Country context

Indonesia continues to see significant economic growth. The country’s gross national income per capita has steadily risen from $2,200 in 2000 to $3,563 in 2012.

In terms of macroeconomic stability, Indonesia has managed to meet many of its fiscal targets, including a significant drop in Debt-to-GDP ratio from 61 percent in 2003 to 26 percent in 2013.

Indonesia has formulated a long-term development plan which spans from 2005 to 2025. It is segmented into 5-year medium-term plans, each with different development priorities. The current medium-term development plan covering 2009-2014 is the second phase and focuses on:
    • Promoting the quality of human resources;
    • Developing science and technology;
    • Strengthening economic competitiveness.

However, considerable challenges remain.

Out of a population of 237 million, more than 28 million Indonesians currently live below the poverty line and approximately half of all households remain clustered around the national poverty line set at 200,262 rupiahs per month ($16.6).

Employment growth has been slower than population growth. Public services remain inadequate. Indonesia is also doing poorly in a number of health and infrastructure related indicators, and as a result, may fail to reach some of the Millennium Development Goals (MDG) targets.

For example, data from 2013 shows that Indonesia still suffers 228 deaths per every 100,000 live births, while the MDG aims to reduce this to 105 deaths by 2015. Maternal mortality remains high, and may not meet the MDG target.

Also, despite recent progress, only 68 percent of the population has access to improved sanitation facilities currently, which is significantly lower than the MDG target of 86 percent.

The investment climate, though still positive, may also be impeded due to regulatory uncertainties, shortcomings in infrastructure provision, and adjustments in minimum wages.