Contributing to Indonesia's Medium-term National Development Plan
ARISE+ Indonesia has supported the Ministry of National Development Planning /BAPPENAS in developing comprehensive strategic plans - known as ‘Grand Designs’ - in three critical areas: Export Acceleration, Investment and Economic Cooperation. These Grand Designs are key inputs into BAPPENAS’ Medium-Term Development Planning process for the next five-year period (2025-2029).
ARISE+ Indonesia engaged three leading Indonesian research institutions to work on development of these Grand Designs: the Center for Economic Development Studies (CEDS) was appointed to work on Export Acceleration; the Institute for Economic and Social Research (LPEM FEB UI) developed the Grand Design on Investment, while the Centre for Strategic and International Studies (CSIS) was entrusted with the Grand Design on Economic Cooperation.
Each of the Grand Designs contained the following key elements:
- Assessments of Indonesia’s recent performance in relation to the Grand Design’s topic
- International benchmarking assessments and case studies
- Stakeholder consultations, interviews and focus group discussions
- Detailed recommendations and action plans for each key stakeholder
Export Acceleration:
- The research revealed that Indonesia is a net importer in the services sector in general, but some service sectors, such as tourism and franchising, are seeing positive export trends.
- Indonesia's export value in the fisheries sector is relatively low compared to several countries with smaller territorial waters. This is in part due to barriers such as licensing, high investment requirements, limited financing and infrastructure, high logistics costs and traceability requirements.
Investment:
- FDI has yet to boost Indonesia's level of participation in global value chains (GVCs)
- Cutting regulatory red-tape and simplifying business and investment procedures will need to go further if Indonesia is to meet its long-term target of achieving a 38% FDI-to-GDP ratio by 2045.
- India, South Korea and Vietnam offer interesting benchmarks and examples of good practice when it comes to FDI attraction and retention.
Economic Cooperation:
- Indonesia’s FTAs have increased the diversification of Indonesia’s exports, although commodities still dominate the country’s export mix.
- Even though Indonesia’s trade balances with FTA partner countries tend to decline post-FTA, Indonesia’s trade balances with non-FTA economies often tend to have surpluses (e.g. with the USA and the EU).
- The increase in FDI inflows into Indonesia in the last two decades has been largely driven by the rapid increase in FDI from major FTA partner countries.
Commenting on the Grand Designs, Ibu Laksmi Kusumawati, Director of Trade, Investment and Economic Cooperation at BAPPENAS, noted that "the action plans developed provide crucial inputs for the Government Work Plan (RKP) 2024 and the early stage planning of RPJMN 2025-2029."
