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Turkey-Indonesia,
the two rising economic powers
By M. Osman
Ghani
In a world of severe economic recession, where
even highly developed economies are desperately searching some way out and
to regain their past glory, few countries are doing their best not only to
minimise contagion effect of economic melt down but achieve new milestones
in their socio economic sectors. Two of such countries are Turkey and
Indonesia. Turkey suffered from hyper inflation of over 100 per cent in
1998. But now, with a GDP of about one trillion dollars (PPP), per capita
of over $12000, total exports of 142 billion dollars, and international
reserves of 83 billion dollars (2008) it is posed to become a member of
BRIC countries. Almost similar is the history of today’s Indonesia. Over
30 years of worst dictatorial rule and plundering of its resources gave
rise to may malaise including worst economic melt-down, flaring ethnic
conflicts and separation movements in many parts of the archipelago. Now,
under the present leadership of President Susilo Bambung Yudhoyono,
Indonesia is again visible in the rudder screen of fast growing economies.
Indonesia’s GDP is approaching one trillion dollars (PPP) with GDP per
capital at $ 4000, international reserves at about $ 52 billion, and
exports at $ 137 billion in 2008. Brief details are given below:-
Turkey: Modern Turkey was founded in 1923 from the
Anatolian remnants of the defeated Ottoman Empire by its national hero
Mustafa Kemal Ataturk, who was later honoured with the title Ataturk or
“Father of the Turks”. Under his authoritarian leadership, the country
adopted wide-ranging social, legal, and political reforms. In 1964, Turkey
became an associate member of the European Community. Over the past
decade, it undertook many reforms to strengthen its democracy and economy.
Over the years, Turkey has achieved remarkable milestones in its socio
economic sectors. In a short period of two years its GDP (PPP) has
increased from $ 854 billion in 2006 to $ 907 billion in 2008 and its GDP
per capital (PPP) has increased from $ 11600 in 2006 to $ 12000 in 2008 or
a jump of $ 400. Its GDP composition by sector is: agriculture 8.5 per
cent, industry 28.6 per cent and services 63 per cent. It has a labour
force of over 23 million with unemployment rate of 7.9 per cent (2008est).
Presently 20 per cent of its population are below the poverty line. Turkey
has overcome many of her economic woes of the late 1990s . Inflation,
which had remained steady at 75 per cent in the first half of 1997,
accelerated to more than 100 per cent by the beginning of 1998, playing
havoc with Turkeys’ macro-economic stability and employment level.
Turkey’s dynamic economy is a complex mix of modern
industry and commerce along with a traditional agriculture sector that
still accounts for about 30 per cent of employment. It has a strong and
rapidly growing private sector, yet the state remains a major participant
in basic industry, banking, transport, and communication. The largest
industrial sector is textiles and clothing, which accounts for one-third
of industrial employment. However, other sectors, notably the automotive
and electronics industries are rising in importance within Turkey’s
export mix. The economy turned around with the implementation of economic
reforms, and in 2004 GDP growth reached 9 per cent, followed by roughly 5
per cent annual growth from 2005-07. Due to global contractions, annual
growth is estimated to have fallen to 1.5 per cent in 2008. Inflation fell
to 7.7 per cent in 2005 – a 30-year low – but climbed to over 10 per
cent in 2008. The strong economic gains from 2002-07, were largely due to
renewed investor interest in emerging market of Turkey. Further economic
and judicial reforms and prospective EU membership are expected to boost
foreign direct investment. The stock value of FDI currently stands at
about $ 85 billion per annum. In 2007 and 2008, Turkish financial markets
weathered significant domestic political turmoil. Economic fundamentals of
Turkey are sound, marked by moderate economic growth and foreign direct
investment. Like may other countries Turkey is also facing problem in 2009
but its strong economic fundamentals and a competent and committed
government would overcome temporary shocks. Its growth momentum has
already picked up and July’s exports were recorded the highest in 2009.
The automotive sector accounted for $ 1.715 billion exports making it the
country’s biggest exporter.
Indonesia: The Republic of Indonesia is a country in
Southeast Asia and Oceania. Indonesia comprises 17,508 islands, and with
an estimated population of around 237 million people, it is the world’s
fourth most populous country, and has the largest Muslim population in the
world. The Indonesian archipelago has been an important trade region since
at least the seventh century, when the Srivijaya kingdom traded with China
and India. Indonesian history has been influenced by foreign powers drawn
to its natural resources. Muslim traders brought Islam, and European
powers fought one another to monopolise trade in the Spice Islands of
Maluku during the Age of Discovery. Indonesia secured its independence
after World War II. Indonesia’s history has since been turbulent, with
challenges posed by natural disasters, corruption, separatism, a
democratisation process, and periods of rapid economic change. It was
plagued with high degree economic chaos starting in the mid 1990s and
continued till the present incumbent was elected as President by popular
votes in 004.
Across its many islands, Indonesia consists of
distinct ethnic, linguistic, and religious groups. The Javanese are the
largest and most politically dominant ethnic group. Indonesia has
developed a shared identity, defined by a national language, ethnic
diversity, religious pluralism within a majority Muslim population. The
country is richly endowed with natural resources, yet poverty was a
defining feature of contemporary Indonesia. Indonesia, has made
significant economic advances under the administration of President
Yudnoyono. Indonesia’s debt-to-GDP ratio in recent years has declined
steadily because of increasingly robust GDP growth and sound fiscal
stewardship. The government has introduced significant reforms in the
financial sector, including in the areas of tax and customs, the use of
treasury bills, and capital market supervision.
In 2007, Indonesia’s economy was one of the biggest
economies in the ASEAN region with a GDP worth $ 863 billion (PPP) and a
GDP growth of roughly 6 per cent, GDP increased to $ 916 billion in 2008.
In the 1997-98 East Asian Financial Crisis, Indonesia was severely hit
together with South Korea and Thailand. The Rupiah dropped from Rp.2,000
per US dollar to Rp. 18,000 and the Indonesian economy shrunk by almost 14
per cent. Many hostile political pundits even started dumping Indonesia as
falling apart and disintegrating. The Government of Susilo Bambang has
effectively stirred the country out of the rough water.
Since Susilo Bambang Yadhoyono was first elected
president in 2004, Indonesia’s real gross domestic product has averaged
around 6 per cent annual growth with per capita GDP at $ 3900 (PPP) in
2008. In 2008 only four of East Asia’s 19 economies achieved rates
higher than Indonesia’s 6.1 per cent (Vietnam, Mongolia, China and
Macau). In the first quarter of 2009, while the recession-hit economies of
Malaysia, Singapore and Thailand, Indonesia’s grew by 4.4 per cent.
Indonesia is handling is economy in an efficient
manner. The government has predicted economic growth of 4 to 4.5 per cent
this year, third only to China and India in the G-20 club of rich and
developing countries. Inflation would remain low at about five per cent in
2010. Strong domestic demand in the country of 237 million people, as well
as its relatively low exposure to export markets hit hard by the global
recession, have insulted Indonesia from the global crisis. It is rapidly
developing as a economic power house in southeast Asia.
Conclusion: The economic condition of Turkey was much
more uncertain and volatile during the late 1990s than perhaps what we are
witnessing in Pakistan today. Similarly Indonesia a country of more than
17 thousand scattered Islands, with diverse ethnicity culture and language
was in a very bad shape, despite being a country of huge natural
resources. The present government has stirred the country out of trouble
water. The government and the people of Indonesia have shown immense
patriotism, unity and determination for a single agenda of national
prosperity. They have defeated terrorism and separatism and now posed to
become a member of higher middle income group of countries. Pakistan
enjoying some unique advantages including geographical location and
endowed with dedicated manpower and huge but yet mostly unutilised
resources could do the same as being done by Turkey and Indonesia with
renewed commitment and guidance of its leadership and people.
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