This Factor Hinders Indonesia from Becoming a Developed Country

DKI Jakarta's Skyscrapers

President Jokowi’s government has made great efforts to realize Indonesia’s dream of becoming a developed country in 2045. Several ways have been carried out, such as digitalization and downstream. However, there is an “x factor” that hinders Indonesia from advancing to the next level. What’s that?

As is well known, Indonesia aspires to become a developed country and enter the world’s top five powers, in a century after independence or to be precise in 2045. This has been stated in a document Vision Indonesia 2045.

The main cause is domestic economic growth that is less than optimal. The Indonesian economy did soar to a level of 7.08% (yoy) in the second quarter of 2021.

However, the surge in growth was caused more by a very low calculation base in the second quarter of 2020, namely a contraction of 5.32% (yoy). Meanwhile, Indonesia’s economic growth in 2022 could reach 5.31% (yoy). Highest point since 2013.

In fact, when a developing country is upgraded to a developed country, the condition is that its annual economic growth must reach 7% for 15 consecutive years.

Unfortunately, during the eight years of President Joko Widodo’s leadership, Indonesia has not even tasted growth above 6% per year.

Referring to data from the Central Statistics Agency (BPS), the average economic growth in 2015-2022 will reach 4% per quarter. This achievement was much lower than the quarterly average during the early reform era (2000) to 2014, which was 5.34%.

Senior Economist & Indonesian Minister of Finance (2014-2016) Bambang Brodjonegoro, gave a warning to the government that the stagnation of 5% economic growth is a threat to Indonesia, which has aspirations to become a developed country.

One of Indonesia’s biggest obstacles to becoming a developed country is the drastic decline in the manufacturing industry.

The growth condition of the goods sector in Indonesia is still below this year’s economic growth which reached 5.31%. High growth is actually dominated by the service sector throughout 2022.

The growth of the manufacturing industry in Indonesia has decreased drastically since 2001. In 2001, Indonesia’s manufacturing growth conditions reached 29.1%, but unfortunately, this figure continues to decline until 2022 which only reaches 18.3%.

In fact, to boost the Indonesian economy, goods sectors such as agriculture, mining, and the manufacturing industry should be encouraged to grow high.