Indonesia Eyes 6% Growth via High-Quality Investment Strategy
Indonesia's Deputy Finance Minister Suahasil Nazara targets 6% economic growth for 2027, prioritizing high-quality investments and fiscal sustainability.
Indonesia’s government is shifting its focus from raw economic growth rates to fiscal quality. Deputy Minister of Finance Suahasil Nazara emphasized that expanding the nation's economy must translate into tangible state revenue, demanding more strategic investments and robust long-term financing mechanisms.
Speaking in Jakarta on Monday, Aug. 31, Suahasil outlined the government's path toward a target of 6% economic growth by 2027, a goal officially incorporated into the 2027 Draft State Budget (RAPBN). He warned that growth is merely a figure on paper unless it creates a sustainable increase in tax income.
Aligning growth with state revenue
The government and the House of Representatives (DPR) have set a target range for the 2027 economy between 5.8% and 6.5%. Suahasil stated that the strategy relies on a multi-pronged approach, balancing household consumption, investment, industrial strengthening, and exports. Rather than treating growth as a standalone objective, the government is working to overhaul tax administration to ensure that as the economy expands, the tax base broadens proportionally.
The push for high-quality investment
Suahasil stressed that not all investments are created equal. The government is now prioritizing projects that deliver high value-added outcomes. He noted that consistent growth is impossible without stable, long-term financing, especially when the goal is to boost the industrial and export sectors. Simultaneously, the state budget continues to act as a buffer for energy price stability, with the government refining subsidy programs to ensure they reach the intended recipients.
This fiscal strategy is part of a larger, long-term agenda to lift Indonesia out of the middle-income trap despite ongoing global economic volatility.
Green economy and digital potential
The transition to a low-carbon economy is being framed as an economic opportunity rather than a regulatory burden. Suahasil explained that decarbonization acts as a catalyst for efficiency and new investment streams. The government is currently developing a specialized ecosystem through fiscal policies, including carbon pricing, tax incentives for low-emission technology, risk-mitigation schemes, and the issuance of sustainable financial instruments such as Green Sukuk, Blue Bonds, and SDG Bonds (worth billions of dollars when converted from local currency requirements).
Furthermore, Suahasil highlighted that Indonesia’s digital economy remains the largest among its neighbors in Southeast Asia. By channeling this potential into sound, long-term financing, the nation aims to secure its growth trajectory. "The challenge is how economic growth can generate state revenue," Suahasil said, reinforcing the government's commitment to prioritizing fiscal health alongside rapid expansion.