Record Detail

Despite the fact that Indonesia has been included as one major economy and put among the G-20 countries, the country is still facing many challenges in its development process. Rising inequality is one of those challenges where according to World Bank only 10% of the population controls around 77% of the wealth of the country. Even worse, 1% of the richest holds half of all the country wealth. While some blame the neo-classical approach contribute to this unequal development, others contend that excessive government role in the economy combined with the power of vested interests is actually culpable of this problem. The paper attempts to explore issues surrounding Indonesia’s development, approaches implemented in Indonesia’s development process, and factors hindering Indonesia’s path to more equal development that can improve the welfare of the majority of the population. The research methodology applied will be based on literature review, with special attention to Indonesia’s development history. The paper points out that actually regardless which approach contributes to development issues in Indonesia, a critical aspect often overlooked is the fact that Indonesia’s development approach misses the point on the real concept of development beyond economics. It does not really consider other noneconomic factors affecting economy, such as efficient bureaucracy, rule of law, issues of corruption, and on top of that social & cultural values of the society. Actually, these factors critical to development success can be improved if the actors of development consider more Islamic-based development.

Keywords: Development issues, Indonesia, New Order Government, Reform era