Twenty years ago, Indonesia underwent tectonic shifts that paved the way for democratization and reform. To this day, the 1998 reformasi movement is still fresh in my mind. For many Indonesians who lived through it, that year was a tumultuous period that brought despair and hope at the same time.

As an academic then, many of my students were involved in the movement and selflessly marched the streets to advocate for change. As much as I feared for their safety at the time, I could also relate to their struggle and ideals. They were courageous — a generation of brave souls who put their lives on the line for the greater good and carried a vision of how they felt this nation should be.

The 1998 reformasi movement happened with the backdrop of the Asian financial crisis, which crippled Indonesia’s economy. It affected the lives and livelihoods of many Indonesians.

The impact of the crisis was indiscriminate. People from all socio economic statuses were hit hard. Overnight, our economy tanked and policymakers were struggling to contain the impact. Our currency plunged, inflation skyrocketed, jobs were lost and many fell into poverty.

Amid the façade of what was thought to be good fundamentals, there lies structural weaknesses in the form of acute and pervasive corruption in our economy and weak governance in our financial system that were exposed by the crisis.

Two decades have passed since that tragic period in our history. Indonesia’s story is still a work in progress, but we have to acknowledge that progress has been made since then. Most importantly, Indonesia’s transition to democracy has sustained to this day.

This republic has strived to make democracy work and efforts are continuously being made to increase participation, transparency and accountability. It is truly encouraging to see that, 20 years after, Indonesia has evolved into a thriving nation. It is becoming a main growth engine and source of stability for the region.

Hundreds of legislation have been passed since the start of reformasi to rebuild Indonesia’s new foundation based on the rule of law, transparency, accountability, good governance and fair competition. Financial, monetary and fiscal reforms were instituted to promote the prudent management of our economy. The independence of Bank Indonesia (BI) was introduced to ensure sound monetary policy and stability. The Financial Services Authority (OJK) was established to provide sufficient oversight of the financial services sector.

Furthermore, on the fiscal side, the issuance of state finance, treasury and accountability laws provided a constitutional mandate for the Finance Ministry to be accountable and effectively manage the nation’s resources. Seamless coordination of the monetary, fiscal and financial dimension is imperative for the nation’s economy.

In 2000, decentralization laws were introduced and paved the way for the devolution of authorities and fiscal resources to subnational governments.

A country with the size of Indonesia requires effective governance, not just at the central level but also at the provincial and subprovincial levels. This, too, is still a work in progress. But for the first time in our country’s history, we are seeing national leaders being born and elevated from the local level.

President Joko “Jokowi” Widodo is a case in point. After his success as the mayor of Surakarta and governor of Jakarta, the electorate trusted him to lead this nation. Decentralization has enabled leaders to prove their mantle from the grass roots all the way to the national level.

Like building a house brick by brick, institutional and regulatory gaps were being addressed one by one. Promoting good governance and building institutions is an ongoing effort that continues to this day, namely through bureaucratic reforms of our public institutions.

The establishment of the Corruption Eradication Commission (KPK) has further bolstered oversight to ensure public entities and the people that run them perform as they are supposed to.

Since the 1998 reformasi movement, our economy is in much better shape and more resilient in weathering subsequent global crisis that followed. Last year, our gross domestic product (GDP) grew 5.07 percent — better than most emerging economies — and our GDP per capita has multiplied sevenfold to around US$3,600 in the past two decades.

The inflation rate, which used to be pervasively double digits, has been kept low and stable at around 3.5 percent. Our debt to GDP ratio is well below 30 percent — among the lowest compared to peer countries.

Furthermore, the poverty rate, which reached almost a quarter of the population during the height of the crisis is now at around 10 percent. Last year, Indonesia’s economy hit the $1 trillion mark and it is now becoming more diversified. And thanks to our fiscal discipline rule, our budget deficit has been kept below 3 percent of GDP.

This is a testament to stronger economic fundamentals, the fruit of comprehensive and continued reforms in the past 20 years. This vibrant economy has been supported by prudent fiscal management, a credible budget and cohesive structural reforms. The policy reforms in Indonesia aim to boost three elements: spending, investment and exports.

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Promoting good governance and building institutions is an ongoing effort that continues to this day.

These continued reform efforts are also translated to international accolades. Our sovereign credit ratings have been further upgraded — highlighting investment grade from all rating agencies. In the World Bank’s Ease of Doing Business Report, Indonesia’s ranking has jumped to number 72 — better than most BRICS countries. Our score in the Global Competitiveness Index has improved significantly. Also, the Gallup World Poll has recognized Indonesia in the top 2 worldwide — along with Switzerland — to have the most trusted government. Furthermore, Indonesia’s longer-term outlook is bright.

Indonesia is predicted to become a major powerhouse in the global economy. PriceWaterhouseCoopers, in its 2017 report, stated that Indonesia would become the fifth-largest economy in 2030 and the fourth-largest by 2050.

However, we are not complacent and there is more work to be done. We need to address the challenge of regional disparities. Java and Sumatra currently make up over 80 percent of Indonesia’s GDP. While the other large islands of Kalimantan, Sulawesi and Papua, respectively account for merely 8.2 percent, 6.1 percent, and 2.4 percent of national GDP. Bridging this disparity and inequality is a key agenda.

Indonesia needs to further diversify its economy to be less dependent on commodities, increasing the value added of the manufacturing sector, and improving the quality of the services sector.

These transformations require better quality of human capital as well as efficient, clean and effective public institutions, along with efficient and competitive private sector. Hence institutional reform is a must and needs to be continued.

The government, under the leadership of President Jokowi, will continue to reduce poverty, address inequality, as well as increase competitiveness and productivity. We are investing heavily in our human capital and bridging our infrastructure gap.

The government has allocated 20 percent of this year’s budget for education and vocational studies, and another 5 percent for healthcare. We have to make sure that the allocated funding will result in better quality human resources, both in skills and well-being.

Furthermore, Indonesia is undergoing an infrastructure renaissance that will improve our connectivity and bring down our logistic costs across the regions.

All of these efforts are aimed to increase our competitiveness. The national budget has become the most crucial element in supporting this goal. The government is not only aiming for higher economic growth, but also sustainable, better quality and inclusive growth.

The journey to building a strong, resilient, prosperous and equitable Indonesia will continue. By the time Indonesia commemorates its 100th year as an independent nation in 2045, the students of the 1998 generation will be in their late years. By that time, our per capita income will have reached $29,300.

Indonesia’s population will have reached 309 million people and 52 percent of which would be of working age population. By then, our urban population will have reached 75 percent and our strong middle-income segment would make up 80 percent of the population. Indonesia will be a formidable economy and the government is laying the foundations for that brighter tomorrow.

Looking back on the Asian economic crisis 20 years ago, we have learned that there are no short-cuts in reforming a system. We have also learned that we should always have an open mind in looking at probable solutions. I am optimistic that Indonesia will prevail and the 1998 reformasi movement provided that turning point in our nation’s history.
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The writer is the Finance Minister.

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