SINGAPORE – Sceptics have doubted new Indonesian President Prabowo Subianto’s ambitious goal of 8 per cent annual economic growth during his first term, up from about 5 per cent in recent years.
But the man enlisted by Mr Prabowo to lead a team to achieve that vision has a multi-pronged strategy for how that can be achieved.
“We can achieve that gradually,” Mr Luhut Pandjaitan, Indonesia’s newly appointed chairman of the National Economic Council (DEN), said on Nov 12 in an exclusive interview with The Straits Times.
He outlined plans to first digitalise and reform government services for better efficiency and transparency.
A second prong is an export-oriented growth strategy, aided by efforts to court investments. These could help the nation meet the annual growth target of 8 per cent that President Prabowo has set the country to achieve by his third year in office.
Indonesia’s economy has expanded by about 5 per cent annually over the past five years and enjoys relatively low inflation of below 3 per cent.
So the country is “still in good shape”, said Mr Luhut, who attended the ST Asia Future Summit in Singapore on Nov 12, during which he delivered a special address and was part of a panel discussion.
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The one-day forum organised by ST was attended by thought leaders, ambassadors and government officials.
Until recently, Mr Luhut was Indonesia’s coordinating minister for maritime affairs and investment and a powerful focal point of the previous Joko Widodo presidency.
He is also a special adviser on digitalisation and government technology.
That background is a strength. “I’m part of the previous government, so we learn from the past, and we make it better today,” he said.
Growing Indonesia’s economy has been at the forefront of the Prabowo administration’s national agenda.
Mr Prabowo, inaugurated on Oct 20 for a five-year term, has also laid out what some have deemed to be ambitious growth targets and policies.
In early November, he assembled a team of economic advisers also known as DEN, with Mr Luhut as its head.
The 8 per cent target for growth will be gradual, explained Mr Luhut, saying that one priority for DEN is to implement a digital framework for public-sector data processing.
This will enhance transparency, promote efficiency and improve fiscal management.
An example is the INA-Digital platform launched earlier in 2024 that will consolidate the 27,000 government-related mobile apps into one single app to streamline public services. The benefits go beyond the economic, Mr Luhut said.
“You deal with the machine. You cannot bribe a machine,” he said, referring to the use of digital platforms, which could eliminate corruption and bribery in areas like procurement and licensing processes.
The current global landscape is shaped by various short- and medium-term challenges, including the conflicts in the Middle East and Europe, the economic slowdown in China, as well as the imminent return of Donald Trump to the White House in his second term as US president, said Mr Luhut, in unpacking worldwide disruptions and risks during his special address at the summit.
“Despite these real challenges, the Indonesian economy is expected to continue to grow strongly,” he added.
Citing Mr Prabowo’s plans for reform that will also look at ensuring responsible and sustainable use of Indonesia’s wealth of resources, reducing inefficiencies and improving the quality of fund allocation, Mr Luhut said that these will go hand in hand with fiscal discipline and more productive spending.
Programmes that will receive priority include a free-meal programme that aims to feed 83 million Indonesians by 2029.
One other area for reform is moving Indonesia’s export industry up the value chain – from exporting raw materials such as copper, tin and seaweed to exporting higher-value-added goods through downstreaming, said Mr Luhut.
Indonesia’s downstreaming policy has focused on developing the country’s refining and manufacturing sectors utilising its raw minerals.
It is this process of downstreaming that has evolved Indonesia’s economic structure and allowed it to play a growing role in electric-vehicle production.
The country boasts the world’s largest nickel reserves and, in 2023, produced about 40 per cent of the world’s supply of nickel, which is used to make stainless steel and is also vital to the production of electric car batteries.
“Indonesia will continue to reform, increasing its competitiveness by improving its economic efficiency,” said Mr Luhut.
The eight-member economic task force that Mr Luhut heads is also staffed with notable figures such as former trade minister Mari Elka Pangestu, former finance minister Muhammad Chatib Basri and investment banker-turned-bureaucrat Septian Hario Seto.
The DEN, which existed briefly under then President Abdurrahman Wahid from 1999 until 2001, will play a key role in giving advice and recommendations directly to the President on wide-ranging strategic policies and in monitoring policy implementations.
The council has submitted some of the above recommendations to Mr Prabowo, said Mr Luhut, adding that these suggestions are free from conflict of interest and backed by data.
“(Mr Prabowo) has responded very positively,” said Mr Luhut, noting that each report will be presented and discussed with the President and sometimes other ministers.
Indonesia is also seeking economic growth by increasing investor-friendly policies.
Under the previous administration, it had already been building relationships with top industry leaders, including Mr Elon Musk, who helms Tesla and SpaceX, and tech giant Nvidia’s co-founder, Mr Jensen Huang.
Mr Luhut said he is scheduled to meet Mr Huang on Nov 13 in Jakarta, adding that discussions will revolve around possible “research and investment” in Indonesia.
“If you treat people well and bring hope to them, of course, they will pay attention,” said Mr Luhut. “Like Elon Musk, (who) has had a very good experience with Indonesia, and now we are becoming good friends.”