The priority now is equipping young people with skills and knowledge, so that Indonesia can exit the middle-income trap. — The Jakarta Post
THE celebration of the 79th anniversary of Indonesia’s independence has provided us with an opportunity to look forward and reflect on the journey ahead toward Golden Indonesia 2045.
Independence means preparing future generations to navigate the path for Indonesia to become a strong, developed country. This all depends on a resilient, diversified and competitive economy where technology-based industrialisation increases incomes.
Golden Indonesia envisages turbocharged economic growth of between 6% and 7% for decades as well as inclusive and high-quality development.
Achieving this will advance our remarkable nation. However, we must shift gears to focus on national interests by implementing more efficient and effective public policy.
This vision sets a high economic growth and development standard, and we must work toward it. Indonesia’s demographic posture is assumed to deliver a bonus, with 85% of people under 55 years old and 57.9% living in urban areas, according to the 2022 national census.
Generation X, millennials and Gen-Z are the dominant cohorts among Indonesia’s population of 277.7 million.
With their energy, creativity and adaptability, younger generations hold the key to a prosperous future by fuelling consumption-led growth and bolstering state revenue for social protection.
Moreover, Internet penetration of Gen-X, millennials and Gen-Z is more than 83%, showing that they are digitally connected.
However, despite our growing economy, Indonesia is not without challenges. Unfortunately, our young people are held back by the level of formal education, as only 6.41% have achieved an education level higher than senior high school.
Indonesia has the highest unemployment rate in the Asia-Pacific, high informality and the lowest labour productivity rate in South-East Asia.
Our people, our nation’s greatest asset, are at risk of being left behind. This is a significant challenge for transformation; however, a strategy based on meticulous calculation can put Indonesia on the right path in the long term.
With sound economic management, we can effectively navigate the demographic shift. This is not a task that can be left to intuition. Each generation has different productivity characteristics depending on access to education and employment opportunities; our challenge as policymakers is maximising the potential of our people.
Moreover, preparing the next generation is a long-term investment, as current policy impacts future generations.
The priority now is equipping young people with skills and knowledge, so that Indonesia can exit the middle-income trap. Embedding technology and science in the economy has been proven to accelerate economic growth and social welfare, as measured by per capita income.
Just look at the transformation of Taiwan and South Korea; nowadays, Vietnam, China and India are using this strategy, too. This is when I come back to why Indonesia needs to engineer the economy.
An engineer makes calculations based on science and technology, and an economist makes empirical predictions of conditions while considering risks.
Combining the two schools of thinking to engineer the economy is a winning strategy and should be decisive in managing Indonesia’s limited resources to maximise social and economic benefits nationwide.
Engineering the economy is vital because the promise of a brighter future for Indonesia is not guaranteed, especially in the face of the unpredictable external landscape.
We must revitalise the economic engine room and ensure rigorous policymaking equips our people with the tools to navigate opportunities and risks in a complex world. This is a future where sound economic management is data-driven and sets higher standards to benefit all Indonesians.
Moreover, engineering the economy delivers a predictable policy framework, which benefits businesses and investors.
Indonesia’s growth engines must generate broad-based employment and raise incomes to ensure the stability of the middle class.
The Job Creation Law, a transformative policy that reformed 79 regulations, is a significant step toward a more robust and fairer economy. It focuses on simplifying regulations and improving the business environment.
Already, it has contributed to a surge in job-creating investments two years after its implementation, benefiting businesses and communities throughout Indonesia.
The introduction of pre-employment cards further equips Indonesians with the skills to seize new opportunities in many sectors, including service industries.
These initiatives and establishing 12 special economic zones nationwide are vital for delivering intergenerational prosperity.
The long-term strategy must navigate global structural change, ongoing external shocks and geopolitical rebalancing while deepening economic integration. — The Jakarta Post/ANN
Airlangga Hartarto is Indonesia’s Coordinating Minister for Economic Affairs. The views expressed here are the writer’s own.
