Indonesia is preparing to shift its economic development strategy under President Joko Widodo (popularly known as Jokowi). Amidst the continuing global slowdown, the Jokowi administration sees the need for a new approach that can lift growth rates beyond current levels and create both more and better-paying jobs for Indonesians entering the workplace. Signs indicate that this new approach aims to move Indonesia up the value chain in global production networks, with an emphasis on industrialisation and innovation as new engines for growth. This goes beyond the traditional approach of relying on the resource and commodity sectors.
Indonesia’s aims are ambitious, and many challenging tasks lie ahead for the country. These include rolling out widespread policy changes, providing key infrastructure, reforming the bureaucracy, reforming state-owned enterprises (SOEs), improving the rule of law, and developing a work force with adequate skills and training. This report, originally released at the SIIA’s 9th ASEAN & Asia Forum on Monday 22 August 2016, considers the current and emerging factors that can support the Jokowi government’s economic shift, as well as some of the key challenges that must be addressed.