"If we want to escape the middle-income trap, it (Indonesia’s gross national income per capita) must be increased at least three times from the current level of about US$4 thousand (Rp58.99 million) to reach US$12 thousand (Rp176.97 million) by 2035,” he said here at the opening of the 2023 Indonesia Digital Finance and Economy Festival (FEKDI) on Monday (May 8).
If Indonesia’s gross national income per capita can reach US$12 thousand, the country would become the world’s 7th largest economy, he added.
It is important to strengthen the domestic market through digitalization as one of the supports, backbones, and accelerators of Indonesia's economic growth, the coordinating minister emphasized.
He noted that the attempt is necessary so that Indonesia’s economic growth can be maintained at 6 percent to help the nation escape from the middle-income trap.
Hence, the government is expanding the establishment of the telecommunications network infrastructure, starting to implement 5G, and encouraging the use of low Earth orbit (LEO) satellites in some regions to maintain good connectivity at less cost, he pointed out.
Furthermore, Hartarto said he expected that the digitalization of local currencies will support economic activities, especially regarding peer-to-peer (P2P) payments since people will not need to use American dollars anymore as they will be able to use their own country’s currencies for completing a transaction.
He noted that the attempt would reduce the cost for economic players, since there is always a service fee for buying and selling foreign currencies.
A study by Temasek and Bain & Company showed that Indonesia’s digital economy reached a value of US$77 billion (Rp1,135.5 trillion) in 2022 and would continue to grow to US$130 billion (Rp1,917.2 trillion) by 2025, he informed.
The coordinating minister said that currently, Indonesia's market share in the digital economy sector is 40 percent of the total ASEAN digital economy transactions.
The country also has 1 decacorn, 11 unicorns, and more than 2 thousand startups, he said.
"In the future, (the contribution of Indonesia’s) digital economy is expected to reach 20 percent of the gross domestic product (GDP)," he added.
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