|Submited on :||Thu, 6th of Dec 2018 - 06:27:19 AM|
|Post ID :||a3hdvn|
|Post Name :||t3_a3hdvn|
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|Subreddit ID :||t5_2qhnn|
Submission Statement: With the largest economy in Southeast Asia, a key strategic location and the world’s fourth largest population, Indonesia has garnered little investment from China’s trillion-dollar Belt and Road Initiative. However, despite mounting concerns of predatory loans Indonesia is now offering projects worth an estimated $60 billion to Chinese investors as part of an effort to capitalize on Beijing’s BRI. The offers include four hydropower plants, mine-mouth power plants, industrial complexes, ports and other infrastructure projects.
Just curious, by what metric is Indonesia the strongest economy? Or did you mean to say largest? As by growth rate, it trails Laos, Cambodia, Vietnam, Myanmar, Philippines, and Malaysia (or did in 2017).
By GDP per capita, it trails Singapore, Malaysia, Thailand, and Brunei.
It also has a fairly large inflation rate of 3.4%, which is quite large compared to its growth rate (for a developing country), and is struggling with currency issues.
Not saying the article is bad, but I'm not sure by what metric it's the strongest economy...
Just curious, by what metric is Indonesia the strongest economy?
"Largest" would be a more suitable term, I've edited my submission statement to reflect this. Thank you.
3.4% inflation is not terrible especially for a developing economy, some economists even suggest central banks target 3% inflation(for issues to do with the zero lower bound).
The issue isn't that the inflation is 3.4% in a vacuum, it is relative to their GDP growth, as it creates drag. Its part of the reason why Indonesia, compared to other SEA developing economies, is lagging. It currently sits ahead of who? Singapore, Thailand, and Brunei in terms of real GDP growth rate. So yeah, it's pretty bad compared to its peers relative to its growth rate. A big part of this inflation rate being as low as it is is also the result of large fuel and electricity subsidies that artificially lower inflation overall inflation, while other areas of the economy have a significantly higher rate than the total national average for inflation.
FYI, the only other ASEAN countries with a higher rate are the Philippines and Myanmar, and by a smaller amount, Vietnam. However, its real growth rate is lower than those countries.
I think the only possibility is the population. i.e., more the population more the potential of economy.
What do you mean by the strongest economy in South East asia? By what metrics?
Indonesia has a very comprehensive infrastructural development plan (not like what went on in Malaysia), but this goes to show that China is an indispensable partner for infrastructure in the developing world.
China has loaned Indonesia US$45 Billion over the last decade.
Japan loan US$53.00 Billion.
People here are too tied up with "initiatives", and not looking at how much China lends to each country under all its initiatives.
What the Indonesian government is doing is trying to get more private sector participation on infrastructure projects
My personal opinion, is they will have a difficult time getting the investment, because it involves the private sector. How it will work is the companies borrow money from the BRI than built the project, and than pay off the loans with proceeds from the project.
Indonesia already gets roughly US$5-6 Billion a year worth of private sector Investment from China and Hong Kong every year, which is almost double the amount that subsaharan Africa get in private sector Chinese investment.
That is what the Indonesians are trying to leverage.
> That is what the Indonesians are trying to leverage.
Exactly my analysis. Indonesia is seeing the Sino-American rivalry/competition through the same lens it did the Cold War. Play both sides, declare non-alignment, and reap the benefits of being geopolitically critical (strait of Malacca),
Pretty much every country outside of the west should do exactly this though.
Based on previous controversy over previous belt and road initiatives and the corruption present in the Indonesian government I doubt the effectiveness of this plan.
I wonder if there will be opposition from Australia around this project.
I think you're hugely overestimating Australian hard and soft power. Indonesia is hardly some micronation Australia can claim to have sphere of influence over. A country of twenty something odd million vs growing behemoth with over 10 times its population up north?
Indonesia's foreign policy is beholden to neither the US nor China (both far larger and more significant than Australia) and is something they flaunt regularly. What on earth makes you think Australia has even an iota of a say in who and how they deal with foreign powers? Every other year there's a story about some Australian facing execution or life in prison for committing crimes in Indonesia. Do you think you'd be seeing this from a country "under" Australia's sphere of influence?
Australian opposition for security reasons?
It's in Australia's sphere of influence and some analysist have predicted that part of the one belt one road is creating ports that are set up to fail and cause the country to default on the loan so China can take possession of the port and use it to set up forign naval basses.
Indonesia has 10 times the population than Australia. Indonesia is like Australia's USSR, not its Taiwan.
How on earth is Indonesia under Australia's sphere of influence ?? If anything at all, it should be Australia that is going to be under Indonesia's sphere of influence in the near future.