Despite slowing down in recent years, Indonesia’s growth trajectory remains impressive. The country’s gross national income per capita (Atlas method) has steadily risen, from $560 in the year 2000 to $3,650 in 2014. Today, Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20. It has made enormous gains in poverty reduction, more than halving the poverty rate since 1999, to 11.2 percent in 2014.
Indonesia’s economic planning follows a 20-year development plan, spanning from 2005 to 2025. It is segmented into 5-year medium-term plans, each with different development priorities. The current medium-term development plan – the third phase of the long-term plan -- runs from 2015 to 2020, focusing, amongst others, on infrastructure development and improving social assistance programs in education and health-care. Such shifts in public spending has been enabled by a reform of long-standing energy subsidies, allowing for more investments in programs that directly impact the poor and near-poor.
Considerable challenges remain in achieving Indonesia’s goals.
Out of a population of 252 million, 28.6 million Indonesians currently live below the poverty line and approximately 40 percent of all people remain clustered around the national poverty line set at 330,776 rupiah per person per month ($22.6).
Employment growth has been slower than population growth. Public services remain inadequate by middle income standards. Indonesia is also doing poorly in a number of health and infrastructure related indicators.
For example, data from 2013 shows that Indonesia still suffers 228 infant deaths for every 100,000 live births, while the MDG aims to reduce this to 105 deaths by 2015. At 190 maternal deaths for every 100,000 live births, maternal mortality also remains high.
Also, despite recent progress, access to hygienic toilet facilities currently stands at 68 percent of the population, which remains significantly short of the MDG target of 86 percent.
The investment climate, though generally positive, faces continued regulatory uncertainties and shortcomings in infrastructure provision. However, the Investment Coordination Board has established a One-Stop-Service for business licensing and plans further streamlining of regulations.
Last Updated: Oct 06, 2015