INDONESIA Towards a prosperous, democratic and just economy Indonesia s mediumterm development plans and master plans

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1 INDONESIA Medium-term economic outlook (forecast) percentage change) Medium-term plan GDP growth rates (percentage changes) Average of six ASEAN countries Average of Emerging Asia (average) (average) Theme Source: Basic data (in 2010) Total population 238 million GDP per capita 9.6 million (current USD) Sources: Notes: Six ASEAN countries Emerging Asia ASEAN 10 Average Emerging Asia Average OECD Average Sources: Composition of exports (in 2010) Composition of imports (in 2010) (percentage of total imports) Texles 7% Plascs / Rubber 7% Others 29% Machinery / Electrical 10% Mineral Products 35% Vegetable products 12% Chemicals & Allied Industries 9% Others 24% Transportaon 10% Metals 10% Machinery / Electrical 26% Mineral Products 21% Source: Trademap. Towards a prosperous, democratic and just economy s mediumterm development plans and master plans strengthening of public sector capacity and further consolidation of democracy (Table 3.1.1). SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD

2 Enhancing regional connectivity and human resources are priorities was launched in May 2011 and is complementary to the medium-term plan. The Table Summary of the Development Plan: key development targets Initial status (2008) Target (2014) Economics 8.4 (7.4 in 2010) 5-6 Education Health Maternal mortality rate per live births Infrastructure (13.3 in 2010) 8-10 Source: 86 SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD 2012

3 Structural policy focus s medium-term policy challenges and responses Speed up transport infrastructure development by improving the regulatory environment Improve the outcome of higher education and reduce urban-rural disparities in access to educational infrastructure POLICY FOCUS Speed up transport infrastructure development by improving the regulatory environment which hampers both the internal economic integration and the international competitiveness of the country. been constructed. Though total investment needs for infrastructure development 2 there is room to mobilise national savings for infrastructure development further. Together with an effort to Land acquisition is an additional impediment to accelerating transport infrastructure development. Reforms of the land acquisition process are needed to speed up further infrastructure development. be further harmonised over time. SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD

4 Box Enhancing the use of public-private partnerships: examples from OECD countries The public sector comparator use to assess value for money. Countries such as Germany countries such as Japan and the Netherlands use the public sector comparator prior to the bidding process. Australia, compares France and the United States. PPP units Knowledge Centre in the Netherlands AustraliaUnited Kingdom Political support and engagement of all stakeholders provided. Source: OECD (2008a). POLICY FOCUS Improve the outcome of higher education and reduce urban-rural disparities in access to educational infrastructure Tertiary education in needs to be enhanced as both access to and the quality of university reallocate resources to tertiary education within education sector. The quality of tertiary education in is lagging behind. Although the medium-term development 3 th out of 139 countries in global competitiveness in higher education and training 4 according to the Global Competitiveness Report SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD 2012

5 i.e. 5 Although access to basic education has been steadily improving (highlighted by the increasing enrolment rural-urban disparities. The sub-optimal performance of higher education is an important factor behind the of the urban-rural disparity in education infrastructure can be observed in both enrolment and literacy programmes need to be raised to international standards and the quality of teachers needs to be enhanced if these limitations are to be remedied. th in 2009 among the 65 participating countries in st in mathematics and 60 th Figure Enrolment rates by level of education Figure OECD PISA results 6 from in 2009 (percentage) (score) Primary School Junior High School Senior High School University Reading Mathemacs Science OECD Note: Sources: national sources and OECD has been increasing 7 SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD

6 a special focus on rural school infrastructure development. It is also essential to step up the involvement of POLICY FOCUS Reform labour market regulation to increase employment i.e. sector in ) by the 10 and its labour productivity 11 and 3.1.4). Figure Nature of employment (percentage of total employment) Yogyakarta Banten Formal 11% Formal 24% Informal 89% Informal 76% 12 Figure Contributions to GDP of formal and informal sectors (percentage of total gross value added) Yogyakarta Banten Informal 37% Informal 27% Formal 63% Formal 73% Source: SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD 2012

7 to the formal economy. Reducing the rigidity of labour regulations is also necessary to increase employment. compliance and enforcement of minimum wage regulation. Figure Severance payment for redundancy dismissal Figure Minimum and average wage in (average monthly in IDR) Average of six countries of ASEAN OECD average Minimum wage (nominal, average) Average wage (nominal) Source:Doing Business Source: SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD

8 Notes 2. Total estimated investment needs of for the period of are USD 450 billion. 3. top 400 universities in the world. Among the top 700 universities considered by the QS World University th nd 4. th th th rd between 15 years 3 months and 16 years 2 months at the time of assessment and who have completed SOUTHEAST ASIAN ECONOMIC OUTLOOK 2011/12 OECD 2012