Indonesia at the Crossroads of Politics and the Future of Development
At a roadside coffee stall in Jakarta, conversations about who holds power in the next five years sound as common as complaints about rising food prices. Yet beneath the casual tone lies a serious truth: political power shapes the direction of national development.
Indonesia today stands at a decisive crossroads. The political transition after the 2024 election is not just about a change of president; it is about a model of development. Do we continue with project-driven politics—highways, dams, a new capital city—or do we shift toward human-centered development, investing in education, health, and skills that define a nation’s future?
From a development studies perspective, this dilemma is not new. Many resource-rich countries fall into what scholars call the “infrastructure trap”—pouring money into visible projects while underinvesting in human capital. Indonesia risks repeating this pattern.
Worker productivity remains low, only around 23,000 dollars per year compared to Malaysia’s 55,000. At the same time, inequality persists, with a Gini ratio hovering at 0.39. These numbers are not just statistics; they are signals that our growth has not been inclusive.
Politics complicates the picture. Party elites remain consumed with cabinet bargaining rather than policy debates. Development priorities—like tackling rural–urban inequality, preparing for climate shocks, or addressing youth unemployment—rarely dominate public discourse. Instead, political theater takes center stage: coalition drama, slogans, and image management.
Development theory tells us that institutions matter. South Korea and Singapore succeeded because their political institutions aligned with long-term development goals—investing in human capital, technology, and governance capacity. Indonesia, however, often falls into path dependency: short-termism shaped by electoral cycles, leaving us with fragmented policies and unfinished reforms.
The new capital city, IKN, captures this tension perfectly. Promoted as a “smart, green city,” it symbolizes ambition. Yet the question remains: does it serve as a strategic solution for urban congestion and inequality, or does it represent another showcase project for elites? While billions are spent on new infrastructure, millions of young Indonesians face precarious jobs and households struggle with volatile food prices.
The allure of physical projects is understandable. They are tangible, photogenic, and politically rewarding. In contrast, human development—teacher training, curriculum reform, healthcare access—produces results that take decades, often beyond a single presidential term. This raises a crucial governance question: are our leaders willing to plant seeds whose benefits may only be harvested by future generations?
The stakes are high. Indonesia’s demographic dividend could become a demographic burden if youth remain underemployed. More than 12 percent of university graduates are jobless or working far below their skill level. Without structural change, what should be a window of opportunity could turn into a ticking time bomb.
Meanwhile, global challenges are mounting: climate change threatening food systems, energy price volatility, and the intensifying U.S.–China rivalry. Development scholars remind us that resilience—the capacity to adapt institutions and invest in people—is the key to surviving such shocks. Yet resilience cannot be built on concrete alone.
Indonesia’s choice, then, is clear but difficult. We can continue down the path of project politics, impressive on television but fragile at its core. Or we can embrace the harder path: centering development on people, institutions, and long-term capacity.
The crossroads is real. And the cost of choosing wrongly will not be borne only in the next five years, but in Indonesia’s journey toward 2045.
DS
IP 281025 411 1
Indonesia, Oct. 28th, 2025