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. avatar Magy says:

    Hi Dimp,

    First, RI is not a supertanker economically, needless to say, but it is to govern. When a democracy, size and diversity is an issue.

    1. Lapindo is a mess, but you must be aware that the main reason is not corruption or incompetence but unclear responsibility. Was the mud flow a result of an earthcuake or missbehaviour of the company? Who should pay? In one way you could say that, obviously in a larger scale, you have the same issue in New Orleans, still today a mess after Katrina, one important reason also who should pay and for what? Issues that must be settled before work can begin.

    2. No I don’t think FDI are fools, but in a way, they are missing out on a great opportunity. Not all FDI need to go to India and China. This is partly ignorance, partly the inabilty of RI to promote itself and partly “foolish”. RI is a blank spot on the map. Still it is the most developed democracy in ASEAN. Why?

    3. Unfortunately, you are completely right on the travel warning issue. It is a shame that so few people can destroy for so many. RI could be earning much more from tourism without these covards. They want to ruin RI and make it an Islamc fundamentalist state, were women are stoned in public. They are the worst threat to a prosperous future for all Indonesians, and should be treated as such.

    4. I agree, there is ample of room for increased food productivity. In fact the agricultural sector is one of many very important ones to develop. Needless to say, as you also are aware, subsidies are abundant in the US and EU. Why? Because it is impossible to have profitability in farming without subsidies, since farming is all that a poor man could do for a living. So its not a very simple issue? Why invest millions in more effecitve rice production, when you don’t expect to get your money back if you have to compete with abundant world markets. I’m not an expert on this but you cannot take rice import as an example for poor development opportunities or incompetence. I’m not even sure RI should poor billions into becoming the foremost Rice-state on earth, perhaps Vietman could be given that opportunity. RI might be better of focusing on other things. New crops for energy for instance? Let Vietnam provide the world with rice, we could provide the world with alternative fuels?

    I simply cannot see why this negative view – should RI be the only country in the world that don’t develop and industrialize? What we agree upon is that the hard work is needed and much can be improved. What I cannot agree with is this negative veiw – that RI has so many features that are so bad and cannot be improved. In that view RI is bound to stay “banana-republic” for eternity.

    Its simply not true.

  2. avatar Dimp says:

    Hi Magy,

    1. Lapindo mud is a result of a company not taking responsibility in doing its action, not because of earthquake, they were supposed to drill with casing, they ignored the casing to cut cost and now it actuall costing them more. Cutting costs while ignoring safety happen so often in Indonesia, overloading boats, mixing aviation fuel with water. Again it shows the incompetencies of the companies to make sure that safety must not come after profit.

    2. How many foreign companies have left Indonesia? Why? They are not missing anything, with the current condition I don’t blame them, they were not protected by the government, there were no clear law about “premanism”, the union is getting to aggressive, why should they invest in Indonesia?

    3. Again it shows how the government couldn’t handle these thugs, they should just eradicate these thugs who uses the name Islam in a bad way.

    4. Indonesia has always been able to cover its need of food, why stop, why it has to be rice, why other countries like Thailand can survive? If they have the technology then why not implement them? I know there are a lot of subsidies paid to the farmers in the western world, but they are also subject to competition from outside world. What they do is they show that their products are more superior than the cheap imports. Again the government is at fault.

    As you can see the government still has a lot to do, but they should make a clearer plan within the near future, not make prediction for 2030, why not make a more reachable target in let say 2010. SBY has promised so much and now after half his term he has almost shown nothing.

  3. avatar Oigal says:

    Hi All,

    Give you an example, we won a very large contract in Malaysia, we would have had to ship out significant qauntities of equipment and supply the labour / training for 12 months (all Indonesian). We would have had to hire another 20 people to cover the short fall back in Indonesia. All invoices and taxes would be paid into Indonesia.

    However customs then told us that all the equipment would be subject to Full Import Duty when brought back into Indonesia (already paid once). No matter what we said or tried to explain it was a win win for Indonesia, no one cared.

    What did we do? We passed the contract onto a sister company in country where the inmates are not in charge of the Asylum. We won’t bother again and our manufacturing has moved to China.

  4. avatar Marie Antoinette says:

    Rob,
    Absurd bureaucratic rules are common in developing countries (and many developed ones). It sounds that they were just trying to play by the book.
    You know, it would be nice once in a while to get some comments out of the ‘bad guys’ who are always being blamed on this website. What was their side of the story?

  5. avatar Oigal says:

    I left out their side of the story because it was absurd enough on its own.

    But hey “we can fix it”, nudge nudge, wink.

  6. avatar avversamorte says:

    Indonesia has fully the potential to become an economical superpower. Firstly, the masses, Indonesia has the fourth largest population in the world. And what’s more unless you are the rich and powerful of Indonesia would you know the amount of wealth the Indonesians possess. Everybody is returning to Indonesia now, with the economy booming, How great can they be, greater than what they dream. SBY? I believe he is the new generation of intelligent leaders. If you were a businessman would you understand the amount of reform the economy has undergone. Why compare China to Indonesia, why do people want to invest in Indonesia? Simply because it is SAFER to do business in it, rather then go to China and easily be CHEATED. Sure China will definitely become the largest superpower in the world, but it is far too hard to do business there for the average businessman, those without the opportunity to advance to a mega corporation. You all sound like students anyway or commoners, who have not tasted the true experiences that can be garnered in the realm of business and not in school.

    Oh and also, many things in this world have been pre ordained, by people in high places. That and the fact that this vision was inspired by a prediction by the Swiss Bank of the top 5 superpower economies by 2025. So you can think of this world like a Matrix, the commoners and the real action. ( : ciao

  7. avatar Dragonwall says:

    You all sound like students anyway or commoners, who have not tasted the true experiences that can be garnered in the realm of business and not in school.

    By looking at your comment would it be correct to say that you are a highly educated and a very professional individual or enterprenuer? Wow! Indonesia will be saved by people like you.

    Indonesia has fully the potential to become an economical superpower

    Unless Indonesia is ready to apprehend the problem of Sharia and the ever demanding of making Indonesia into an Islamic State, what is the use of being big? What is the use of having that many resources that were ready to be destroyed like Lapindo Brantas. Let’s not say this as an accident. This shows the unprofessionalism in the exploration.

    Firstly, the masses, Indonesia has the fourth largest population in the world. And what’s more unless you are the rich and powerful of Indonesia would you know the amount of wealth the Indonesians possess.

    This are only meant for the crony’s of your short VP.

    I think you are quite ignorant by saying every

    Everybody is returning to Indonesia now, with the economy booming, How great can they be, greater than what they dream. SBY?

    How many have returned? SBY’s hands are tied. He can’t handle things like Soeharto because those premeditated coup d’etat had long before have the ABRI dismantled into bits and it is now out of control.

    Why compare China to Indonesia, why do people want to invest in Indonesia? Simply because it is SAFER to do business in it, rather then go to China and easily be CHEATED.

    You are thinking that you could survive without understanding others? In any country there are the opportunists, crooks, dirty businessmen. The same thing for Indonesia you could also be cheated? Haven’t you.? Don’t you think so?
    How safe is Indonesia? didn’t you know there businesses and people ready to leave Indonesia? In the presence of ever demanding the implementation of Sharia Law? Government unstable policies? How many have you see as new investors?

    Be realistic. By referring to Swiss Bank reports is not going to make Indonesia a Superpower. It is how you work, run a country, use the right person, solve the internal problems, eliminate the threats. By 2025? Price Waterhouse even quoted 2050. LKY even said so. But read carefully his speeches. There are buts and ifs.
    What if you can’t? Can you be?

    Commoners and school children right? This is the real world. Referring to reports is not going to make Indonesia big. I see couple of reports from BI, JK making similar report one after another about the GDP growth and income per capita. You relly think that Indonesia will achieve an income per capita of between 18,500 to 23,500?

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

    And make Indonesia a superpower like connecting on planet to another and become a 8 wonder of the world.

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

    So, with ‘amputated hands’, you still could type well and make sense and less religiously involve. That’s nice.

  8. avatar arlo says:

    Wow, there’s so much skepticism in the air. Needless to say, I am very flattered by the predictions made by UBS and PWC on our future, but cringe on the fact that our fellow Indonesians aren’t as optimistic (or are they actually foreigners posing to be Indonesian to drag down “the real Indonesian’s” spirit).

    first of all, lets talk about forecasting. statistically, there are many ways of forecasting. but all of them involve past data. the Moving average for example, takes data from previous periods and create a LINEAR Extrapolation based on those data. skeptics, this method is what you’ve been using! saying that we’ll never succeed based on past data is like saying that you won’t ever be able to read an write because you weren’t born with the capability. Is that logical? NO!!! because we DO have the POTENTIAL and we can LEARN to achieve our goals! from now on, lets talk about our potential and learn to reach it.

    and about learning. we all know about October 28th 1908. You know, our pledge….one nation, one language, one mother land….if you look at the context, we weren’t actually in that condition. we were fighting Imperialists in sporadic movements. so what does that pledge mean? it’s a VISION. and sure it took 37 years to make it a reality, but without that vision, it would never be. Of course there were pessimists, but the pledge brought us together. and the pessimists fledged out of the country like cowards, only thinking about themselves. it’s ok though, we don’t need them, anyway.

    BTW, I’m an entrepreneur born from a bureaucratic family that lived in poor conditions and have had my fair share of involving in social activities and an academic background. I am in no one’s fans club. I’m concerned about my country, thats it.

  9. avatar lsyu says:

    People need a dream but successful people need more than dream like Target. If we want to achieve this ambitious target maybe government need to have more complete and detail program. It is just like a long project u need to have milestone and policy to achieve the grandiose goal. With our potential ( natural resource, home market, population, etc ) it’s not impossible to have a 7.26 % annual growth rate. In one part government can provide more friendly business environment and assist local company to be more competitive. If u observe current indonesia company, you will find out that our company is less competitive and more home market oriented. Our company is less eager to add more value to the exported goods . Companies just want a quick money and exported the raw material to other countries and then the imported countries will do the finishing job and re-export to Indonesia. Maybe that’s why our company will never have the competitive advantage compare with our neighbor countries. Our cost is higher but our price is lower . How can all of us have a better life with this condition ? This is what they call the Curse of abundant nation. We have all the natural resource in our motherland but we are just to LAZY to better use it. This ignorance really kill our competitiveness. In current most prospective developing nation, we will have China, India, Brazil , Russia and also Vietnam. But where is Indonesia ?? People blame the government for its inefficiency, corruption, bla bla. I think this fault is all us as Indonesian. In private sector, we have a lazy and short-sighted entrepreneur . You can’t find the role model in our business circle who is respectable, visionary and competitive enough to play in international stage. Government is just the same with its inefficient, corruption , no planning, etc.. I believe if we work harder and more concern with our society, we will achieve this goal in our generation. We will provide the better future to our next generation. The future which Indonesia is a more prospered, respectable, united and opened nation. Maybe we can tell our grandchild that we feel no regret to being born in this era as we have been part of our country great achievement. I really hope that someday in the future I can tell my grandchild that I ever have this dream and finally the dream come true.

  10. avatar DAMEANOS says:

    There is nothing wrong with vision of the foundation. In fact, it serves as an inspiration to Indonesian government. That vision conveys a message that there is nothing impossible, everything is possible as long as the government wants too. Indonesia is growing, even though it is not as fast as China and India, but the growth is consistent. In the current global financial crisis, many countries in Asia are suffereing of slowingdown in their economic growth but it is not the case with Indonesia. We are hopeful that Indonesia will continue growing and can stand firm amidst crisis.

    We should have a big dream and be positive, don’t be too negative about our country. Those who are always looking at the dark side of Indonesia is psychologically ill.

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