The Ministry of Investment and the Investment Coordinating Board (BKPM) forecasts that Indonesia’s economic growth will reach 8% by 2027, as targeted by President Prabowo Subianto. This projection is based on achieving an investment realization of IDR 2,684 trillion by that year.
Economic growth is anticipated to reach 6.8% in 2024, surpassing 7% in 2026, paving the way for the 2027 milestone.
According to Edy Junaedi, Deputy for Investment Implementation Control at BKPM, the total investment target for 2025-2029 is set at an aggregate of IDR 13,528 trillion, which will be achieved incrementally. This investment is expected to create 3.4 million jobs over five years, averaging 680,000 annually.
“With this calculation, investment, coupled with downstreaming efforts, will serve as the economic engine for accelerated growth. This target is significantly higher than the past decade,” Edy stated during the Executive Forum on Monday (November 18), as reported by Kontan.
Job Creation Aligned with Downstreaming Roadmap
The projected job creation aligns with the roadmap for downstreaming 28 commodities through 2040. Approximately 60% of these commodities are linked to labor-intensive mining industries.
“The downstreaming of the mineral and coal sectors accounts for nearly 60% of the commodities in the roadmap. Hence, investment potential in this sector could reach USD 816 billion by 2040,” Edy explained, as quoted by Katadata.
To achieve 8% economic growth, investment absorption must grow at an average of 17.43% between 2025 and 2027. Edy highlighted that foreign investment would dominate, contributing over 50% of total investments during this period.
“This projection stems from simulations conducted in collaboration with the National Development Planning Agency. Economic growth of 8% will be gradual, becoming achievable by 2027,” Edy added.
Investment Realization Milestones
Indonesia targets an investment realization of IDR 1,650 trillion in 2024, rising to IDR 1,906 trillion in 2025. Projections for subsequent years include IDR 2,280 trillion in 2026, IDR 2,684 trillion in 2027, and IDR 3,116 trillion in 2028, eventually reaching IDR 3,544 trillion in 2029.
As of Q3 2024, BKPM reported an investment realization of IDR 431.38 trillion, marking a year-on-year (yoy) growth of 15.24% and exceeding the previous quarter by 0.72%. This achievement represents 26.15% of President Joko Widodo’s target of IDR 1,650 trillion for 2024.
Coordinating Minister for Economic Affairs Airlangga Hartarto previously stated on last October 2024, that achieving 8% growth by 2029 targeted by President Prabowo is feasible, citing Indonesia’s historical economic performance.
“This is not impossible, as Indonesia recorded an average growth of 7.3% from 1986 to 1997 and even reached 8.2% in 1995,” Airlangga remarked during the Indonesia Sharia Economic Festival at JCC Jakarta on October 30, 2024.
Sources: kontan.co.id, katadata.co.id
Image source: Getty Images
