Indonesia targets regional growth and SME support to escape middle income trap

The Indonesian government is intensifying efforts to drive regional economic growth to help the nation escape the middle income trap. During a coordination meeting in Jakarta, Minister of Home Affairs Muhammad Tito Karnavian emphasized that the central and regional governments must work together to ensure high economic growth, suggesting that double-digit growth may be necessary to transition from a developing to a high-income nation.

To support this, the Ministry of Home Affairs is evaluating regional budget realization to prevent year-end spending accumulation and encourage faster circulation of funds. Additionally, regional governments are being urged to simplify investment processes to create jobs and stimulate local economic activity. Minister of National Development Planning (Bappenas) Rachmat Pambudy noted that high growth must be accompanied by increased productivity and equitable distribution.

In a related effort to bolster the economy, legislator Bambang Haryo Soekartono is calling for stronger support for small and medium manufacturing industries (IKM). He highlighted the need for improved access to capital, digital market promotion, vocational education, and easier access to Indonesian National Standards (SNI) certification to ensure these businesses can sustain growth and provide local employment.