Schroders Says There Are Three Main Factors For Indonesia To Release The Middle Income Trap

Photo: Doc. Antara

JAKARTA - President Director of Schroders Investment Management Michael Tjoajadi conveyed three main factors so that Indonesia can escape from the'middle income trap' and reach developed countries.

The three factors include demographics, decarbonization, and deglobalization, Michael said in a seminar entitled "New Optimism for Economic Development of the Prabowo-Gibran Government Era" in Jakarta, Thursday, August 29.

In the midst of a demographic bonus, he said that Indonesia needs to increase the capabilities and capacity of Human Resources (HR), so that it will be able to compete at the global level in the future.

"The number of our population is quite large, it is interesting to become a market, it is interesting to do consumption. However, we also have to advance to class, the people here must advance to class," said Michael, quoted from Antara.

He explained, one of the efforts to improve the quality of human resources, including by increasing investment in this sector.

"For example, LPDP scholarships must be pushed. More are sent abroad to learn science, more," said Michael.

Then, deglobalosing, he said Indonesia needs to improve the performance of the manufacturing sector so that it can compete at the global level.

"Manufacturing is important," said Michael.

Then, decarbonization, he explained that Indonesia needs to fix regulations related to decarbonization.

"We need capital, we attract foreign to inject capital. However, we don't have a rule for it (decarbonization). So, they (asing) are wondering why they should invest," said Michael.

On the same occasion, the Expert Staff of the Coordinating Minister for Economic Affairs Raden Pardede said that the manufacturing sector was an option that could save the middle class.

"The problem is in the middle class, the pillars are the formal and manufacturing sectors whose productivity is relatively high," said Raden.

According to him, the participation of the middle class in the manufacturing sector is considered to be able to improve the quality of manufacturing products, which if this happens, then manufacturing productivity can work and the middle class has adequate income to support their purchasing power.

"So, the economy will move on its own because the purchasing power is strong to buy our goods, and the manufacturing is also working," said Raden.