Page last updated at 11:45 GMT, Thursday, 17 February 2011

Can Indonesia join the BRIC countries?

Houses in the shanty town of Bukit Duri, Indonesia
Many of the homes in Bukit Duri are flooded by river water during heavy rains

By Peter Day
BBC News, Jakarta

Finance experts are coming to regard Indonesia, the world's largest Muslim nation, as a potential member of the up-and-coming BRIC nations - Brazil, Russia, India and China. But corruption remains a big obstacle.

You notice one thing straight away in Mamat's tiny house in a crowded shanty town called Bukit Duri in the east of Jakarta, the sprawling capital of Indonesia.

There is no furniture and few possessions on the clean yellow tiles. There is little evidence that three generations of Mamat's family are living here - him and his wife, three children and two grandchildren.

There is a reason for the lack of stuff, and it is not just poverty. This ramshackle village with tiny covered dried mud corridors instead of village streets clings to the side of the Chilli Wong river.

It rains hard in Jakarta, and every few months the stinky river floods.

The river water is pent up in concrete channels which have then been narrowed by thousands of unofficial houses.

So when it floods, the water level rises fast in the villages along the banks - reaching 1m (3ft), 2m, 3m, 4m, very quickly.

With 240 million people, Indonesia is the fourth most populous country in the world

It drowns the ground floor of Mamat's house, and forces his family upstairs to the flimsier wood-built second storey where they wait for the floodwater to go down.

It has happened all the time he has lived here, he says - 50 years or so - since he was a small boy.

Mamat's television is on the second floor. The families are always ready to move when the rains come and the river half drowns their home for as long as three days at a time.

Poverty and prosperity

I travelled to Indonesia because international investors are getting excited about a country of 17,000 to 18,000 islands that stretches almost 3,000km (1,700miles) along the equator.

A map of Indonesia

Finance experts are coming to regard it as a potential member of the vibrant club of so-called BRICs nations (Brazil, Russia, India and China) which are growing exceptionally fast and likely to rise over the next 20 or 30 years right to the top of the world's economic league table.

With 240 million people, Indonesia is the fourth most populous country in the world, the biggest Muslim nation, a youthful democracy succeeding the decades of post-colonial dictatorships under Presidents Sukarno and Suharto that ended in chaos at the end of the 1990s.

Indonesians have been watching the news from Egypt with some recognition. "It is a bit like our story 11 years ago," they say.

Now it has to be said that even if international investors are getting excited about Indonesia as another of what they call the "emerging markets", there are drawbacks to their expectations.

Much of Indonesia's current prosperity comes from its huge exports of coal and palm oil to China and India from giant enterprises that remain in few hands.

Fifteen per cent of the country lives in abject poverty, worse than the flood prone village I visited in Jakarta.

Other kinds of development activity are strangled by terrible transport, a real problem in a country the shape of Indonesia.

Kickback culture

But the thing that may hold back the overseas investor is something not uncommon in other BRIC or developing countries. Corruption.

Indonesian rupiahs being counted
Corruption remains a big problem in Indonesia, despite attempts to stop it

It is openly talked about, the news is full of it - a culture of bribery and kickbacks that pervades everyday life and then top politics, bureaucracy, the courts, business.

In the years of democracy, there have been concerted attempts to prosecute and send to prison some of the most spectacular offenders and that continues.

But still they come, new cases of corruption, tax dodging, delays to the planning and business licensing process unless cash is paid to officials.

At one stage in recent years, Indonesia was named as absolutely the most corrupt place in the world in the annual league table compiled by the campaigners Transparency International.

It is now off the bottom but still pretty awful, says the organisation.

And yet Indonesia has huge potential - vast, staggeringly beautiful, gorgeous food and intricate cultures and very friendly people.

It is growing younger in total population terms, at a time when much of the developed or developing world - including China - are facing a rapid decline into distinct old age.

Waiting for the next flood in his house above the river in Jakarta, I asked Mamat whether he made anything of the BRICs thesis and Indonesia's aspiration to be up there with the big boys.

"I don't understand investments," he said, "but I do feel that my life has got more difficult compared to the old days," by which he meant the 30 years of Suharto dictatorship.

Mamat is fearful the authorities will move him from his house soon, flooded but familiar, with not enough compensation to buy another one.

He is a driver for a building firm and he spends more than a third of his daily income - totalling the equivalent of just $5 (£3) a day - on sending his son to secondary school.

The bankers may talk of BRICs, but Mamat is hoping that a little learning may help his son prosper more than he has done in the new Indonesia.

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Indonesian growth at 6-year high
07 Feb 11 |  Business

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