The future of Indonesia may begin in an industrial area on the outskirts of the capital Jakarta. On the vast grounds of the state-owned construction and industrial company Wika, growling shovels move piles of gravel and cement, young men in construction helmets clamber over gigantic reinforced concrete pillars and the rumble of steel presses and spark welding machines can be heard everywhere.
There’s nothing to say that there’s a high-tech startup here. But still: in a small shed next to a mountain of rusting steel, dozens of mechanics in gray uniforms screw together shiny electric scooters from the young brand Gesits.
No foreign motorcycles, built by cheap labor that follows foreign manuals, as is usually the case in Southeast Asia. No, an Indonesian scooter, conceived and designed by Indonesians and made from Indonesian parts. Well, for 58 percent then. Some components, such as the precious lithium battery, still come from China. But not for long, if it’s up to director Samyarto.
“Look, that’s where the steel frames come in that we bent, welded and sprayed next door,” he says. ‘And this is where the assembly line begins: first the wiring harness, and then our own electric motor from Tangerang!’ The scooter slowly moves towards the exit, mechanics are given two minutes per workstation. After the quality inspection by a man in an orange safety helmet, Samyarto jumps on a brand new scooter. “Come on, time for a test drive!” The Gesits website promises: ‘We will continue to innovate to eventually dominate the global electric motorcycle market.’
G20 summit in Bali
That is the ambitious face of Indonesia that President Joko Widodo likes to show the world. Next week, he will host the world’s largest economies for the G20 summit on the holiday island of Bali. There, delegation members will be taken to the conference center by Indonesian-made electric buses, past newly installed charging stations and electric police cars brought over from Jakarta for the occasion.
Because Indonesia is firmly a part of the G20. The gigantic country of 275 million consumers is the world’s 17th largest economy; the seventh if you take purchasing power into account. According to some reports Indonesia will grow to become the fourth largest economy in the world by 2050, after China, India and the US.
Indonesia itself is looking at a different list: in 2045 – exactly one hundred years after the declaration of independence from the Netherlands – the country wants to enter the exclusive club of high-income countries. Where residents earn at least 13 thousand euros per year (the Netherlands is at 56 thousand euros). At 4,700 euros per inhabitant, Indonesia is at the top of the middle bracket, and is rising steadily. In Southeast Asia, only Brunei and Singapore belong to the club; but the first is an oil state and the second a kind of Monaco. It would be extremely clever, experts say, if Indonesia penetrated what was previously called the First World.
No initiative
‘Everything starts with self-confidence,’ says teacher Muhammad Nur Yuniarto of Surabaya University of Technology. He is one of the co-designers of the Gesits scooter and likes to deploy his students at start-ups around the campus where, among other things, they are working on their own lithium battery. It is a missed opportunity, says Nur, that the Indonesian industry mainly assembles foreign items according to foreign patents. ‘There is nothing Indonesians can’t do, if they change their attitude.’ He is too docile and without initiative, says the engineer who was partly trained in Manchester, UK. He mentions the centuries-long occupation by the Netherlands as an explanation. ‘Indonesians were only good enough to serve. That has an effect on our mentality.’
At his own university, Nur tries to deliver innovative students. “Manchester was an eye opener. Everything was 180 degrees different there. We were challenged with projects and had to come up with solutions ourselves. That’s how you create leaders instead of implementers.’ The eight electric buses that are now driving around Bali and the seven charging stations; they all come from the workshops of the Institut Teknologi in Surabaya. ‘We use the G20 as a shop window. Not just to show foreigners what we can do, no, especially the Indonesians themselves!’ Nur argues for more research budget and subsidies to stimulate electric mobility. ‘Other governments have been doing that for a long time.’
Brand new skyscrapers
A lot is going well in Indonesia. Get on the back of a moped taxi in Jakarta and you will navigate between brand new skyscrapers and towering illuminated signs that are reminiscent of New York or Singapore. Along the crowded streets, young Indonesians order iced lattes or Vietnam drips in retro-modern coffee shops. The economy has been growing for decades more than 5 percent per year. The percentage of Indonesians living in poverty (2.15 euros per day) fell below 10 percent for the first time four years ago.
When he took office in 2014, President Widodo declared economic progress his first and only priority. The former furniture dealer from Surakarta launched major infrastructural works to better connect the island kingdom: new ports, toll roads, airports and train tracks. The high-speed line between Jakarta and Bandung alone – which should reduce travel time from 2.5 hours to 39 minutes – costs 8 billion euros. Widodo removed bureaucratic rules for investors this year and is cautiously building a welfare state – 235 million Indonesians are now members of its national health insurance – and the president was rewarded with a second term.
Corruption and poverty
A lot is not going well in Indonesia either. Drive along the ten-lane Jalan Tol (toll road) out of Jakarta and you’ll see homeless people sleeping under flyovers and children playing between piles of litter on riverbanks. The four richest Indonesians are together richer than the poorest 40 percent of the population (more than 100 million people). The country invariably scores poorly on international lists on corruption, democratization, health care and education. For example, child mortality is three times higher than in neighboring countries Thailand and Malaysia.
In the global Pisa comparison of the level of students, Indonesia invariably dangles at the bottom. It is true that Widodo did appoint the young tech billionaire Nadiem Makarim as Minister of Education in 2019, but he has not yet been able to implement many structural changes. The Harvard-trained founder of the successful multi-app Gojek (for taxi, delivery service, payment platform, among others) has started a retraining program for all teachers via an online platform. In addition, Makarim has to compete with Islamic leaders who believe that students should mainly recite Koran verses.
‘Broadly speaking, Widodo is doing the right things, in the eyes of development economists’, says David Henley, professor of Indonesia studies at Leiden University and author of a book about the difference in development rates between Asian and African countries. Institutions such as the World Bank and the IMF, according to him, normally prescribe investments in infrastructure and education, in addition to removing trade barriers. ‘That also produces results, but often less than expected.’ Indonesia is a stable middle-income country, says the professor, which is making steady progress. ‘But already a high-income country in 2045? I expect Thailand and Malaysia to get that done sooner.’
Rich oligarchs
According to him, Indonesia relies too heavily on the sale of commodities such as palm oil and coal, allowing a small group of oligarchs to become wealthy and buy political influence in Jakarta. At the same time, the state is buying out foreign mining companies and trying to move the country up the value chain by building smelters and refineries. Well, that model produces good results almost nowhere in the world.’
If Indonesia really wants to push through quickly, says the professor, a national program is needed in which government, industry and universities work together closely and for a long time. “And that’s difficult.” Taiwan and South Korea have succeeded, according to Henley. China partly. ‘In those countries, the government invested billions in a sector, such as the car industry or electronics; shielded it from foreign competitors and gave its own entrepreneurs and researchers time to develop a product that could survive on the international market.’ For example, Samsung, Hyundai and Huawei grew into global brands, he says.
Back to the drawing board
The crux lies in the quality requirements. Many manufacturers are already satisfied with the money they earn in the domestic market. That is why few people have ever heard of the Malaysian car brand Proton or the Indonesian aircraft manufacturer Dirgantara Indonesia. Henley: ‘It’s a paradox. Without state intervention you will generally not become competitive in the international market.’ The quality of the Gesits scooter designed and produced in Indonesia is not yet at that level, co-designer Nur also acknowledges. “It’s normal to have to go back to the drawing board every now and then. But you have to be given the time for that.’
At the Sentrik motorcycle shop in Denpasar, not far from the beach where the world leaders meet this week, a Gesits shines in the shop window. You hardly see them on the street, among the millions of Japanese and Korean skuters smoking and crackling clog the narrow Balinese roads. But since Widodo had to reduce the subsidy on fuel this year – the war in Ukraine thus reached the ordinary Indonesian – interest in electric vehicles has increased, says the satisfied seller. ‘A liter of petrol now costs 64 cents, while you can get just as far on a battery that you charge for 13 cents! In addition, the maintenance costs are lower.’ On the other hand, he acknowledges, that an electric scooter is somewhat more expensive to purchase. ‘Um no, the environment does not play a role in the purchase decision.’
This is the first contribution from our new Southeast Asia correspondent.