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Designing The Future Economic Structure of Indonesia

I think we as a nation need to design our economic structure in the future right now. If we let the economic growth to progress along the path of least resistance, we risk putting our nation at a structural disadvantage that is very hard to reverse later on.

How should Indonesian economy grow? Producing fifty million hijab would result in equal GDP output with manufacturing ten jet fighters, but they will imply a very different geopolitical consequences. So it’s important to choose what comprises our GDP.

When it comes to nations, I can imagine different type of nations. There is the nation domestic consumption like Indonesia where its economy is powered by, well, domestic consumption. Global shocks have diminished effect in these economies. There are also factory nations that manufactures stuffs at a very competitive price to ship around the world like China. There are trading nations like Singapore where its livelihood depends on the volume of trade passing it and by serving as financial hub for (and safe haven for rich people from) larger nations surrounding it. Of course these categorization is very arbitrary, made on the fly, and very likely miss a lot of important details regarding those different economies. But it serves the point nonetheless.

Designing economic structure is very dependent on the ultimate goal of the nation. Very often, the goal is simply self-preservation, so treading the path of least resistance makes the most sense given the limited resources and priorities the nations have. But what if we want some more beyond mere self-preservation. What if we want to use the nation as an instrument to conquer the world? How should the economy structured to enable the logistical demand required to that of conquering the world?

First of all, conquering the world means war. In peacetime, it makes sense to trade. Different countries produce different goods at different efficiency. Because of comparative advantage, it makes sense for countries to produce stuffs that they are good at and trade with other nations for goods they are not good at producing. This sentence exist in all introductory economic textbook. However, when at war, trade becomes restricted. Access to strategic raw materials can be denied. Germany and Japan learn this the hard lesson. There is even one time when the Germans ran out of rubber and their vehicles only use steel for their wheels, without the rubber. Imagine the performance of the German army. Therefore, Indonesia should have all the strategic raw materials within access, be it through domestic production or securing alliance with dependable nations that can provide it.

Second, food supplies should be abundant. With fertile lands and large land area, Indonesia should be able to produce its own food without depending on other nation. Going to war without a secure food supplies can make the enemies weaken the national resolve by cutting food supplies and starve the people. The enemies don’t need to starve our citizen to death to make us surrender because we don’t have enough manpower anymore. They just need to make the living (and hungry) citizens to pressure the government to stop the war whatever the cost. This is not desirable. Hence, food security is of paramount importance.

Third, domestic manufacturing weapons should be possible. Dependency on foreign-produced weapon can make us cannot wage war against the interest of the weapon producer. So we need our own military-industrial complex.

Fourth, maritime supremacy. Although air travel is possible, seaborne transportation remain the cheapest way to travel goods and people. A strong blue-water navy is imperative to secure our trade interest and patrol the global sea lane

Fifth, resilient financial sector. Our financial sector should be strong enough should our enemies try to pressure us economically either through capital flight, attacking our currency, etc. Today, even negative foreign sentiment is enough to trigger capital flight and weaken our currency and our capital market. Our financial system should be structured so we can withstand these shocks or better yet, even cause these shocks to our enemies instead. We might need to deepen our financial market further by encouraging more companies to be listed and more people to invest in our stock market. In this way, the output of our real sector can grow too.

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