Jakarta. Chief Economic Affairs Minister Airlangga Hartarto recently talked about how Indonesia grew its economy amidst global uncertainties at the 2024 Nikkei Forum. 

According to Airlangga, Indonesia managed to maintain its economic growth during the Covid-19 pandemic. 

“Our economy has been growing within a range of 5 percent year on year [yoy] since the second quarter of 2021,” Airlangga told the forum, as reported by a ministerial press release. 

Indonesia’s economy also expanded by 5.11 percent this first quarter. The country’s inflation stood at 3 percent in April. Indonesia’s gross domestic product (GDP) per capita has been growing since the pandemic as the government seeks to propel the figure to $5,500 this year. 

“Indonesia is pushing for stable economic growth through social and political stability. Of course, this serves as a great condition for both investors and businesses,” Airlangga said. 

Indonesia today is currently shifting to a new administration as the government tries to ensure the continuity of existing programs. This includes the incumbent President Joko “Jokowi” Widodo’s efforts to propel Indonesia to a golden era by its centennial in 2045. To avoid being in the middle-income trap, Indonesia has prepared two scenarios. The first is a transformative scenario in which the country achieves a 6 percent growth each year to escape the middle-income trap by 2041. An optimistic scenario sees Indonesia escaping the middle-income trap by 2038 as long as its annual economic growth stands at 7 percent, according to Airlangga. 

The senior minister added that Indonesia had also made structural reforms to improve its investment climate, among others, by launching the Job Creation Law. Indonesia’s membership bid to the Organization for Economic Co-Operation and Development (OECD) is set to drive more structural reforms. Indonesia is hoping to be a full-fledged OECD member in 3 years. Policy reforms by referring to OECD standards will not only increase policy predictability and transparency, but Indonesia will help determine the global economic standards so that it becomes a benchmark for sustainable and quality investment, Airlangga said. 

“Hopefully we can achieve our target of $30,300 in GDP per capita in 2045 by adopting OECD’s standards,” Airlangga said. 

To book robust growth, Indonesia will continue to adopt “conventional growth engines” such as infrastructure development, food security, and international cooperation. But the country will also combine it with new growth engines such as massive industrialization, digitalization, and energy transition. 

According to Airlangga, Indonesia has been engaging with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Indo-Pacific Economic Framework (IPEF) to expand markets and encourage increased investment. The minister also spoke of Indonesia’s domestic processing policy of its minerals as it seeks to play a pivotal role in the electric vehicle battery and renewable energy industries. Indonesia is home to reserves of nickel, copper, bauxite, and tin. These minerals are part of the renewable industry, space industry and even the defense industry.

"On energy transition, Indonesia --as one of the initiators of the Asia Zero Emission Community [AZEC]-- highlights the importance of inclusive funding for decarbonization cooperation and the transfer of low-carbon technology. Currently, there are at least 12 cooperation projects within the AZEC framework and 3 of them are already in the implementation stage," Airlangga said.