Accelerating Toward Greater and More Sustainable Prosperity

Ten economic priorities within four key policy areas:

Public sector investment and efficiency

Creating clean, lean and efficient government

Improving the flow of goods and information by investing in upgrading
infrastructure
Ensuring economic growth with social inclusion through effective subsidy

Productivity and entrepreneurship

Preparing Indonesias SME to compete in ASEAN market

Increasing depth, responsibility and confidence financial markets
Promoting value-added manufacturing industries

Human Resource Development

Improve education and close the talent gap

Expand access to basic, quality health care

Natural Resources

Ensure Access and Security

Strengthen agriculture and enhance food security

SEDA: Sustainable Economic Development Assessment, a diagnostic tool aimed at

helping countries sharpen their focus on the standard of living of their citizens in
shaping their national strategies
1. Income
2. Economic
3. Employment
4. Income equality
5. Civil society
6. Governance
7. Education
8. Health
9. Environment
10.Infrastructure

Improving the flow of goods and information by investing in upgrading infrastructure

Key Priorities:
Enhance the infrastructure planning process
Indonesias global competitiveness can be increased if the quality of the
infrastructure increasing as well. A strong and efficient infrastructure is necessary in
order for the government to be able to serve its people the quality of Indonesias
overall infrastructure has been steadily improving, however it still need major
improvements in planning process.

Streamline and ensure consistency of bureaucratic processes with

stronger and more effective coordination among government agencies.
Increase in inter-agency coordination leads to better project prioritization and
project implementation mechanism, effort such as clear delineation of roles
and responsibilities would increase governments project-planning
capabilities. To ensure consistency in bureaucratic processes is to cut
inefficiency processes resulting in consistency in policies
Strengthen the governments capabilities in terms of infrastructure
planning. 20 percent of the preparation determines 80 percent of the value
of the project. Therefore it is crucial that the early plans and foundations
maximize the value creation of the project. By strengthen governments
capacity and capability in terms of the infrastructure planning process. To
increase the governments capability infrastructure project analysis training
and web based PPP toolkit can help enhance capacity in planning process.

Provide Better Funding and Enforce Regulation and Accountability

Indonesia will be having projections in the near future for the development of
power, rail, ports and roads. Therefore it needs high level of financing from both
public and private sectors.
Secure Alternative Financing for infrastructure. Despite Indonesias needs of
high level of financing Indonesias allotted investment is relatively low, as well as
the funding from the bank and foreign investment due to potential currency risk.
Therefore government should consider its financing strategy of alternative sources
such as alternative payment like sukuk practices, pension funds and governments
investment agencies, since there are many sizeable investment opportunities
available to private sector. Another alternative payment can be done is to build
professional organizations to help obtain financial leverage, however government
must make sure the lans are properly executed
Strengthen and Clarify authority functions by implementing effective
project management. Lack of strong supervisory and controlling functions in

project implementation resulting in late and neglected projects, clarifying authority

functions will create public accountability for the completion of the infrastructure.

Improve law enforcement for land acquisition. Government should provide

greater support of the enforcement of existing land regulations to reduce constraint
in land acquisition. It can be done supervision and evaluation of relevant agencies.
Improve Productivity of Existing Assets.
A strong utilization is needed for the new infrastructure. Improving the efficiency
and longevity of utilization can be done by optimizing operations and maintenance
(O&M). a week utilization will result to needlessly high costs. O&M can be improved
by providing good roads and ports which will lead to higher logistic performance
that is very important for new infrastructure.
Coordinate and Integrate more closely with related parties for the
provision of infrastructure services. Three best practices for infrastructure
operators can be put into three categories, first increasing the utility of
infrastructure by maximizing asset utilization and enhancing quality for users by
ramping up during peak time, such as introducing integrated system in the airport
for real-time passenger flow forecasting to identify upcoming bottlenecks, this
approach also increased capacity during peak times, it reduces passenger waiting
time and planning time. Second category is decreasing the total cost of
infrastructure by reducing O&M costs and mitigating environmental and social
impact. Due to lack of funding for the infrastructure, there are still many project
such as roads are not in good condition which leads to more maintenance cost,
therefore government should consider allocating more budget portion to O&M
funding for the current infrastructure. Third category is increasing the value of
infrastructure with a whole life-cycle view by extending its lifetime reinvesting in it
with whole life-cycle view.
Strengthen asset-management practices for existing assets by using
framework based on international standard such as ISO to achieve more integrated
asset-management planning, government can also use cost-benefit analysis before
funding projects.
Create Clean,Lean and Efficient Government
Indonesia boasts the largest economy in Southeast Asia, however Indonesian
government institutions currenty rank at 67 on the world banks global
competitiveness, therefore improvement in government bureaucracy with
performance management and open digital government.
Recruit, Retain and Manage Talent in Government Institutions

Many recent graduates choosing to work in multinational corporations instead of

government sector, whereas to create an effective and high-performing civil is by
hiring highly talented workforce.
Recruit the best talent to work in the government. In terms of career
development and compensation, it is hard for the government to compete with
private sectors, therefore government must create a working environment that
values and rewards strong performance, and provides a clear and fast advancement
track for high performers.
Create comprehensive training programs to develop talent. There are
currently various training programs for government officers, ranging from technical
capability training to behavioral training which aim to help employees understand
the importance of combating corruption and promoting cleaner government.
Measure and reward performance based on results by implementing simple,
measurable and actionable KPIs at all level, the government can accurately
measure performance, then reward high performers through variable pay.
Strengthen Coordination between institutions by monitoring role to mitigate
overlap in government would minimize inefficiency and avoid the duplication of
roles.
Increase Transparency and Access to Government Data using online
government services to increase transparency.
Improve participation of government institutions and citizens in open
government via online channels by increasing public awareness of the data and
government services that available online
Promote Crowd sourcing in government to increase public engagement using a
crowdsourcing web-based platform where citizens can submit complaints of
inappropriate practices such as bribery.
Build capabilities and adopt an end-to-end customer-centric service
delivery design to improve the quality of the user experience. The
government should strengthen its service execution by improving online services.
Reform Subsidies to Spur Economic Growth and Equality
Protect the Poor and Reduce Income Equality
Focus subsidies on commodities and services that are most relevant to the
poor. Focus on supporting service for the poor, such as health care and education,
rather than reducing fuel subsidies.

Ensure subsidies reach target populations with minimal leakage with

integrated system such as electronic money system to increase efficiency and
reduce leakage.
Ensure sustainability of Government Spending on Subsidies
Promote sustainable spending on subsidies with equal spending and
development efforts to encourage national efforts.
Promote responsible consumer behavior and subsidy consumption by
reconsidering the subsidy structure which leads to responsible consumer behavior,
also by implementing a conditional cash disbursement program.
Promote Value- Added Industries
Build the Ecosystem and Enable Infrastructure to Drive Competitiveness
Invest in required infrastructure and support services to improve Indonesias
infrastructure and support services.
Attract multinational corporations to Indonesia by setting up special
economic zones to boost the manufacturing sector. The government could
promote special economic zones by offering tax incentives.
Build a local supplier base across industrial clusters through tax
incentives, and with local content. it could have on creating an ecosystem for a
manufacturing hub
Build Better Relationships Between Labor and Industry to Improve Productivity
Developing labor skills through better education and training by
cooperating with firms and educational institutions to ensure that graduates are
market-ready.
Adjust regulation to balance between social welfare and competitiveness,
by allowing more variable based pay to create balance between labor welfare and
competitiveness.
Implement a clear and smooth dispute mechanism to ensure productive
communication among the labor force, companies and government.
Encourage Research and Development Initiatives to Generate Innovation
Collaborate with universities to set up R&D centers such as science parks and
business incubator to encourage innovations.
Provide Incentives to encourage R&D using tax incentives for R&D activities
would encourage innovation and boost productivity.

Build Confidence in and Responsibility of Financial Markets

Increase Penetration of financial services to the lower income customer by

increasing bank branches in rural area, and designing financial product that are
more suitable for the lower income segment.
Promote cross-sector and digital channels by collaborating with core sectors
such as transportation, retail and telecommunication to create more integrated
result in environment to increase awareness among the lower income segment.
Develop transactional payment platforms, by enhancing open platforms would
drive the development of a more efficient payment system
Improve effectiveness of financial literacy, by implementing financial
education programs and promoting an experience-based learning.
Enacts Positive Reforms to Encourage Growth of Indonesian Financial Markets
Implement reforms to encourage local institutional investment such as
promoting pension fund, and reducing tax as incentive for the investors.
Ensure supportive regulation to encourage IPO and bond issuance by
erasing the issuance tax and lowering the requirements for issuing bonds would
encourage market growth.
Increase capital inflow and reduce capital outflow with tax reforms and
diversification of investment options.
Strengthen Consumer Protection through Regulation and Process Enhancement
Improve collaboration between different financial institutions to improve
effectiveness of financial decision-making.
Increase financial transaction transparency and consumer data privacy by
standardizing products, services and fee disclosures, these would also increase
efficiency of financial services.