Indonesia, currently the largest economy in Southeast Asia as well as a diverse archipelago nation of more than 300 ethnic groups – has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s. Today, Indonesia is the world’s fourth most populous nation and the world’s tenth largest economy in terms of purchasing power parity. Furthermore, Indonesia has made enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to 9.78% in 2020. Indonesia, recently qualifying the country to reach upper middle income status, is projected to be the world’s fourth largest economy in 2045. This is only possible with consistent growth. Indeed, since 1980, Indonesia has demonstrated the most consistent growth of any economy. With its strategic position and opportunity, Indonesia will play a leading role in advancing the global economic recovery and drive a principal catalyst for the post pandemic-world to reach a new equilibrium.
Over the next five years, Indonesia is expected absorb USD 23 billion in impact investments* which could be materialized in the form of Public-Private Partnership (PPP) projects. Some of these investments are already happening in agriculture, energy and transportation sectors. Given the opportunity and challenges, we believe impact investing in Indonesia has a huge potential, backed by its underserved market.
As the world’s eighth largest greenhouse gas emitter and second-fastest growing economy, Indonesia also has a huge opportunity to boost its economy, shrink its deficit, create jobs and improve its air and water through bold climate action. The country is currently in an excellent position to be a global leader in the transition to a zero-carbon economy. More ambitious climate action at the national level will increase Indonesia’s competitiveness, attract greater investment and support a stronger, better recovery from the COVID-19 pandemic and economic crisis.
Looking ahead, government and corporate leaders can begin to formulate longer-term strategies that will help Indonesia move forward quickly with building a modern economy. In that context, it is essential to understand how the country and the world have evolved and to craft strategies that recognize those changes. The Government will implement green and sustainable measures in recovering the national economy. Therefore, a comprehensive synergy between economic, environment, and social aspects is needed.
