Every country faces the dilemma of having too much or too little government involvement in pursuing their respective economic development.

Too much involvement may scare off businesses and kill private creativity and initiative. In Suharto’s New Order regime, excessive state interference created massive corruption, a high-cost economy, and patron-client relations between businesses and ruling elites.

But a small government role can widen the already large gap between the poor and the rich, creating deprivation among the people as a whole.

The New Order regime made such a lasting impact, there is always the belief that Indonesia can never go anywhere, or amount to anything, without the government. However, the last 10 years have suggested otherwise. Indonesia’s gross domestic product in nominal terms has grown more than threefold to become an almost $1 trillion economy. Income per capita has grown from $300 to $3,000 and unemployment is relatively low.

So, thanks to then-president Susilo Bambang Yudhoyono, right? Not entirely.  Yudhoyono’s administration should be praised for providing security and political stability — nothing more. This is the least a government can do.

The country, instead, should thank its own people and resilient business sector. Private consumption has been the key to Indonesia’s economic growth. In this sector, the government was absent. We witnessed very little development in infrastructure, health and education. The Gini ratio continues to increase, meaning the gap between the rich and the poor is growing wider.

President Joko Widodo inherited these conditions when he took office and it will be his job to create as little disruption as possible if he wishes to bring the government back into the economy.

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Source: The Jakarta Globe