This ambitious target refers to Indonesia's achievements in 1995, during which economic growth reached 8.2 percent.
"The president hopes that our economy can grow at eight percent. Several countries have targeted this number as well, including Vietnam, where they already reached around seven percent," Hartarto remarked at the Bisnis Indonesia Economic Outlook 2025 event in Jakarta on Tuesday.
He noted that consumption, investment, and exports will be the main pillars to achieve the target.
The government aims to maintain growth in the consumption sector within the five to six percent bracket while setting a 10 percent target for investment expansion and actively promoting export growth to reach approximately nine percent.
The minister highlighted that several other sectors projected to be the driving force of growth include manufacturing, especially through industrial downstreaming, services and tourism, the digital economy, the green economy, semiconductors, and construction or housing.
"We are also pushing the manufacturing sector, exports of downstream natural resources and palm oil, and also automotive manufacturing sector," he added.
However, major challenges exist in increasing productivity and optimizing investment.
Hartarto elaborated that given the current investment share of 30.5 percent in the gross domestic product (GDP) and an Incremental Capital Output Ratio (ICOR) of 6.5, the economy remains constrained within the five percent growth range.
"This can be resolved with increased productivity and infrastructure development connected to production areas. That way, we can suppress the ICOR," he explained.
He highlighted that the government is also encouraging labor-intensive and capital-intensive investments, also referred to as capital deepening, as well as increasing the allocation of funds for research, technology, and innovation as a strategy to reduce the ICOR.
Furthermore, he stated that developing Special Economic Zones (SEZ) is also one of Indonesia's initiatives in pursuing the economic growth target of eight percent.
He noted that the massive flow of investment and industrial activities from 24 SEZs in Indonesia could spur higher economic growth.
"In the last few years, we have developed 24 SEZs, with the investment value reaching Rp242.5 trillion (USD14 billion) and employed 151,260 people with business actors approaching 400 companies," he revealed.
Meanwhile, the performance of SEZs in the third quarter of 2024 has recorded an investment realization of Rp68.43 trillion (USD4 billion), with the absorption of 34,169 workers.
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Translator: Bayu Saputra, Resinta Sulistiyandari
Editor: Rahmad Nasution
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