MP3EI 2011-2025
The Master Plan for Accelerating and Expanding
Indonesia’s Economic Development
An Overview of Concept and...
Structure of Presentation
•
•
•
•

Purpose of presentation
Indonesian 2025’s Vision
What’s & What’s not MP3EI?
Objectives ...
Purpose of Presentation
• Introduce basic concept and strategic elements
of MP3EI to the team members GIZ
Decentralisation...
Background
Geopolitical and
geoeconomic position
of Indonesia
Natural resources
endowment
Demography bonus

INDONESIA
Indonesia 2025’s Vision
“Propelling Indonesia into a developed
nation, to be one of the ten world largest
economies by 202...
The 2025’s Vision focuses on three main goals:

• Increase added value, expand value chain
and efficiency of industries:
•...
What’s and What’s not MP3EI?
• MP3EI is a roadmap to transform Indonesia’s economy, to
accelerate economic growth and to i...
Objectives of MP3I
“Propelling Indonesia into a developed nation, to be one of the
ten world largest economies by 2025, an...
MP3EI Estimated Investments
Strategic Framework of MP3EI

Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
Programs and Main Activities of MP3EI

Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
Institutional Setup of MP3EI
Director

: President of Republic Indonesia

Vice of Director

: Vice President of Republic I...
The Six Economic Corridors

Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
Annual Growth Target for The Six Corridors in Year 2025
% GDP Nominal Growth (2010-2025)

Source: Coordinating Ministry of...
The Framework of Indonesia’s Connectivity

Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs
The objectives of the national connectivity strengthening

1. Connecting the centers of major economic growth based on the...
Human Resource Development
• Academic Education Program ➜ developing higher formal
schools (university academic & polytech...
Human Resource Development: The Proposed
Innovation Initiatives

Source: Coordinating Ministry of Economic Affairs: MP3EI ...
Challenging Issues and Constraints

Source: Author’s compilation
Challenging Issues and Constraints

Source: BPS
Problematic Factors for Doing Business
In Indonesia

Source: World Economic Forum: The Global Competitiveness Report 2013-...
Indonesia’s Doing Business Rank*
DB 2012
(of 183
economies)

DB 2014
(of 189
economies)

Ease of Doing
Business:

129

120...
Indonesia’s Rank on Doing Business Topics*

*) Source: World Bank 2013: Doing Business 2014
Indonesia’s & Southeast Asia’s Doing Business Rank since 2011
Doing Business Rank
State

2011

2012

2013

Singapore

1

1...
Time Dealing with Construction Permits in Indonesia

Source: World Bank, Doing business in Indonesia, 2012
Indonesia’s Doing Business Rank 2014

Source: World Bank 2013: Doing Business 2014
Time and Procedures to Start a Business since 2010
in Selected Countries in Asia-Pacific

Source: World Bank, Doing busine...
Investor Confidence Index 2013

Source: The 2013 A.T. Kearney Foreign Direct Investment Index
Logistic Performance Index (155 Countries)
Global Rank
Countries

2010

2012

Malaysia

29

29

Philippines

44

52

Vietn...
Discussion and Concluding Remarks
• Indonesia has made significant progress in improving national economy and
global compe...
References:
• A.T Kearney (2013), Foreign Direct Investment Confidence Index. Back to Business:
Optimism Amid Uncertainty....
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  1. 1. MP3EI 2011-2025 The Master Plan for Accelerating and Expanding Indonesia’s Economic Development An Overview of Concept and Implementation Issues Dr. Astia Dendi Component Team Leader Policy Advice & Networking Decentralisation as Contribution to Good Governance Program (GIZ-DeCGG)
  2. 2. Structure of Presentation • • • • Purpose of presentation Indonesian 2025’s Vision What’s & What’s not MP3EI? Objectives and Strategic Frameworks of MP3EI: • Issues and Constraints in MP3EI Implementation • Concluding Remarks
  3. 3. Purpose of Presentation • Introduce basic concept and strategic elements of MP3EI to the team members GIZ Decentralisation as Contribution to Good Governance Program (DeCGG); • Discuss some issues and constraints of MP3EI implementation • Food for thought: Bureaucracy Reform & MP3EI
  4. 4. Background Geopolitical and geoeconomic position of Indonesia Natural resources endowment Demography bonus INDONESIA
  5. 5. Indonesia 2025’s Vision “Propelling Indonesia into a developed nation, to be one of the ten world largest economies by 2025, and to be one of the six world largest economies by 2050 through high, inclusive, and sustainable economic growth.” Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  6. 6. The 2025’s Vision focuses on three main goals: • Increase added value, expand value chain and efficiency of industries: • Integrate domestic market to enhance competitiveness and strengthen the national economy; • Strengthen the national innovation system towards an innovation-driven economy.
  7. 7. What’s and What’s not MP3EI? • MP3EI is a roadmap to transform Indonesia’s economy, to accelerate economic growth and to improve competitiveness; • MP3EI is a working document to implement the Long Term Development Plan 2005 -2025: • MP3EI provides direction of development for specific economic activities (8 programs & 22 economic activities), requirement for the investment and the improvement of the regulatory framework; • The MP3EI is not a substitute for the National Mid Term Development Plan (RPJMN) and not a substitute for the ongoing national and regional development programs;
  8. 8. Objectives of MP3I “Propelling Indonesia into a developed nation, to be one of the ten world largest economies by 2025, and to be one of the six world largest economies by 2050 through high, inclusive, and sustainable economic growth.” Objective Indicators: Income per capita will shift from USD 3,000 to around USD 15,000 with GDP of around USD 4-5 trillion in 2025. Real economic growth of 7 - 9 percent per year Rate of inflation is 3% by 2025 Improved equality Etc.
  9. 9. MP3EI Estimated Investments
  10. 10. Strategic Framework of MP3EI Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  11. 11. Programs and Main Activities of MP3EI Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  12. 12. Institutional Setup of MP3EI Director : President of Republic Indonesia Vice of Director : Vice President of Republic Indonesia Executive Director (Ketua Harian) : Coordinating Economic Minister Deputy 1 : Minister of National Development Planning Agency Deputy 2 : Coordinator for National Economic Committee Members : • 22 Ministers • Cabinet Secretary • Head of Indonesia Investment Coordinating Board • Head of National Land Agency • Head of National Innovation Committee • Chairman of Chamber of Commerce Source: Presidential Decree No. 32 year 2011 on MP3EI 2011-2025
  13. 13. The Six Economic Corridors Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  14. 14. Annual Growth Target for The Six Corridors in Year 2025 % GDP Nominal Growth (2010-2025) Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  15. 15. The Framework of Indonesia’s Connectivity Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs
  16. 16. The objectives of the national connectivity strengthening 1. Connecting the centers of major economic growth based on the principles of integration, through “inter-modal supply chain systems”. 2. Expanding economic growth through accessibility improvement from the centers of growth to the hinterland. 3. Distributing the benefits of economic development by improving the quality of connectivity to the less developed areas, isolated areas, and border areas in order to achieve equitable economic development.
  17. 17. Human Resource Development • Academic Education Program ➜ developing higher formal schools (university academic & polytechnic) and university research centers nationally: • Vocational Education Program ➜ the development of community colleges in every capital city, and the development of education vocational schools. • The development of job trainings and certification bodies: • The enhancement of technological competence and skills: • The development of a national sustainable innovation system (see next slide):
  18. 18. Human Resource Development: The Proposed Innovation Initiatives Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025
  19. 19. Challenging Issues and Constraints Source: Author’s compilation
  20. 20. Challenging Issues and Constraints Source: BPS
  21. 21. Problematic Factors for Doing Business In Indonesia Source: World Economic Forum: The Global Competitiveness Report 2013-2014
  22. 22. Indonesia’s Doing Business Rank* DB 2012 (of 183 economies) DB 2014 (of 189 economies) Ease of Doing Business: 129 120 Starting a business 155 Time and Cost for starting Business in Indonesia** Dealing with 71 construction permits Getting electricity 45 44 42 161 175 39 35 34 88 39 34 31 29 29 28 31 29 27 121 32 30 27 29 26 26.3 26.6 Registering property 99 101 Getting credit 126 86 Protecting investor 46 52 Paying taxes 131 137 Trading across borders 47 54 Enforcing contracts 156 23.5 24.3 147 17.8 17.9 18.5 19 19.3 21.2 19.7 20.2 20.5 Time, days (left scale) Resolving insolvency 146 22 22 22.2 22.4 22.7 22.9 Cost, % of income per capita (right scale) 144 *Source: Compiled from World Bank: Doing Business Reports **Source: World Bank, Doing business in Indonesia, 2012 30.8
  23. 23. Indonesia’s Rank on Doing Business Topics* *) Source: World Bank 2013: Doing Business 2014
  24. 24. Indonesia’s & Southeast Asia’s Doing Business Rank since 2011 Doing Business Rank State 2011 2012 2013 Singapore 1 1 1 Malaysia 23 18 12 Thailand 16 17 18 Brunei Darussalam 86 83 79 Vietnam 90 98 99 Indonesia 126 129 127 Cambodia 138 138 133 Philippines 134 136 138 Lao PDR 163 165 163 Source: Compiled from World Bank, Doing Business Report
  25. 25. Time Dealing with Construction Permits in Indonesia Source: World Bank, Doing business in Indonesia, 2012
  26. 26. Indonesia’s Doing Business Rank 2014 Source: World Bank 2013: Doing Business 2014
  27. 27. Time and Procedures to Start a Business since 2010 in Selected Countries in Asia-Pacific Source: World Bank, Doing business in Indonesia, 2012
  28. 28. Investor Confidence Index 2013 Source: The 2013 A.T. Kearney Foreign Direct Investment Index
  29. 29. Logistic Performance Index (155 Countries) Global Rank Countries 2010 2012 Malaysia 29 29 Philippines 44 52 Vietnam 53 53 Thailand 35 38 Indonesia 75 59 Cambodia 129 101 Lao PDR 118 109 Source: Compiled from the World Bank (http://lpi.worldbank.org/)
  30. 30. Discussion and Concluding Remarks • Indonesia has made significant progress in improving national economy and global competitiveness; but facing some problematic issues. • MP3EI calls for a whole government approach • Quality of governance matters: Build on integrity, harmonize and simplify regulations, promote vertical and horizontal coordination & collaboration, and evidence-based policy making; • What are appropriate incentives for boosting private sector involvement/investment? • Land acquisition: State Law VS Adat Laws (e.g. Law 22/ 2012 and Presidential Regulation 71/ 2012)? • Need for Local stakeholders ownership: stakeholders fora for MP3EI? • Shift from Business as Usual to Innovation-Driven: A Great challenge for Bureaucracy Reform!
  31. 31. References: • A.T Kearney (2013), Foreign Direct Investment Confidence Index. Back to Business: Optimism Amid Uncertainty. • Bappenas (2011), Sustaining Partnership: National Connectivity 2011 Special Edition. • Coordinating Ministry For Economic Affairs (2011), Master plan for Acceleration and Expansion of Indonesia Economic Development 2011-2025. • Strategic Asia (2012). Implementing Indonesia’s Economic Master Plan (MP3EI): Challenges, Limitations and Corridor Specific Differences, can be accessed at: http://www.strategic-asia.com/pdf/Implementing%20the%20MP3EI%20Paper.pdf • World Bank, Doing Business in Indonesia 2012. • “Land restriction put brakes on MP3EI Growth”, Jakarta Post, Tuesday, 11 June 2013, can be accessed at: http://www.thejakartapost.com/news/2013/06/11/land-restrictions-putbrakes-mp3ei-growth.html • “MP3EI infrastructure projects flounder as govt fails to act”, Jakarta Post, Friday, 31 August 2012, can be accessed at: http://www.thejakartapost.com/news/2012/08/31/mp3eiinfrastructure-projects-flounder-govt-fails-act.html • Presidential Decree No. 32 year 2011 on MP3EI 2011-2025

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