Indonesia Strengthens Cooperation With India To Boost Economic Growth And Investment

Indonesia Strengthens Cooperation With India To Boost Economic Growth And Investment

Monday, 09 Dec 2024

Indonesia is actively expanding its economic opportunities by strengthening international partnerships, particularly with India. Through this collaboration, Indonesia aims to stimulate economic growth, projected to reach 5% in 2024 and 5.2% in 2025. Under the leadership of President Prabowo, the nation harbors ambitious goals to achieve an economic growth target of 8% by 2029.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, emphasized that economic transformation is a priority for the government, focusing on industrial downstreaming, enhancing the digital economy, developing a semiconductor ecosystem, and transitioning to environmentally friendly energy sources.

“To achieve these growth targets, funding is essential for implementing development programs, with investment being crucial for financing. Indonesia will undertake necessary measures to optimize infrastructure to reduce the Incremental Capital Output Ratio (ICOR), thereby making investment and productivity key sectors,” stated Airlangga on Sunday, December 8, 2024.

India is a significant partner for Indonesia, with bilateral trade reaching approximately US$ 27 billion in 2023 and growing at around 20% annually. The government anticipates that economic cooperation between Indonesia and India will encompass various sectors, including digital, small and medium enterprises (SMEs), healthcare—such as vaccine and pharmaceutical development—telecommunications, and other strategic areas.

For Indonesia, India is a strategic partner not only in trade but also in investment. It is essential for Indonesia to establish a connection with India that links products made in Indonesia with those made in India, stated Airlangga.

The addition of manufacturing value and downstream processing can enhance growth in the region. Currently, Indonesia has 22 sectors within its Special Economic Zones (SEZs), with an additional 7 sectors under development, focusing on downstream processing, the establishment of health centers, educational institutions, and digital data centers. Notably, Indonesia's nickel exports have surged from USD 4 billion in 2015 to nearly USD 35 billion in 2023.

Airlangga emphasized that the lessons learned from nickel downstream processing could also be applied to other commodities, including the agricultural sector. Indonesia is the world's largest producer of palm oil, generating approximately 50 million tons annually.

The economic slowdown in several partner countries, such as China, has impacted Indonesia's economic growth. However, Airlangga asserted that Indonesia's economic fundamentals remain robust. This is evidenced by the low annual inflation rate of 1.71%, reflecting the effectiveness of government policies in maintaining price stability and consumer purchasing power. Additionally, Indonesia's debt-to-GDP ratio is below 40%. Given these strong economic fundamentals, Airlangga encourages the Indonesia-India partnership to bolster economic growth for the welfare of both nations.

"Let us seize the opportunities available to further strengthen our partnership and create a prosperous future for our people," Airlangga said. (putri@insightinnews.com)

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