Indef: Cawapres Must Explain In Detail The Strategy For Economic Growth Above 6 Percent

Illustration. (Photo: Unsplash)

JAKARTA - Deputy Director of the Institute for Development of Economics and Finance (Indef) Eko Listiyanto hopes that vice presidential or vice presidential candidates can provide a more detailed explanation of their strategy to achieve economic growth above 6 percent in the vice presidential debate which will be held on December 22, 2023 tomorrow.

"Economic growth, although not everything is an indicator to predict whether Indonesia can become a developed country in the future. This is important to explain in the debate later," said Eko in an online public discussion in Jakarta, quoted from Antara, Thursday, December 21.

Pair number 1 Anies Baswedan-Muhaimin Iskandar targets economic growth of 5.5-6.5 percent, pair number 2 Prabowo Subianto-Gibran Rakabuming Raka targets economic growth of 6-7 percent, while pair number 3 Ganjar Pranowo-Mahfud MD targets the economy to grow 7 percent

Eko highlighted the economic growth targets of these various candidates. Even though the target is ambitious, he sees it can be realistic, with the right strategic record.

However, he warned that growth above 6 percent requires financial sector support, especially in liquidity. The banking credit rate, which currently only grows 9 percent, must reach a minimum of 20 percent to avoid middle-income traps and achieve high-income country status.

"Credit growth which is only 10 percent will be difficult to achieve economic growth of 6 percent, unless concrete steps are taken to support the vision and mission of the candidates for leaders," said Eko. Eko emphasized the need for clear ideas and programs from candidates to overcome these obstacles.

Eko hopes that in the context of seeking funds to accelerate liquidity, the candidates can collaborate on strategies to improve governance efficiency, ensure lower ICOR, and reduce investment costs in Indonesia.

ICOR or Incremental Capital Output Ratio, is the ratio between additional capital needed to generate additional output or output. High ICOR shows that investment in a country costs a lot of money. Eko identified high logistics costs and potential industrial imports as factors that caused ICOR in Indonesia to be high. He also highlighted the decline in the trend of economic growth to 5.05 percent in the last three quarters. "This shows that efforts to increase economic growth must be carried out comprehensively," said Eko.