Jakarta. Indonesia needs to accelerate investment in digitalization, semiconductors and artificial intelligence to break out of its roughly 5% growth rate and move toward the government's 8% target, Chief of Economic Affairs Minister Airlangga Hartarto said.

Airlangga said Indonesia was still developing technology-driven industries more slowly than Vietnam, which he said had achieved growth of around 9%.

“The opportunity to move up from 5%, where we are on average, is there. If we want to catch up with Vietnam, which can reach 9%, then we also have to move into digitalization, semiconductors and AI,” Airlangga said in Central Jakarta on Tuesday.

The World Bank's latest projections underscore the growth gap, forecasting Indonesia's economy to expand 5.2% in 2026, compared with 7.4% for Vietnam and 5.1% for Malaysia. The World Bank also said Indonesia was lagging regional peers in benefiting from the global surge in AI investment.

Indonesia nevertheless started 2026 on a stronger footing, with growth accelerating from 5.1% in 2025 to 5.4% in the first half of 2026, its strongest two-quarter average since 2022. The World Bank attributed the stronger performance to higher private consumption and a surge in public spending around the turn of the year.

Airlangga said Indonesia needed to broaden its economic base beyond existing resource-based and manufacturing industries by developing sectors with higher technology and added value.

“Vietnam has done it before Indonesia,” he said.

Airlangga also pointed to the difference in the scale of special economic zones (SEZs) between the two countries. Indonesia has around 24,000 hectares of SEZs, compared with about 2 million hectares in Vietnam.

“Imagine Indonesia has around 24,000 hectares of special economic zones, while Vietnam has 2 million hectares. So, it is more massive and more daring than us,” he said.

Vietnam also has an advantage in international market access, Airlangga said, having moved earlier to establish trade ties with Europe and secured more favorable tariff and non-tariff treatment from the United States. These advantages have strengthened Vietnam’s export competitiveness.

Indonesia, meanwhile, has the advantage of a large domestic market. Airlangga said the country must leverage that strength by improving business certainty, expanding industrial zones, widening export market access and attracting investment into high-technology industries.

He said a structural shift toward higher-productivity industries was essential for Indonesia to achieve 8% economic growth.

“Vietnam is already there. India is also there. We have yet to move from level two to level three. If we can do that, 8% growth can be achieved. But once again, this requires strong human resources,” he said.

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