A developed country in 2045: Jokowi’s figures in plain English
IN his speech to kick-start his second term on Sunday,IndonesianPresident Joko “Jokowi” Widodo used the word “dream” twice when talking about his vision for Indonesia to be a developed country in 2045.
The target does reflect one big dream, but most Indonesians may be confused about what the numbers mean in everyday language. The Jakarta Post guides you through the targets, the numbers and terms that may be Greek to you to help you make sense of the speech.
Middle income trap
“Our dream, our ambition is that by 2045, after one century of Indonesian independence, Indonesia should, Insya Allah [God willing], have escaped the middle-income trap.”
The middle-income trap is a development economics term that, in short, describes an economy being stuck at middle-income level without progressing to be rich.
By World Bank standards, people in countries with “middle income” status earn between $1,000 and $12,000 per person per year. For illustration, $1,000 will buy you things like a mid-range motorcycle or an iPhone XR in Jakarta. With $12,000 you can buy a humble 30sqm home in the outermost parts of the capital city.
Avoiding this middle-income stagnation is crucial for countries with a large working-age group like Indonesia, where people aged 15 to 64 years account for almost 68 per cent of the overall population. A greater share of working-age people means greater chances to boost the economy and overall income.
So, where does Indonesia stand now in terms of income? As of last year, Indonesia’s gross domestic product (GDP) per capita – a universal measure of a country’s prosperity – was $4,284. This level earns the country the “middle income” status in the World Bank’s classification and is just above the $3,955 threshold separating lower-middleincome countries from uppermiddle-income countries.
Annual income: $23K
“Indonesia will have become an advanced country with an annual income of 320 million rupiah per capita or a monthly income of 27 million rupiah per capita.”
Jokowi’s target of 320 million rupiah in per-capita annual income in 2045 means that Indonesians will – on average – earn 320 million rupiah per person each year, or 27 million rupiah per month. That will be achievable by 2045, according to ‘Jokowinomics’.
At the current exchange rate, 320 million rupiah translates into around $22,700 per capita per year in dollar terms – a more than fivefold increase from today’s level. At today’s level, that would take Indonesia to somewhere near rank 40 globally.
Today, Indonesians rank 104th worldwide in terms of per-capita income, a lthough the countr y is among t he top-20 la rgest economies in terms of nominal GDP. Luxembourg, Nor way, Switzerland, Ireland and Qatar are t he richest in terms of income, while Madagascar,
Sierra Leone, Malawi and Mozambique rank lowest.
$7 trillion GDP
“Our dream is that by 2045, Indonesia’s GDP will have reached $7 trillion.”
A $7 trillion economy would mean that Indonesia’s GDP will increase sevenfold from today’s level by 2045, because the country’s nominal GDP was just a little over $1 trillion last year.
This will earn Indonesia a top-five spot among the world’s largest economies, alongside the US, China and Japan. Today, Indonesia is the 16th-largest economy in the world by nominal GDP.
Poverty rate nearly at zero
“Indonesia will have become one of the world’s top five economies with a poverty rate nearing 0 per cent.”
In March, the poverty rate in Indonesia stood at 9.41 per cent of the population. That means some 25 million Indonesians still live below the poverty line, which is described as spending less than 425,250 rupiah per person per month.
The poverty rate of close to 0 per cent envisioned by the president would be the lowest ever in the history of Indonesia. The country’s poverty rate has been on a declining trajectory from 23.4 per cent in 1998 at the height of the Asian financial crisis.
Scandinavian countries like Denmark, Norway and Sweden have poverty rates of less than one per cent.
Other European countries like Iceland and Switzerland also have close to zero poverty.
In a nutshell
The ‘Jokowinomics’ will see Indonesia be among the topfive largest economies in the world with almost none of its citizens being poor, in 2045, securing the country highincome status. Looking at income targets, however, Indonesians’ prosperity would still rank only at 40th at best compared with the rest of the world.
Apparently, the numbers were run by the National Development Planning Board (Badan Perencanaan Pembangunan Nasional, Bappenas). The Jakarta Post reported in January that Bappenas released the projection during a public discussion on Indonesia’s vision toward 2045, when the country will celebrate its 100th anniversary of independence.