Jakarta, February 18, 2025 - Indonesia’s ambitious 8% economic growth require mutually supportive fiscal and monetary policies at a time when geopolitical challenges may affect growth prospects and there’s a need to keep efficiency i check back home.

President Prabowo Subianto had set the 8% economic growth target by 2029, an aim that will be driven by a more efficient government spending and a concerted effort to attract higher quality investment. The large-scale budget cut of 256 trillion rupiah is to be taken from ministries and agencies and 50 trillion rupiah is to be taken from central government transfers to regional administrations.

Chatib Basri, Member of National Economic Council, said the government budget is not the sole most important instrument to promote economic growth in the country. It is attracting investment—both foreign direct and domestic investment—that should be the first priority to boost GDP growth, he said.

Speaking at the 3rd plenary session titled ‘Financial and Monetary Policies to Support High Sustainable Economic Growth" during the first day of the Indonesia Economic Summit today, Chatib Basri, who also previously served as Indonesia’ Finance Minister in 2013-2014, said the country’s efficiency efforts understandable but a closer look on the subject might be needed.

“I can see the justification why the government needs to do budget efficiency but a couple of things that we have to look. I don’t think the government can cut th budget one size fits all across the board,” he said.

The government seeks to attract 1,905 trillion rupiah ($730 billion) in investment this year. In 2029, Indonesia aims to attract 3,414 trillion rupiah in investments.

Lavanya Venkateswaran, Senior ASEAN Economist at OCBC Bank, observed that Indonesia managed to attract larger foreign direct investment but most of it concentrated in the mining sector and a large portion of the FDI came from China. “Diversifying the sources of the engines of growth from just minerals, mining, and resources overall I think it’s important,” she said.

Nicolo Magni, Head of Southeast Asia and South Asia, Global Banking at UBS, said with a growing distribution of value chain, there are new opportunities for Indonesia to capture such as macrochip to power AI and healthcare.

Despite an ongoing trade war between the US and China, speakers believe that Indonesia may be benefited as Chinese companies may look for relocations to be able to export to the US.

“Indonesia is a great spot. You have low inflation, great political stability, and you have a number of policies that are driving growth,” Magni of UBS said.

About the Indonesia Economic Summit (IES): The Indonesia Economic Summit (IES) is an annual initiative of the Indonesia Business Council (IBC). Initiated as a high-level forum for collaboration and innovation, IES seeks to promote competitiveness, inclusive growth, and sustainable prosperity for Indonesia. This forum reflects IBC’s commitment to advancing Indonesia’s role in the global economic arena.

About the Indonesian Business Council (IBC): The Indonesian Business Council (IBC) is an association of CEOs and business/industry leaders of leading companies in Indonesia, established in February 2023. IBC seeks to promote and strengthen Indonesia’s competitiveness, encourage collaboration, and enhance the contribution of the Indonesian private sector to economic growth and prosperity, through advocacy. For media inquiries, please contact:
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