Jakarta, CNBC Indonesia – The Institute for Economic & Community Research (LPEM), Faculty of Economics and Business, University of Indonesia, said that Indonesia has the potential to fail to become a developed country in 2045 if its economy continues to grow at around 5%.
This potential is expressed in the White Paper entitled From LPEM for Indonesia: Economic and Community Agenda 2024-2029. In the White Paper, it was revealed that Indonesia had not met the sufficient and necessary conditions to become a high-income country 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 until now at the level of 18% and extreme poverty that is persistent at the level of 1.7%.
Teguh Dartanti, Dean of FEB UI, who is one of the authors of the white paper, in the chapter Navigating Indonesia’s Path to 2045: Equality and Economic Mobility, said that compared to the Indonesian government, including future presidential and vice presidential candidates, they are focused on the obsession of becoming a country. high income earners should focus on alleviating poverty, reducing inequality and building a strong and innovative middle class.
“I think these are very critical notes, whether the dream is realistic or not, or whether we need to rethink Golden Indonesia 2045 or Anxious Indonesia 2045,” said Teguh when giving a keynote speech at the launch of the White Paper, Friday (27/10 /2023).
Head of LPEM, Chaikal Nuryakin, added that the relatively stagnant condition of the Indonesian economy seems to indicate that Indonesia’s road to 2045 is currently hitting a glass ceiling wherever one steps. He also reminded the importance of a backup strategy to navigate the Indonesian economy if it fails to become a developed country by 2045.
“What should we do if we don’t become a developed country?” said Chaikal on the same occasion.
In the white paper, LPEM also suggests, including to the future presidential and vice presidential candidates, to prepare a second option if Indonesia fails to become a developed country by 2045, namely preparing the Indonesian middle class which is the owner of a portion of 40-80% of Indonesia’s total population to be economically strong and innovative. .
“Our middle class will be very large, so we must prepare a strong and innovative middle class. Even if in 2045 we do not become a developed country, we will have a strong and productive middle class,” said Chaikal.
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 and only capital to realize the dream of a Golden Indonesia.
LPEM also reminded that the rate of economic growth during President Joko Widodo’s administration in the second term of his leadership, which was not inclusive, should not be repeated. Like the government’s program which focuses too much on the bottom 20% and the top 10%, but forgets about the middle class which makes up 40-80% of the total population.
“This may be a bit pessimistic, but this is good for preparing a strong and innovative middle class. So that we can make Indonesia a developed country in the next 20 years or 2065,” stressed Chaikal.
[Gambas:Video CNBC]
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