RI predicted to be high-income country by 2045

The Jakarta Post - 9 January 2019

The Jakarta Post, Jakarta

Indonesia can enjoy the demographic bonus and avoid the middle-income trap if it can maintain economic growth of at least 5 percent each year until 2045, National Development Planning Minister Bambang Brodjonegoro has said.

Bambang said if Indonesia could take full advantage of its demographic bonus, it would become a high-income country in 2045, when the country commemorates its 100th anniversary.

"However, economic growth should be kept to at least 5 percent," he said in a reference to the country's growth in the past two years.

"We could even get out of the middle-income trap by 2038 if we do that," Bambang said following a public discussion on Indonesia's vision toward 2045 on Tuesday.

Indonesia is predicted to experience a demographic bonus from 2020 to 2035 as a result of robust economic growth, thanks to a larger working age group, which is expected to reach 70 percent of the total population by 2030.

However, there is growing concern about the sluggish economic growth in the last few years, and many analysts are worried the so-called demographic bonus could instead turn into a disaster.

In addition, Indonesia could fall into the middle-income trap, a situation in which a country suffers economic slowdown after achieving middle-income status and is unable to move to high-income level.

Bambang said to ensure Indonesia did not miss the demographic bonus or demographic dividend, the government would continue to carry out structural reforms so that economic growth could be maintained at 5 percent or more.

"Manufacturing is the main sector to promote growth. Moreover, structural reforms must also be implemented in a bid for sustainable competitiveness," he said. In addition, the government would also improve the vocational training system so that the country's large working group would have the capacity to work in the industrial and service sector, he said.

In 2017, President Joko "Jokowi" Widodo expressed optimism that with the country's large number of productive workers, Indonesia, which is now categorized as a lower-middle income country with a per-capita gross domestic product (GDP) of US$3,600 (as of 2017), would become the world's fourth-largest economy by 2045.

According to a forecast by the Organization for Economic Cooperation and Development (OECD), Indonesia is expected to shift from a middle-income nation to a high-income, or advanced, country by 2045.

President Jokowi also said a demographic bonus would be seen in the period from 2030 to 2035, when 52 percent of the population would be at a very productive age. He stressed that human resource development must be the key for the achievement of this by 2045. In terms of population, Indonesia is the largest country in ASEAN and the fourth-largest in the world, after China, India and the United States.

According to a Statistics Indonesia's (BPS) 2018 report titled "Indonesia Population Projections 2015-2045", Indonesia's population is estimated to surpass 310 million people by 2045.

Gadjah Mada University economist Tony Prasetiantono said the demographic bonus would become a disaster if economic growth fell below 5 percent.

"It is therefore important for the government to accelerate economic growth to at least 6 percent, because with the average growth of 5 percent, most of the people could only work in the informal sector with low productivity and added value," Tony told The Jakarta Post on Tuesday. However, he said it would be difficult to achieve 6 percent economic growth with the growing uncertainties in the global economy.

He said the government should continue to boost infrastructure development and improve human capital as well as the manufacturing sector in order to achieve high economic growth.

Indonesia was predicted to have the fourth-biggest GDP after China, India and the United States by 2050, in a study commissioned by a multinational professional service network

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