Jakarta, INTI – Indonesia's economy has demonstrated robust performance amid ongoing global challenges. According to the latest data, Indonesia's economic growth in the third quarter of 2024 was recorded at 4.95%, outperforming several major countries such as Singapore (4.1%), Saudi Arabia (2.8%), and Mexico (1.5%). Coordinating Minister for Economic Affairs Airlangga Hartarto expressed his confidence in Indonesia's economic strength during the Conference on Indonesian Foreign Policy (CIFP) C-Suite Access in Jakarta on Saturday (November 30), which focused on Indonesia’s Economic and Political Outlook 2025.
Indonesia's Strong Economic Fundamentals
During the conference, Minister Airlangga highlighted several indicators that reinforce the stability and resilience of Indonesia's economy. "First and foremost, Indonesia has managed to sustain growth at around 5% over the past decade. Only a few countries, like Indonesia, have been able to control inflation at levels below 2%. Our debt-to-GDP ratio is also very low, at around 40%. This means that Indonesia's economic fundamentals are strong. Our foreign exchange reserves are around USD 150 billion, and our trade balance is positive," he said.
Declining Unemployment and Improved Labor Market
Another positive sign is the decline in the unemployment rate. As of August 2024, Indonesia's unemployment rate stood at 4.91%, showing a decrease from 5.32% in August 2023. Meanwhile, the number of workers increased by approximately 4.7 million, from 139.9 million in August 2023 to 144.6 million in August 2024. Out of this total, 42.05% were employed in formal sectors, while 57.95% were in informal sectors.
Minister Airlangga also mentioned that President Prabowo announced a 6.5% increase in the minimum wage for the next year, which is higher than the economic growth rate. "Maintaining the middle class in Indonesia is crucial because our goal is to become an upper-middle-income country. We want to accelerate development so that, in the next 10 years, per capita income can reach above USD 12,000," he explained.
Equitable Development: Addressing Income Disparity
Minister Airlangga emphasized the importance of equitable development across different regions in Indonesia. He noted that certain provinces, such as Jakarta, East Kalimantan, and several in Sumatra, have already shown relatively high per capita incomes. For example, Jakarta has a per capita income of USD 22,000, while East Kalimantan and some provinces in Sumatra have around USD 17,000.
"The government's task is to ensure that there is greater equity and no disparity in income between regions. One way to achieve this is by building Indonesia based on an Indonesia-centric principle, shifting the economic gravity from Java to Eastern Indonesia. The government has established 22 Special Economic Zones (SEZs) to support this initiative," he added.
Indonesia’s Active Role in Multilateral Economic Forums
Indonesia has also been proactive in participating in various multilateral economic forums, which form part of its strategy to integrate further into the global economy. Notable examples include the Regional Comprehensive Economic Partnership (RCEP), which includes China, and collaboration with the United States in the Indo-Pacific Economic Framework for Prosperity (IPEF). Additionally, Indonesia is currently in the process of joining the OECD and BRICS.
Minister Airlangga explained that the signing of these multilateral agreements aims to open new trade markets, enhance and harmonize trade and financial standards, and attract more investments that would create job opportunities. "Our investment target for this year is around Rp 1,900 trillion, and we expect that next year, we will need more than Rp 2,100 trillion in investments, so we need more 'friends' and investors," he said.
Global Investor Confidence: A Key to Sustainable Growth
The interest of global investors in Indonesia is driven not only by the country's large export market potential and strong domestic consumer purchasing power but also by the assurance of the rule of law, transparent business practices, environmental sustainability, and the absence of corruption. These factors are vital to maintain and enhance Indonesia's appeal as an investment destination.
Minister Airlangga reassured global investors, saying, "If you want to grow, then grow with Indonesia." This message underscores Indonesia's commitment to providing a conducive environment for foreign investments that align with global values and principles.
Sustainable Development Strategies
Minister Airlangga emphasized that Indonesia's development must focus on sustainability and inclusivity. This includes strengthening the MSME sector, enhancing workforce capacity, and promoting technological and innovative advancements. Programs aimed at the development of e-commerce, logistics, and digitalization of MSMEs are expected to contribute significantly to accelerating the country's economic growth.
The solid economic fundamentals of Indonesia, demonstrated by stable growth, a declining unemployment rate, and a manageable debt-to-GDP ratio, illustrate that the country is on the right path toward sustainable economic growth. The government's efforts to drive development in various regions through Special Economic Zones and investments in key sectors are strategic steps to promote economic equity.
Furthermore, with increasing global investor confidence and adherence to principles of sustainability and transparency, Indonesia is poised to face future challenges and strengthen its position in the global economy.