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Indonesia with less unemployment than India expected to lead Asian business growth. Pivot from Chin

Never thought about Indonesia? Its population is approx 300 million, about the same size as the US. Along with Vietnam, many Asian countries are rapidly expanding their economies as the US and Europe pivot from buying stuff from China.

In addition to all the negative sheet China has pulled of recently, Chinese labor rates have gone up 10x in the last 12 years making other Asian tigers more attractive.

A quarter of Indian youth are unemployed, worse than Indonesia and Bangladesh

In Indonesia, youth unemployment stood at 13% in 2022 and 12.9% in Bangladesh

A quarter of Indian youth are unemployed, worse than Indonesia and Bangladesh

By Mimansa Verma, Quartz Media


Nearly a quarter of Indians aged between 15 and 24 were jobless in 2022. Countries in the neighborhood such as Indonesia, Bangladesh, and even Bhutan, did better on this front, according to World Bank.

Unemployment has been a critical problem for India, especially since the outbreak of the covid-19 pandemic. Even this year in April, India recorded a fourth consecutive rise in the unemployment rate to 8.11%, according to the Centre for Monitoring Indian Economy (CMIE). India saw its highest unemployment rate at 30.6% in 2020.

In Indonesia, on the other hand, the youth unemployment rate stood at 13% in 2022. Joblessness has been steadily declining in the southeast Asian nation over the years, after peaking in 2005 at 26.4%, World Bank data showed.

The comparison between India and Indonesia holds particular significance as foreign investors often place them together as both are attractive investment destinations with similar growth trajectories and abundant opportunities.

The China-plus-one strategy adopted by the western countries makes both of them potential partners—and foreign investment destinations in Asia. This strategy looks to diversify away from China in terms of operations and supply chains.

Indonesia is similar to India, but a tad different

The two emerging market economies of India and Indonesia run on similar lines, with a large public sector. Both countries impose price controls on essential commodities. They have also opened up to foreign investment significantly and yet have similar development challenges: industrialization, infrastructure, and social inequalities.

Earlier this week, a Morgan Stanley report said India, the world’s fastest-growing economy, along with Indonesia, is expected to drive growth in Asia over the next decade. But, weaker business confidence and external demand are likely to stagger India’s capex cycle, the Business Standard reported.

US-based rating agency Moody’s, too, has voiced similar concerns about India.

Its report last month said the country’s “bureaucracy in decision-making” could slow down approval processes for foreign businesses, “especially when competing with other developing economies in the region, such as Indonesia and Vietnam.”

How’s Indonesia fared at tackling unemployment?

Indonesia has strategized its labour policies (pdf) smartly.

President Joko “Jokowi” Widodo has “spent a lot of time getting that infrastructure, working on labor laws...,” F Chapman Taylor, partner at a US-based investment firm Capital Group, told Nikkei Asia last month.

In November 2020, the Indonesian government enacted a job creation law, allowing the employment of foreign workers at its tech startups for a certain period of time without a work permit. It is aimed at attracting investment, creating new jobs, and stimulating the economy by simplifying the licensing process and enabling faster policy decisions.

This was part of a strategy to enable knowledge transfer, speeding up the development of Indonesian workers, Reuters reported.

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