Bappenas states regulation and institutional frameworks hinder Indonesian growth
The Ministry of National Development Planning (Bappenas) has stated that regulation and institutional frameworks are the main obstacles that must be addressed to drive economic growth and accelerate Indonesia’s transformation into a developed nation.
Eka Chandra Buana, Deputy for Macro Development Planning at Bappens, noted that this finding is based on a growth diagnostic study conducted by Bappenas in collaboration with Harvard University to identify various constraints hindering Indonesia’s economic growth.
“The most binding obstacles in Indonesia are not only from the economic side, but also from regulation and institutions,” he said during a joint conference between Bappenas and the Asian Development Bank Institute (ADBI) in Jakarta on Tuesday.
According to him, improving regulation and institutions is vital because a clear development vision and strategy alone are insufficient to lead Indonesia towards its long-term development goals.
To this end, Eka mentioned that the government needs to ensure a consistent regulatory and institutional framework, accompanied by adequate funding and investment support, to accelerate the implementation of various development priorities towards becoming a developed nation.
He added that institutional reform is essential to ensure that various development policies do not merely remain as documents but can be implemented consistently and sustainably.
Furthermore, Indonesia currently possesses the 2025–2045 National Long-Term Development Plan (RPJPN) through the ‘Golden Indonesia 2045’ vision, aimed at achieving developed nation status and escaping the middle-income trap.
Eka stated that Indonesia’s economic growth needs to be in the range of 6-7 per cent to escape the middle-income trap.
To achieve this target, Bappenas has established four stages of economic transformation within the RPJPN 2025–2045.
In the first stage, 2025–2029, the transformation is directed towards strengthening the industrialisation ecosystem and increasing industrial product complexity, with an economic growth target of 5.6–6.1 per cent.
Subsequently, for 2030–2034, the government targets the strengthening of industrial product complexity with economic growth of 6.9–7.8 per cent.
In the 2035–2039 stage, the transformation is aimed at strengthening industrial competitiveness towards global expansion, with a growth target of 6.4–7.6 per cent.
Meanwhile, for the 2040–2045 period, Indonesia is directed to become a manufacturing hub for the global market, with an economic growth target of 5.4–6.7 per cent.