Indonesia outlines long-term economic growth plan

The Indonesian government has approved the 2025-2045 National Long-Term Development Plan (RPJPN) to realize its vision of a "Golden Indonesia 2045".

National Development Planning Minister and head of the national development agency (Bappenas) Rachmat Pambudy last week highlighted that the country's development faces significant challenges, including stagnant economic growth.

Over the past two decades, Indonesia's economy has maintained a steady growth rate of around 5%, resulting in the nation being stuck in the middle-income trap for over 30 years.

Another critical issue is the low quality of human resources. Indonesia’s human capital index stands at 0.54, significantly below Singapore's 0.88.

Additionally, the workforce skills require substantial improvement, as evidenced by its Programme for International Student Assessment (PISA) scores, which remain far below the OECD average.

To break free from the middle-income trap, Indonesia must accelerate its economic growth. Minister Rachmat emphasized that achieving an annual growth rate of 7% over the next 20 years could transform Indonesia into a developed country by 2038.

The government has set an ambitious interim target of 8% annual growth within the next five years.

The RPJPN includes several strategic economic transformations, focused on increasing productivity through five key initiatives, including Economic Innovation and Efficiency, Green Economy, Digital Transformation, Domestic Economic Integration, Urban and Rural Development.

Priority areas include resource-based industrialization, high-tech industries, basic industries, and labor-intensive sectors such as food and beverages, textiles, footwear, and creative industries.