Institute for Research on Economics and Society (LPEM) from the University of Indonesia (UI), has raised concerns about Indonesia’s potential failure to become a developed nation by 2045.
The study titled: “Economic and Social Agenda 2024-2029” reveals that Indonesia has not met the necessary criteria for achieving high-income status similar to countries like China, Malaysia, South Korea, Thailand, and Brazil when they first entered the high-income category.
LPEM FEB UI has noted that Indonesia’s economic growth remains stagnant and has never significantly exceeded a 5% growth rate.
Annual credit growth has also remained below 15%, the tax-to-GDP ratio has not surpassed 11%, the industrial contribution to GDP has been steadily declining to its current 18%, and extreme poverty persists at a rate of 1.7%.
Teguh Dartanto, Dean of FEB UI and one of the authors of the study suggests that instead of focusing on the obsession of becoming a high-income nation, the government, including future presidential and vice-presidential candidates, should prioritize poverty alleviation, reducing inequality, and building a strong and innovative middle class.
Teguh emphasized the critical nature of these observations, asking whether the dream of Indonesia achieving high-income status by 2045 is realistic or if a reevaluation is needed.
Chaikal Nuryakin, Head of LPEM, echoed the concerns about Indonesia’s stagnant economy and the possible impediments to reaching the 2045 goal, emphasizing the importance of backup strategies in case the nation fails to become developed by the set date.
The study prompts discussions about the need for alternative approaches to achieve economic growth and development, ensuring a more equitable and prosperous future for all Indonesians.