOs have contributed to the reforms happening at the local level, enough to hope for a more participative democracy in Indonesia. But a lot is still needed to instill a national-level consciousness in the citizens to take part in policy-making and governance.

The legacies of the authoritarian regime have left civil society unpoliticized. Having been left out of the political setting since they started, NGOs lack “a critical consciousness to act politically: to build constituencies, engage the public in debates, formulate and disseminate alternative public policies, discuss ideologies, search for broader consensus, find middle grounds, compromise, innovate, all those impossible things that are expected of a person, party or organization with an interest in politics, governance and change.”(Antlov, 2003, p.154)

Now, eight years after he was forced out office, Soeharto might not even be punished for his crimes as current President Susilo Bambang Yudhoyono – a top general during the New Order – considers dropping the corruption charges against him for health reasons. Soeharto, facing charges of embezzlement worth USD600 million, has been in and out of the hospital since 2004 for intestinal bleeding. He had also suffered several strokes since 2000, causing legal efforts to recover the stolen public money to stall. Political analysts think there is a high possibility that Soeharto will be given pardon considering that he still wields considerable influence among political and military elites, including vice president Jusuf Kalla.[20] (Indonesia may drop Suharto charges, 2006)

Because they still wield considerable power, the military is likewise getting away with human rights violations despite Indonesia adopting a bill of rights in its Constitution. As the 2005 Amnesty International Report states, “The majority of human rights violations were not investigated, and only a few investigations led to prosecutions. By the end of the year only one person remained convicted for crimes against humanity committed in Timore-Leste in 1999.” Shockingly, that one person is still free.[21] (Indonesia: Human Rights Concerns, par.3) This shows that the Indonesian government, despite adopting a democratic system, has “thus far been unable or unwilling to effectively prosecute upper-level officers in the security forces.”(Indonesia: Human Rights Concerns, Papua section, par.2)

According to Forbes (2006) Indonesian society has experienced a profound shift in the location of wealth. For much of the period since independence in 1949, wealth was concentrated in rural areas, particularly beyond Java. The rural elite prospered through their control of land and through their success as crop exporters. With industrialization in and around the larger cities, however, the wealth has shifted to urban areas of Java and Bali. Wealth is now derived from manufacturing, infrastructure projects, and the services sector.

Indonesian’s perception that the government is very slow on developing the country, brought public dissatisfaction and distrust in government are mounting. Markin (2004) cited various surveys, which shoes that Indonesians increasingly express disappointment with the slow pace of reform in areas ranging from the economy to government corruption to law enforcement.”(p. 123) A poll in 2003 reported that 71% of Indonesians found that the government had brought little or no improvement at all to Indonesia. This has caused Indonesian’s to be torn between wanting the stability and progress during the Soeharto regime and maintaining their relatively freer society.

Indonesians also felt they are not part of the decision-making process, a central part in any democracy. An Asia Foundation survey conducted in 2003 found that although 93 percent of Indonesians said they will vote in the 2004 elections, only 15 percent felt that they had gained any influence over government decisions.(Markin, 2004, p.122)

Corruption is still a major problem. Indonesia remains up to this day as one of the most corrupt countries in the world. In 2004, Kwik Kian Gie, state minister of National Planning Development, has even declared that his own party, the ruling PDI-P, which is also President Megawati’s party, is the most corrupt in Indonesia.(Antlov, 2003, p.167)

Mechanisms for transparency and accountability are still not firmly established. “Civil servants in Indonesia still see themselves as serving the regime, not the citizens. They get their authority and power from higher authorities and not through popular support. Even the local councilors elected in 1999 have turned out to be just as corrupt as their predecessors.”(Ibid)

It is sad to note that the reforms enacted to date have only managed to bring little meaningful, tangible economic benefits to the people. An Asia Foundation survey found that most Indonesians believe they are worse off now than when they elected their first post-Soeharto government. “They complain, for example, that unemployment has remained high, crime has worsened, and various pretenders of power seek bribes for needed services that once could be obtained by making a single payment to a known Soeharto crony.” (Markin, 2004, p.123) While Indonesians are happy about the freedom they experience in a democracy, they still lament that economic development had been slow in the post-Soeharto governments.


Granted that today’s Indonesia is so much freer than that of Soeharto’s regime, a cursory look into the actions of the government, particularly Megawati Sukarnoputri’s administration, the third since Soeharto’s, is a telling indication that the move to democracy is taking a backlash.

The problem could be traced to the very people in government, many of whom are the same political elites holding power during the dictatorship. Democratic institutions like free elections and freedom of speech had allowed Indonesians to speak more openly and vote for whatever political party they choose – many of which are formed after Soeharto’s fall.

 In the Lesson from Indonesia: Predatory power possible under democracy (2006), “The institution of power has changed from those associated with authoritarian rule to those that are democratic but the kind of social interests that dominate Indonesia are the same predatory institutions that had been nurtured and cultivated under authoritarianism rule.” This just illustrates the fact that Indonesia’s transformation to democracy still has a long way to go. Especially since those who had been influential during Soeharto’s regime and are still holding power today are reviving old policies of the repressive authoritarian regime in order to curtail the growing political dissent.

Megawati’s actions against the press are examples of how Indonesian politics is reverting to authoritarian and repressive measures instead of moving towards democratization. The press, which had experienced unknown highs after the fall of the dictatorship, is again being subjected to threats, repressions and censorship for criticizing the government or the military.

Moving away from authoritarianism should have meant that the military be kept away from the arena of politics and governance. But under Megawati’s watch, more and more ex-generals are appointed to governorships all over the archipelago, oftentimes disregarding the nominees put forward by local members of her party. (Markin, 2004, p.130)

Arguably one of the worst legacies of the authoritarian regime for Indonesians is that it left them torn between wanting freedom and seeking the stability they experienced from Soeharto. rying to balance this dichotomy could result to a uniquely Indonesian political system, merging a number of democratic institutions (like free elections) and a handful of authoritarian elements to ensure national unity and stability (like limits to freedom of assembly). Although far from a real democracy, this compromise could provide, in the near future, the necessary assurance for many Indonesians that the nation will find stability and unity without having to return to a Soeharto-style regime.

As the pseudo-democracy matures – and the people are able to free themselves from the remnants of the Soeharto period – Indonesia might be able to decide how best to progress, which parts of the old system they will let go and which ones they will use to serve a purpose.

If they succeed, whatever political system evolves could serve as a model for other Muslim-majority countries. The political movements in Indonesia, where the world’s largest Muslim population resides, “could influence the debate in many other predominantly Muslim countries about whether Islam is compatible with democracy.”(Markin, 2004, p.120)


(10 May 2005) Asia-Pacific Developing Countries Face Three Challenges: ADB President. [online] Retrieved February 13, 2007 from:

Antlov, H. (2003). Civic Engagement in Local Government Renewal in Indonesia. In          Citizen Participation in Local Governance: Experience from Thailand, Indonesia    and the Philippines (pp. 139-171). Quezon City, Philippines: Institute for Popular        Democracy.

Budiardjo, C. (2003). Country Profile: Indonesia [electronic version]. New Internationalist, June 2003. Retrieved January 12, 2007 from

Davies, Jack L. (2005) Reunification of the Somali People. Civic Webs Virtual Library [online]

Retrieved February 13, 2007 from:

Frost ; Sullivan (20 Dec 2005) Assessment of the Asia-Pacific Contact Centre Markets. Market [online] Retrieved February 13, 2007 from

Indonesia and East Timor. (2005). Retrieved January 17, 2007 from Human Rights Watch Web site:

Indonesia may drop Suharto charges. (2006, May 10). The Sydney Morning Herald. Retrieved from

Indonesia: Human Rights Concerns. (n.d.). Retrieved January 17, 2007 from Amnesty International USA Web site:

Indonesia: The New Order Under Suharto. (1992, November). Retrieved January 17, 2007 from Library of Congress Country Studies Web site:

Lesson from Indonesia: Predatory power possible under democracy. (2006). Jakarta Post, December 20, 2006. Retrieved January 12, 2007, from Action in Solidarity with Asia and the Pacific database.

Markin, T. (2004). Indonesia: Struggling Between Authoritarianism and Democracy. Retrieved January 7, 2007, from

Perlez, J. (2003). His headlines pack punch; Indonesia hits back. New York Times, July 7,          2003. Retrieved January 11, 2007, from Pacific Media Watch database.

Way,  A.L. Jr. (2007)  Dictatorship--The Opposite of Constitutionalis. The American          Political System Politics & Government in the USA. Cyberland University of         North America. Retrieved February 12, 2007 from

Cite this Page

Asia’s Economic Promise and Challenges. (2018, Jun 27). Retrieved from

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

plagiarism ruin image

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer