Page 69 - AEI Insights 2019 - Vol. 5, Issue 1

Ziegenhain, 2019

children per woman (Sumra 2016). It was observed in Malaysia that the mean age of the first
marriage of women has increased from 21.6 to 25.1 years from 1970 to 2000 (Mahari 2011:
4). The opportunity for women to pursue higher education and skills level empowers them to
participate in the labour market. This contributed to delay in their marriage (see also
Hirschman/ Bonaparte 2012: 30f.). Another reason for the declining birth rate was the
availability and acceptance of contraceptives in both countries. The Indonesia government
actively promotes and financially supports family planning since the later 1960s until today.
Consequently, the birth rate in both countries dropped significantly as can be seen in Figure 9.
Together with a sharply rising life expectancy due to better nutrition as well as medical and
hygienic progress in both countries, the declining birth rates will lead to ageing societies.

Figure 9: Birth Rates per Woman in Indonesia and Malaysia, Source: World Bank Development Indicators

The consequences of an ageing population will surely become a major policy concern for
Indonesia and Malaysia in the years to come. Both countries can hereby refer to the experiences
which the European countries and their governments already made. All efforts to raise the very
low fertility rates by tax and other incentives failed in the EU countries so that in the end the
high percentage of elderly people had to be accepted and dealt with. One consequence was the
raising importance of pension systems as policy issue, whereas the management of migration
to counterbalance the unfavorable balance between working (tax-paying) population and non-
working (tax-receiving) elderly population has become another debate.

Population ageing in lower middle-income countries such as Indonesia brings potentially more
challenges as in the upper-middle income economy of Malaysia. In both countries nevertheless
two important national development goals will get into conflict: How to sustain robust
economic growth while at the same time provide welfare to the growing number of old people?
Achieving these two goals simultaneously “will require new policies, most importantly policies
that encourage saving, and investment in health and education to improve productivity”
(Kohler/Behrman 2017: 11). The problem for emerging economies such as Indonesia – which
have not yet reached a middle income country status and where poverty is still widespread –
could be that economic growth stalls before they transition into high-income status. Getting

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