Indonesia vs Singapore: Two Different Paths<\/p>\n\n\n\n
By Laksamana Sukardi<\/p>\n\n\n\n
\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014-<\/p>\n\n\n\n
A Tale of Two Economies<\/p>\n\n\n\n
In 2023, Singapore\u2019s per capita income reached US$74,000, while Indonesia\u2019s remained at US$5,000\u2014still stuck in the middle-income trap.
This is remarkable considering that, in the 1970s and 1980s, both countries were poor, with per capita incomes below US$1,000. (See Chart)<\/p>\n\n\n\n
Why has resource-rich Indonesia, blessed with a large population and domestic market, been left behind by a small, resource-poor island nation?<\/p>\n\n\n\n
Modern Colonization<\/p>\n\n\n\n
When Cornelis de Houtman arrived in 1596, the Dutch East India Company (VOC) gradually turned the Indonesian archipelago into a colony, extracting its wealth by force.
Today, colonization no longer requires armies or occupation.<\/p>\n\n\n\n
Thanks to information technology, algorithms, data analytics, and artificial intelligence, nations and corporations can now extract wealth without physical control.
As Thomas L. Friedman noted in The World Is Flat (2005), globalization has created a new kind of power\u2014\u201cmodern colonization.\u201d<\/p>\n\n\n\n
Global tech giants like Microsoft, Apple, Google, Meta, and YouTube now dominate our daily lives\u2014education, business, communication, even politics\u2014earning trillions from the world\u2019s economic activity.
They are today\u2019s VOCs, extracting value not through cannons but through code.<\/p>\n\n\n\n
Singapore: The Regional Extractor<\/p>\n\n\n\n
Within Southeast Asia, Singapore has mastered this modern art of extraction.
Armed with world-class infrastructure, legal certainty, professional management, and technological sophistication, it has built a powerful hub that captures value from its neighbors\u2014especially Indonesia.<\/p>\n\n\n\n
Aviation: Sky-High Profits<\/p>\n\n\n\n
Singapore Airlines (SIA) earns about US$15.1 billion annually\u2014nearly five times Garuda Indonesia\u2019s US$3.4 billion\u2014and flies to 128 destinations in 36 countries.
Every year, over five million Indonesians travel abroad via SIA, making their spending a source of Singapore\u2019s profit.<\/p>\n\n\n\n
Changi Airport handled 67.7 million passengers in 2024, more than ten times Singapore\u2019s population.
The busiest routes? Singapore\u2013Jakarta and Singapore\u2013Denpasar.
Meanwhile, Garuda remains burdened by debt, unable to capture value from its own home market.<\/p>\n\n\n\n
Healthcare: Exporting Trust<\/p>\n\n\n\n
Singapore\u2019s hospitals generate US$6.77 billion a year from inpatient care, treating 646,000 foreign patients in 2024\u2014roughly 20\u201330% of total patients.
Many are Indonesians seeking reliable treatment and professional service unavailable at home.<\/p>\n\n\n\n
Trade and Finance: The Invisible Drain<\/p>\n\n\n\n
Singapore\u2019s trade volume reached US$900 billion in 2023, powered by PSA International, one of the world\u2019s busiest ports.
Much of that trade originates from Indonesia\u2014exported cheaply, repackaged and re-exported at higher prices.<\/p>\n\n\n\n
Singapore\u2019s tax-free transshipment policy has long encouraged under-invoicing: Indonesian exporters sell goods below market value to Singapore intermediaries, which then resell them abroad at a markup.
The result is massive profit leakage and lost tax revenue for Indonesia.<\/p>\n\n\n\n
According to NEXT Indonesia Research, between 2014 and 2023 Indonesia lost an estimated US$401.6 billion in export value and Rp6,539 trillion in potential tax revenue\u2014about twice our national foreign debt.
Those missing funds could have cleared our debt and financed growth at home.<\/p>\n\n\n\n
VCC vs Danantara: Two Financial Realities<\/p>\n\n\n\n
Singapore\u2019s Variable Capital Company (VCC) framework, launched in 2020, offers flexible, confidential fund structures rivaling global tax havens.
In just four years, it has attracted US$6 trillion in assets\u2014ten times Singapore\u2019s GDP.
In addition to the VCC framework, Singapore has two fund management institutions \u2014 Temasek and GIC \u2014 with total assets under management (AUM) exceeding US$1 trillion.<\/p>\n\n\n\n
Indonesia\u2019s Danantara Fund, by contrast, claims US$900 billion in assets under management, but much of that is merely state-owned enterprise (SOE) assets reclassified through accounting maneuvers.
True equity value likely amounts to only US$270 billion.<\/p>\n\n\n\n
The Lesson<\/p>\n\n\n\n
Singapore\u2019s success is not accidental.
It has built extraordinary capacity to extract and multiply value through finance, logistics, healthcare, and technology, backed by a strong legal and institutional framework.<\/p>\n\n\n\n
The contrast is stark:
\u2022 Singapore\u2019s total banking assets equal 5.29 times its GDP.
\u2022 Indonesia\u2019s amount to just 0.5 times.<\/p>\n\n\n\n
Singapore didn\u2019t steal Indonesia\u2019s wealth; it mastered how to channel regional value through efficiency and trust.
Indonesia\u2019s problem lies at home\u2014in weak governance, collusion, and tolerance for under-invoicing.<\/p>\n\n\n\n
If Indonesia wants to catch up, it must enforce transparency, punish under-invoicing, and revoke export licenses from repeat offenders.
Until then, we will remain a nation rich in resources but poor in results.<\/p>\n\n\n\n
Don\u2019t blame Singapore.
Blame ourselves.<\/p>\n\n\n\n
Jakarta, October 19, 2025<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Indonesia vs Singapore: Two Different Paths By Laksamana Sukardi \u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014\u2014- A Tale of Two Economies In 2023, Singapore\u2019s per capita income reached US$74,000, while Indonesia\u2019s remained at US$5,000\u2014still stuck in the middle-income trap.This is remarkable considering that, in the 1970s and 1980s, both countries were poor, with per capita incomes below US$1,000. (See Chart) Why […]<\/p>\n","protected":false},"author":3,"featured_media":304,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_uag_custom_page_level_css":"","wpupg_custom_link":[],"wpupg_custom_link_behaviour":[],"wpupg_custom_link_nofollow":[],"wpupg_custom_image":[],"wpupg_custom_image_id":[],"footnotes":""},"categories":[9],"tags":[],"class_list":["post-302","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"blocksy_meta":[],"acf":[],"yoast_head":"\n