Laying the Foundations for Future Growth Acceleration?

Abstract

President Joko Widodo was inaugurated for his second term with a vision to make Indonesia a $7 trillion economy by 2045, seven times its current value. This Survey examines recent developments in Indonesia, with a focus on the challenges of laying the foundations for Jokowi’s vision. It discusses issues surrounding the new cabinet composition in relation to economic targets and asks whether the cabinet can push through the reforms needed to achieve the required rate of economic growth. While the annual growth rate has steadied at 5%, we argue that this rate will be insuf- ficient for realising the president’s 2045 vision. A higher growth rate is needed in the next five years but will be difficult to achieve given the external and domestic challenges. The government’s plans to push for productivity improvements and promote investment in value-added manufacturing are laudable. To realise these plans, the government should invest in creating a healthy and competitive invest- ment climate. Policies to promote such a climate should be implemented with the support of capable institutions to expedite the process. INTRODUCTION