Jakarta, CNBC Indonesia – The Economic & Society Research Institute (LPEM) Faculty of Economics and Business, University of Indonesia has just released a White Paper entitled From LPEM for Indonesia: Economic and Society Agenda 2024-2029. One of the points is a signal that Indonesia could fail as a developed country in 2045.
Dean of FEB UI Teguh Dartanto, who is one of the authors of the white paper entitled Navigating Indonesia’s Path to 2045: Equality and Economic Mobility, said that Indonesia has not met the sufficient and necessary requirements to move towards high-income countries like China, Malaysia, South Korea, Thailand, and Brazil, when they first entered the group of high-income countries.
LPEM FEB UI noted that Indonesia’s economic growth was relatively stagnant and never went far above the 5% level, credit growth per year never reached 15%, the tax to GDP ratio never exceeded 11% and was even only 9.9% in the last decade , to the industry’s contribution to GDP continuing to decline to now at 18% and extreme poverty persisting at 1.7%.
“I think these are very critical notes, whether the dream is realistic or not, or whether we need to rethink about Golden Indonesia 2045 or becoming an Anxious Indonesia 2045,” said Teguh when giving his opening remarks at the launch of the white paper in Jakarta, quoted on Tuesday. (31/10/2023).
Head of LPEM FEB UI Chaikal Nuryakin reminded that in order to realize the dream of a Golden Indonesia 2045, or Indonesia becoming a developed country, the government replacing President Joko Widodo could follow the example of developing countries that have succeeded in becoming high-income countries, such as Japan, South Korea, and other countries. Scandinavian.
According to Chaikal, these countries can progress by increasing research and innovation or R&D capacity and focusing on improving the quality of human resources (HR). With this, he ensured, Indonesia would no longer be a consumer country of goods and services and low technology, but would also be able to become a producer country involved in the global ecosystem supply chain.
Meanwhile, if in the end Indonesia fails to become a developed country, Chaikal said, this White Paper suggests that the future government prepare the Indonesian middle class, which accounts for 40-80% of Indonesia’s total population, to become a group that is strong economically and health-wise, as well as innovative.
This strengthening can be done by increasing equality of opportunity and access to quality education and health, formal sector employment, basic infrastructure, and comprehensive social security. According to him, this will be the main capital to realize the dream of a Golden Indonesia.
In this way, the non-inclusive focus on economic policy as occurred in the second period of President Joko Widodo’s administration will no longer occur, namely focusing too much on the bottom 20% and the top 10%, but forgetting the middle class group whose portion is 40-80% of the total. resident.
“Maybe this is a little pessimistic, but it’s also good to prepare yourself from now on to prepare a strong and innovative middle class, even though we won’t be a developed country in 2045, maybe with a strong and innovative middle class we will be a developed country in the next 20 years or 2065,” said Chaikal.
One of the effects of Indonesia’s failure to become a developed country by 2045 is that Indonesia will become a country full of old people before it can earn high incomes. This is because the demographic bonus that will give Indonesia the majority of the productive population will only occur in 2030-2040.
President Joko Widodo also revealed that the effects of failure to escape the middle income trap can be seen from the condition of Latin American countries where countries are quickly getting old before they become rich.
“I have reminded you dozens of times because in Latin American countries, in the 60’s, 70’s they had already become developing countries like we are now – what we have now, until now they are still developing countries because when they were given the opportunity, they were given the opportunity to jump go ahead and don’t use it,” said Jokowi.
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