What type of economic system does Indonesia have? Indonesia's economic system is a mixed economy pairing a private sector with a state-run public sector. On the 2026 Index of Economic Freedom it scored 65.1, ranked 49th globally and rated moderately free. It scores 56/100 on Freedom House, classed Partly Free, an electoral democracy without full liberal protections.
What is the economic system of Indonesia? The economy of Indonesia is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Indonesia?
For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his labor and property, Indonesia scored 65.1 and is ranked 49th globally, indicating that the country has a moderately free economy.
Similarly, the 2026 Freedom House index evaluates the state of political rights and civil liberties globally. Indonesia gets a score of 56/100 (as of 2026), which qualifies it as Partly Free.
Indonesia is considered to have a government that does not control what people do, and people can make their own economic decisions, but it is only considered an electoral democracy, lacking full liberal democratic protections.
The Link Between Public Sector Employment and the Economic System of Indonesia
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Indonesia, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 9.5% (2019). In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State.
Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer the economy is to be a command economy.
What does the biggest company in Indonesia say about the country’s economic system
The biggest company in Indonesia should also be looked at, as well as whether it is a state-owned or private company. In this case, PT Pertamina (Persero) is the largest company in Indonesia by revenue, a state-owned oil and gas company headquartered in Jakarta. As of 2024, Pertamina reported revenue of approximately US$75.3 billion. The company is fully owned by the Indonesian government through the Ministry of State-Owned Enterprises, reflecting the significant role of state enterprise in the Indonesian economy.
More: Biggest companies by revenue in Indonesia
The historical factors that have influenced the economic system of Indonesia
The mixed economy system of Indonesia in the last century was caused by a combination of factors, including the country’s colonial history, its post-independence economic policies, and the global economic environment.
Colonial rule left Indonesia with a legacy of unequal access to resources and a lack of economic development, while post-independence policies focused on import substitution and state-led industrialization.
The global economic environment has also played a role, with the country’s economy becoming increasingly integrated into the global economy.
Sources
- List of countries by the public sector size
- ILOSTAT — Indonesia country profile
- 2026 Index of Economic Freedom — Indonesia
- Freedom in the World 2026 — Indonesia
- PT Pertamina (Persero)
Last updated: June 20, 2026
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