Jakarta. Agung Prabowo, Wholesale and International Banking Director at the state-owned Bank BNI, recently gave insights to whether Indonesia could unlock the 8-percent growth. 

President-Elect Prabowo Subianto is aiming for an 8-percent gross domestic product (GDP) growth. Earlier this year, the former army general said he was even upbeat that Indonesia would reach that growth rate within the first three years of his presidency. Prabowo’s statement sparked questions on whether it would be possible for Indonesia to expand by 8 percent --  a huge increase compared to the country’s natural growth rate of around 5 percent. 

Speaking at Indonesia’s largest investment forum, there are still some things that Indonesia still has to pay attention to if it wishes to expand by 8 percent. This includes improving the country’s purchasing power particularly in the middle-to-low income segments.

“Consumption is part of the GDP formula. If the country’s consumption or purchasing power is weak, of course, it would be hard for the government to achieve that 8 percent growth,” Agung told the recent 2024 BNI Investor Daily Summit at the Jakarta Convention Center (JCC).

“Investment is also one of the aspects that determine a country’s GDP growth,” Agung said.

Agung then talked of the government’s domestic processing strategy. Indonesia has banned exports of unprocessed nickel ores to encourage the localization of the metal’s industry. The government reported Indonesia used to record up to $2 billion before the country imposed the ban. Since the prohibition came into effect, nickel-related exports had now reached around $34 billion. According to Agung, the incoming government needs to continue this domestic processing policy to unlock the 8-percent growth.

“Because domestic processing helps drive economic growth through value creation and job generation. … But if you asked me whether 8-percent growth is possible, it is something that takes process. Indonesia needs to fix the purchasing power and create jobs first before it can achieve that target,” Agung said.

According to Agung, Indonesia also needs to pay attention to the education sector in its state budget planning.

“If we talk from the fiscal standpoint, soft infrastructure like education is pivotal. Without that, it would be hard for Indonesia to create value for its economy,” Agung said.

BNI and B-Universe have partnered to host the 2024 BNI Investor Daily Summit. The two-day conference --which embraces the theme “Accelerating Resilient Growth” seeks to spread optimism for the audience, according to BNI’s President Director Royke Tumilaar.

“We are hosting this event to spread optimism and make this event a platform to exchange insights. It also gives space for the government to inform the public of their future directions so that Indonesia can avoid the middle income trap,” Royke told the forum earlier that day.