Economic Development

Mar 27th, 2007, in Business & Economy, by

Indonesia's economic development is predicted to reach dizzy heights by 2030.

A strategic group consisting of businessmen, academics and government officials has set the ambitious target of transforming Indonesia into one of the world's major economic powers in the next 20 years.

In a document called "Indonesian Vision 2030", Indonesia Forum said the country would join the ranks of major economies, fifth in the world after China, India, the United States and the European Union.

It sets a target of reaching a per capita gross domestic product of $18,000 by 2030.

The group assumed the country's economy would grow by 7.26% annually, with an annual inflation rate of 5% and a population growth rate of 1.1%.

By the year 2030, Indonesia's population would reach 285 million, with a gross domestic product of $5.1 trillion, the Indonesia Forum predicted. The group also set a target of having at least 30 Indonesian companies among the 500 world-class companies listed each year by Fortune magazine.

The group said the goals could be achieved only if Indonesia took the necessary steps, including integrating the country's economy with the world market, implementing good governance principles and constructing adequate infrastructure.

They also proposed a "synergy" between labor, government and the business sector to improve the country's competitiveness in the global environment.

The foundation chairman, Mega group tycoon Chairul Tanjung, said the vision constituted a road map for Indonesia's journey toward becoming a developed nation. The Indonesia Forum Foundation presented the vision to President Bambang Yudhoyono last week in a ceremony at the State Palace.

Other prominent businessmen such as Angky Camaro of Sampoerna group and Anthony Salim of the Salim group are also members of the foundation, along with economists Anggito Abimanyu and Muhammad Chatib Basri, while several ministers, including Coordinating Minister for the Economy Boediono, Finance Minister Sri Mulyani Indrawati and Governor of Bank Indonesia Burhanuddin Abdullah serve as members of the foundation's advisory board.

President Yudhoyono said he was hopeful Indonesia would achieve the target but added that it would be difficult.

I know that after hearing this, some will say "dream on", but I say do not hesitate to dream. Not only big nations strive to realize their dreams.

Economist H.S. Dillon criticized the vision laid out in the document, saying it was biased toward the business community.

They aren't thinking about the people but only growth, and what they call shared growth is in fact another term for the trickle-down effect promoted by the New Order regime.

Dillon added that it was unrealistic to project Indonesia as becoming a major economy without taking into account emerging powers such as Brazil and Russia which are also starting to catch up with developed countries.

A report by Price Waterhouse Coopers this time last year, see Economic Growth to 2050, predicted that by 2050 Indonesian GDP would reach $23,686, lagging behind such countries as China, Brazil, Russia, Mexico and Turkey, but ahead of India.


40 Comments on “Economic Development”

  1. Wow, what an ambitious vision from Indonesia Forum. But, just like SBY said, “Let’s dream!” I don’t think it’s wrong that this BIG country wants to dream to be bigger and better. We have everything we need to be one big and fearless nation like China is becoming right now. You name it, we got the population, natural resources, lots of smart people (i guess), and all. Although the plan might seem too ambitious but at least the people in the cabinet with big business people are doing something. Something that other presidents never did. Hell yeah, I’m not a big fan of SBY myself. Never was and i guess never will be, but for sure he’s the best right now. So, Let’s Save SBY! http://guebukanmonyet.com/2007/03/18/lets-save-sby/

  2. avatar Naga says:

    It’s never going to happen, Indonesia simply doesn’t have the capability.

    Indonesians (apart from the Chinese) are loathe to save, work hard and focus on education, they also hate foreign investors.

    How can the country reach these targets when it can’t even make its economic growth targets every year?

    So long as religion and sitting down and doing nothing has priority over everything else in this country, forget it, it will never occur, you will always be poor.

  3. avatar Dimp says:

    Hi Naga,

    I agree totally, why focus so much to the future 2030, when the government can’t even have a plan for the next year. They can’t even plan what to do with the Lapindo mud, yet they “dream” that they can be a powerhouse in 2030.

  4. avatar Naga says:

    It’s all politics, the government seems to think that by publishing grandiose schemes on what the country MAY be in the future, then they can sell this concept to the public.

    It seems the public are a little more savvy and slowly waking up to the actual power they have as voters, especially after this latest poll showed a massive drop in popularity for SBY, it might wake him up to actually DO something, rather than merely SAYING something.

  5. avatar Magy says:

    Well, in fact this will not be enough to eridicate poverty and unemployment, so it better not just be a dream. Why is it a dream in RI when it already is a reality in Malaysia, and certainly not only a dream to countries like China/Taiwan/.etc.
    I’m not aware Indonesians are less hard-working, less intelligent or more corrupt than any other people.

    If you look at the US, for instance, is a continent, where a lot of different centres, industrial, technological, medical, etc. In some areas they are experts on farming, in others high-tech research and in others they simply are good at manufacturing.

    When trying to think about the future, and the massive amount of people in RI the task seams impossible, however this is not the way to make the “dream” come true. Instead put focus on developing these centres of excellence and on keep focusing on corruption. Noone will ever invest IF the rules of engagement is not very clear and upheld by the state of RI.

    Its not a dream.

  6. avatar Dimp says:

    Hi Magy,

    It is not a dream, it certainly can happened, but not with the current attitude of the government. When the government officials are to corrupt that they consider purchasing laptops rather than spending the money for the people, when they are to self centred all they can think is how to increase their income without showing their work.

  7. avatar Robert says:

    It is always dangerous to make such a long term prediction and that goes for most countries. As a country you are very much dependent on the worldwide economic climate, interest rates, prices of oil/gold/copper/ etc, these all are difficult to control. Then there are factors like natural disasters (tsunami, earthquake, mudslide) which have a devastating effect on the economy. So there are much uncertainties.

    The group said the goals could be achieved only if Indonesia took the necessary steps, including integrating the country’s economy with the world market, implementing good governance principles and constructing adequate infrastructure.

    Good governance and adequate infrastructure are key factors in this plan, these two will be a tough nut to crack. For example, the way the Government has dealt with the Jakarta floods wasn’t very hopeful.
    Why make such a long-term plan? Why not make a short-term plan which is much more controllable and realistic? For example, focus on a few matters like agriculture (rice!), water management and infrastructure. Do this in a certain region and see how this works out, and then expand this on a larger scale.

  8. avatar Magy says:

    Anyway, I think it is great to ALSO have a vision. I agree completely that action is needed. Nevertheless all companies and statse need also to have a vision. This is the first time I have ever read about a target, a vision. In fact, RI cannot be accoused of not dealing with the current issues, this is all RI does. Trying to live trough the day, handle catastrophies, counter terror acts, handle turbulent economic conditions, etc.

    RI need to work more with these kind of visions, and make them part of a shared purpose for all Indonesians for a better and prosperous life.

    Its nothing wrong for a a “nation in waiting” to have “dreams” – rather the opposite.

  9. avatar Bas says:

    Of course Indonesians are less hard-working, less intelligent or more corrupt than any other people.

    Educated Indonesians are the first to admit it. Just read newspapers. It’s so obvious only politicians or westerners living in their exotic dream can’t see that reality.

    In 2030 Indonesia will still be a major sexual tourism destination. That’s all I am sure about the future.

  10. avatar Dimp says:

    Hi Magy,

    I don’t have a problem for a country to have a vision, but for a country like Indonesia, to set a target for 2030, while they cannot even plan for the year ahead seems to be a bit preposterous. SBY will not be in charge in 2030, he should plan what he can do while he is in the office, let say no more corruption from his office by 2008, or all transport industry will have to comply with international standard by the end of the year.

  11. avatar Ihaknt says:

    Magy an UNREALISTIC vision will simply just be a dream. It will not come true. Education needs to better if he really wants to realise this dream in 2030. Not only that, he will also need to be strict and unforgiving and merciless for anything that shakes national security and has the potential of (further) marring our reputation in the international stage. It’s hard enough luring the foreign investors currently let alone to realise this dream in ’30. But we’ll see, cos so far he’s all talk. Unfortunately he is sort of the best amongst the worst.

  12. avatar Magy says:

    I don’t think the vision is unrealistic at all. Why?

  13. avatar Dimp says:

    Hi Magy,

    Have you been living under a rock? How can you expect Indonesia to be a powerhouse by 2030? Do you think all the other countries will just stand still and let Indonesia to build? Indonesia has debt beyond it’s capacity to repay, Indonesia is one of the most corrupt country in the world, do you think this can change much by then?

    Indonesia has been independent for more than 60 years, yet it has not build further railway besides what was left behind by the Dutch, that is 60 years and no development in the railway, so what do you think we can do in 20-odd years?

    The Lapindo mud is still a problem and has been so for close to a year and what is the government planning to solve this matter?

  14. avatar Ihaknt says:

    Magy, are you SBY in disguise? Hi sir apa kabar?

  15. avatar Dimp says:

    Hi ihaknt,

    You can probably see Magy in one of the SBY fan club in Indonesia. I wonder which other leader can boast “Hey, at least I have a fan club back where I come from.”

  16. avatar Ihaknt says:

    I heard he is a very good singer, maybe what he meant by his statement was that he will have built an empire from his singing by ’30, or he may have his own record label by then. OR he may audition for Indo Idol, unless of course it’s banned cos it’s an “American” thing.

    He hasn’t even succeeded in getting rid of FPI for f88k’s sake!! How’s the budget for our education? Is it up? Can he at least focus on educating his citizens first?

  17. avatar Dimp says:

    One thing for sure, he has promised a crackdown in corrupt officials.. but so far all we can see is a crack in his policy. He can’t even put his ministers in line, Hamid Awaludin and Yusril Izha Mahendra are corrupted as ever and he hasn’t even said anything. And when his number 2 stated that the people shouldn’t be to paranoid against the officials all he can do is throw empty promises to the air.

    And now as the people can see that he hasn’t fulfil any of his promises he created another promise that is so way off, so maybe if the promise cannot be fulfilled everybody have forgotten about it.

  18. avatar Magy says:

    Well, I don’t think it is unrealistic. This is not a zero-sum game. The more others grow, the more RI will be able to grow. I cannot see why RI could not grow by 7% when many other countries do. Vietman 13%, Cambodia 12%, China 10%, Malasyia 6%, Argentina 9%, Columbia 8%, India 9%, etc.

    Is there an earthly law that binds RI to a lower growth rate than the rest of the world? No.

    RI is not significantly more corrupt than any other country above. Certainly not more than China, Vietman and Cambodia. So this is not really a very convincing obstacle.

    Don’t forget that RI was among wort hit by financial melt-down, and also has had a very caotic beginning of its democratic development. Last year RI took the painful decision to reduce subsidies on fuel, which put of a begining poitive investment cycle, because of doubled interest rates. Tough but very brave.

    I think very much is developing in the right direction. Why are you so sceptic? Is RI much worse than the other countries above?

  19. avatar Naga says:

    “RI is not significantly more corrupt than any other country above. Certainly not more than China, Vietman and Cambodia. So this is not really a very convincing obstacle.”

    ahh…. yes it is, that’s why its dysfunctional at every level and why it isn’t achieving its economic growth targets…

    “Don’t forget that RI was among wort hit by financial melt-down, and also has had a very caotic beginning of its democratic development. ”

    All caused by the incompetence of its bureaucrats and political leaders. Indo suffered under the krismon, partially because of the flow-on effect of what was happening in Thailand and partially because of no checks and balances on its corporate markets, rampant anti-Chinese discrimination and poor leadership.

    Chinese capital fled the country, prices were rising whilst Suharto was pictured smiling on the golf course….

    “Last year RI took the painful decision to reduce subsidies on fuel, which put of a begining poitive investment cycle, because of doubled interest rates. Tough but very brave.”

    The fuel subsidy had to be removed before the country went bankrupt, the ‘positive investment cycle’ is only occurring in a handful of oil and lng deals, all of which Pertamina appear to want to hijack in the future once they turn profitable.

    “Is RI much worse than the other countries above?”

    yes, Vietnam will overtake RI very soon as far as development is concerned, just watch…

  20. avatar Sputjam says:

    Build a highway between Bali to Singapore and you will surpass the prediction.

  21. avatar Colson says:

    Spectacular results are possible. And the first step to growth is optimism. In this sense I agree with guebakanmonyet & magy.

    What’s needed is people with enterprising attitudes. Not the ones who are looking for the government to act – but those who do so themselves. Not resigned people, who are always cynically blaming others and government for the lack of progress. These critics should in stead turn active themselves. Only people who are not afraid to take their fate in their own hands, will transform society – not the president.

    Of course everyone agrees corruption should be tackled (RI ranks in the top five of the world, I’m afraid – but i’m sure, there must be, among all those hundreds of millions, at least 1 percent of Indonesians who because they are fed up with the problem, can effectively tackle it), indeed big investments are needed for modernizing the backward infrastructures ( but i guess there must be, among those hundreds of millions of Indonesians, at least 1 promille who have enough initiative and enterprising attitude, to bring that about) and efforts should be made to rid Indonesian from (religious) restrictions that hamper creative thought, print and speech ( of course there must be enough Indonesian intellectuals to do that).

    A country with great ambitions, like SBY’s Indonesia obviously has, undoubtedly got the required minority of “marginal men/women” it needs. So i’m optimistic too. That is in as long the country’s elites – by which i don’t mean the usual suspects: the military, the officials, the zealots- take their responsibility.

  22. avatar Magy says:

    Naga, Vietnam is a Communist state, like China. Russia is an Autocracy. Cambodia is a democracy, but coalitions never seem to be able to cooperate effecively. Thailand, is ruled by the military. Politically, RI has developed remarkably well in a very short time since it became democracy. Most promising of all, the people of RI seem very wise, they have shown very good judgement when electing their leader and government. This is very, very important, since democracies are very sensitive in early stages. I’m confident they will vote out any elected government and president that don’t deliver on increased prosperity and wellfare for all.

    In fact, many important parts of the puzzle are already in place, for growth to take of. Stable and sensible leaders, a growing democracy, low inflation, lower interest rates, positive external balances, low RI state borrowing, a “clean” banking system with relatively low degree of bad loans, a free market economy, an open economy with international trade, firm stance on fundamental religious forces, promotion of tolerance and religious freedom (this is perhaps not all togehter true?), nevertheless not entierly bad, very well seen internationally, according to latest polls among businessmen anti-corrupt measures begin to work, etc.

    What more is needed for investment to take of?

  23. avatar Yunir says:

    First,
    It is no use being pessimistic.
    Complain, cry, whine and weep but do or propose nothing to improve the situation.

    Ok, I have to agree with Maggy that Indonesia is indeed one of the most if not the most democratic country in S.E.A.

    But I disagree that a free market is desirable. Indonesia should never leave economics in the hands of market. State policies matter.
    For example, Batam Industiral Parks are State-introduced and so far, it has created employment.

    Indonesia must also implement policies that can lead to further end of corruption so investors can have confidence. Maybe higher punishments, maybe rewards for whistleblowers.

    Ultimately, it is not economic growth that should be the goal.
    Economic growth is only a path.
    A path to the real goal: the people’s welfare must rise.

  24. avatar Magy says:

    Colson & Yunir. Agree completely on your remarks.

  25. avatar Ihaknt says:

    Magy I am a sceptic because SBY hasnt been able to fix internal affairs as he mentioned. Our country is rapidly divided with religious tensions, lack of education, slow respond to disasters – natural and man made, etc. Apart from that, I just don’t believe any politicians, from Indo or foreign countries. They just say what people want to hear, but not necessarily true facts. ANd many times, after the elections all those dreams they sold to the public remain dreams.

    Look, if Indo can become what he said then good. But to do that, he also needs short term goals, what he can do in the next year or two and actually do it. I am concern about education. I have seen skolah negeri, they are (the ones i have seen anyway) poorly looked after, broken chairs, over crowded classes, etc. With good education, hopefully it can fix other problems as people would be more open minded. So, can’t he try to fix this first before boasting that we will be someone big in ’30? In the end without this education his ‘vision’ to be all that is not very feasible.

    Seriously, although I disagree with your optimism, I think it’s good that you believe in him and support him. Then again what is a politician without the faith of his/her voters? So I do hope when ’30 comes you wont be disappointed. I’d like you to have the last laugh, cos that means that Indo is at least doing something right.

  26. avatar Dimp says:

    Hi Yunir,

    I am not being pessimistic, but I look at the reality of the Indonesian condition. Magy is just being naive, thinking Indonesia is not as bad as other countries in term of corruption, where have you been living Magy? Everything is corrupted in Indonesia, have you heard of people actually paying the right fee for anything (KTP, passport, Driving License anything). Still 40% of the population is still under the poverty line, and yet the DPR member is fighting to get their hands on a new laptop.

    Indonesia is not the only countries hit by the 1997 recession, Malaysia and Thailand have recovered. And don’t tell me about the disasters (Tsunami etc), what happened to the huge amount of donation coming from Australia, US, and other countries? How much of the actual donation actually did the Acehnese received to rebuild their infrastructure?

    SBY cannot even make prediction what will happen next year, he should keep his focus on the time he is in the office, fixing the mess that the country is in at the moment (corruption, welfare, that Lapindo mud mess), and not changing the focus to the “dream” of being economic powerhouse in 2030.

  27. avatar Cukurungan says:

    The most important things for the foundation of the state economic growth is the education system.

    Unfortunately, RI education system has been going to further a wrong direction. Un-like in the advanced country where they made huge investment in the education and research center but RI under SBY has made the education system becoming a profit center institution. It can seen easily in well known University like ITB, UI, UGM, ITS and UNAIR, enrollment cost and yearly cost in those University is only affordable by a few rich minority Indonesia.
    So if you want your kid to take college in those University the most important things is not how smart your kid but rather how much money you have.

    Those problems was even worsening by a wrong strategy education system. There are not so many a school or college system for training “labor skilled worker” required for the real economic activities becoz need big investment but there are overcrowded school for “non-real economic activities” such as law, administration, broadcast , cinema , modeling and dance.

    So optimism regarding “Great Indonesia” in meanwhile just “mimpi disiang bolong”.

    It seemed history will repeat itself “Big Brother Indonesia” already beaten by “Little Brother Malaysia” once again will beaten by “Young Vietnam”

  28. avatar Dimp says:

    Finally I agreed something with Cuk, sure hope that Indonesia can change its direction sometimes in the near future, although looking at the quality of the leaders at the moment, very unlikely. All they can do is talk and talk, and sometimes not very smart at it as well. What we need is a “do”er not a “talk”er.

    Fix the education system as well as the welfare system, sack any government officials who are not up to their job, let more competent people be in charge.

  29. avatar Magy says:

    Perhaps its a dream, and perhaps to optimistic. I think my remark in this thread was also meant to show that many thing actually is in place for this “dream” to come true and that RI actully has done, in many ways its homework, much better than many other countries, that are so “admiered”.

    RI is a supertanker and if you are a democracy, asking all the passengers to vote on the direction and agree on the route takes time and effort. It’s quicker just to let the commander bridge decide the route, like China and Vietnam, perhaps even potential foreign investors think this is great since they now who is in charge. Shake hands and its a deal. What they forget completely is that the crew and the passengers may one day protest. They might even claim their right to have a say. Your handshake is worth nothing, the perceived stability is not there anymore.

    RI needs investments, this is the key, and there is plenty of opportunities. FDI, is 30 times bigger in China than in RI, so when the international capital realize that, as they have been experiencing lately, the illusion of stability (think of Thailand) is just an illusion, they might “see” clearly, and thnk again, if they really want to poor in money in a communist regime, like China / Vietnam.

    RI has been really bad to bring forward the positive sides. With 250 million people there are so many opportunites.

  30. avatar Dimp says:

    Hi Magy,

    Perhaps its a dream, and perhaps to optimistic. I think my remark in this thread was also meant to show that many thing actually is in place for this “dream” to come true and that RI actully has done, in many ways its homework, much better than many other countries, that are so “admiered”.

    I agree that many things are in place, but much more are still not in place. You are saying that Indonesia has done its homework, that is why I am saying that you are living under a rock, you need to get out more, don’t just look at Jakarta. The Lapindo mud is still a problem and it has almost been a year, the government just stand still doing nothing, yet you say that Indonesia has done its homework. Corruption is still rampant, compare this to China, the government has taken an extreme measure, death penalty for corruptors, while in Indonesia corruptors can still become a member of the parliament.

    RI is a supertanker and if you are a democracy, asking all the passengers to vote on the direction and agree on the route takes time and effort.
    It’s quicker just to let the commander bridge decide the route, like China and Vietnam, perhaps even potential foreign investors think this is great since they now who is in charge. Shake hands and its a deal. What they forget completely is that the crew and the passengers may one day protest. They might even claim their right to have a say. Your handshake is worth nothing, the perceived stability is not there anymore. .

    At least there is still a “stability”, Indonesia has none, there is no guarantee that the government will still be there in 5 years time, do you think that all the FDIs are stupid to invest in China and not Indonesia? There is a reason why the FDIs are much much bigger in China compare to Indonesia. Even Indonesians prefer to invest in China and other countries.

    RI needs investments, this is the key, and there is plenty of opportunities. FDI, is 30 times bigger in China than in RI, so when the international capital realize that, as they have been experiencing lately, the illusion of stability (think of Thailand) is just an illusion, they might “see” clearly, and thnk again, if they really want to poor in money in a communist regime, like China / Vietnam.

    Thailand is still more steady than Indonesia, even with the military coup there are hardly any foreigners escaping the country. There are no travel warnings, compare this to Indonesia where there are constant travel warnings.

    RI has been really bad to bring forward the positive sides. With 250 million people there are so many opportunites.

    250 millions count for nothing, it is not the quantity that matters, it is the quality.

    I suggest you open your eyes, get out from your ideal world, see that people are still struggling to earn a living in Indonesia. We are imporing rice, if we can’t even provide our own food how can you think we can be superpower?

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