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Is Indonesia Really Doing Well? Revealing the Harsh Truth Behind Economic Data

The harsh reality is here—Indonesia is not "just fine." Explore why millions struggle financially and why it's time for everyone to wake up and act. Middle class, unemployment, and economic disparity are at the center of the nation’s crisis.

Are you among those who still believe Indonesia is “just fine”? Many can still send their kids to school or attend concerts, but is that the whole story? This article unpacks the hidden realities behind the “good news,” using hard data, real stories, and expert insights that most people ignore.

The Illusion of Economic Growth: Is Everyone Really Getting Richer?

Why GDP Growth Doesn't Tell the Whole Story

It’s easy to get distracted by headlines about economic growth and rising GDP. However, the increase in wealth is often concentrated among the richest, while the majority find it harder than ever to afford basic needs like rice or a house. If only a small fraction grows their wealth exponentially, but millions struggle daily, is it fair to call this “progress”?

Growing Inequality: The Reality Behind the Numbers

One of the clearest signs of trouble is Indonesia’s worsening Gini ratio—the gap between the richest and the poorest. Since 2018, data show that economic disparity has been getting worse, not better. While a select few see their assets skyrocket, the majority are forced to tighten their belts just to survive.

The Middle Class is Shrinking—And Why It Matters

Middle Class: The Backbone of a Developed Nation

According to Indonesia’s top planning expert, Pak Bambang (Head of BAPPENAS), a thriving middle class is what distinguishes developed nations from developing ones. Yet, over the past five years, Indonesia’s middle class has taken a massive hit. Many people now live paycheck to paycheck, dipping into their savings or unable to save at all due to layoffs and a lack of new jobs.

Practical Stories from the Ground

How real is this problem? Once, employees didn’t even bother asking food prices at local warungs (food stalls). Now, every purchase is questioned—“Is it too expensive?” If yes, they walk away. This subtle but telling change signals how the middle class is losing its financial security.

The Dangers of Deflation: Not Always Good News

What is Deflation and Why is It Risky?

While most people worry about inflation, Indonesia faces another challenge—deflation. Prices are dropping, not because production is up, but because people can’t afford to buy. This is called demand-pull deflation and is a red flag in any economy. When fewer people spend, businesses suffer, leading to layoffs and even less money in circulation. It’s a vicious cycle.

Policies That Hit the Middle Class the Hardest

• VAT (PPN) increased to 12%
• New taxes on building personal homes
• Higher BPJS premiums
• Possible increases in fuel and LPG prices
• Stricter tax rules for SMEs
• Mandatory insurance for vehicles
• Salary deductions for pension programs
• Rice inflation hitting 20% year-on-year
• The controversial TAPERA housing fund

These measures, intended to generate revenue, end up hurting the group that keeps the economy running—the middle class. Without urgent help, the backbone of the nation could collapse.

Indonesia’s Golden Opportunity: The Demographic Bonus Dilemma

The Next 10 Years are Critical

Indonesia is entering a so-called “demographic bonus,” a decade where the majority of the population is productive and able to work. But if there are no jobs, or if costs keep climbing, this opportunity could be lost forever—just as it was for aging nations like Japan or Singapore.

The Vicious Economic Cycle

Here’s how the downward spiral works:

• Reduced buying power due to rising unemployment and higher taxes
• Businesses cut prices to attract scarce buyers
• Lower prices mean lower profits, triggering mass layoffs
• More unemployment leads to even less spending

This is how deflation feeds itself—and drags the entire economy down.

Systemic Issues: Corruption, Education, and Health

Broken Systems and Policy Failures

Beyond economics, problems like widespread corruption, weak democracy, and failing public services further drag the country down. Education and health are still out of reach for many, with teachers underpaid and healthcare costs rising.

“Indonesia is only ‘fine’ for the rich and the powerful. What about everyone else?”

What Can We Do? Practical Steps for a Tough Reality

1. Acknowledge the Truth

It’s not “pessimism”—it’s realism. Only by admitting the problems can we fix them. Stop the illusion that everything is okay.

2. Focus on Self-Improvement and Community

Boost your skills, look for opportunities—even abroad if needed. Help others who are struggling. Buy from local SMEs, support your friends’ businesses, and keep the economic wheels turning at the grassroots level.

3. Demand Change from the Top

Push for systemic reforms: cleaner politics, competent leaders, anti-corruption measures, more FDI (foreign investment), and serious investment in education and healthcare.

4. Keep Learning and Stay Informed

Don’t wait for government solutions. In this era of self-learning, platforms like Google and YouTube are valuable for boosting your skills, especially in business and digital literacy.

5. Stay Hopeful and Engage

Even when things look bleak, hope remains. Get involved, have discussions, and don’t let fear silence the need for change.

Key Takeaways & Quotes

• "Middle class is the backbone of a strong nation. Without it, progress is impossible."
• "Deflation caused by weak demand is more dangerous than inflation."
• "Indonesia is only 'fine' for the wealthy and the powerful. The rest are struggling."

Conclusion

Indonesia faces real challenges that demand awareness, courage, and collective action. We all have a role to play—by recognizing the issues, supporting each other, and pushing for a brighter future. Share your thoughts below: Do you think Indonesia is really “doing just fine”? Why or why not? Let’s open the discussion and work together for meaningful change. Share this article, comment, or follow for more insights!