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. 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. 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. Background
Geopolitical and
geoeconomic position
of Indonesia
Natural resources
endowment
Demography bonus
INDONESIA

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. 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. 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. 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. MP3EI Estimated Investments

10. Strategic Framework of MP3EI
Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025

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

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. The Six Economic Corridors
Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025

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. The Framework of Indonesia’s Connectivity
Source: MP3EI 2011-2025, Coordinating Ministry of Economic Affairs

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. 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. Human Resource Development: The Proposed
Innovation Initiatives
Source: Coordinating Ministry of Economic Affairs: MP3EI 2011-2025

19. Challenging Issues and Constraints
Source: Author’s compilation

20. Challenging Issues and Constraints
Source: BPS

21. Problematic Factors for Doing Business
In Indonesia
Source: World Economic Forum: The Global Competitiveness Report 2013-2014

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. Indonesia’s Rank on Doing Business Topics*
*) Source: World Bank 2013: Doing Business 2014

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. Time Dealing with Construction Permits in Indonesia
Source: World Bank, Doing business in Indonesia, 2012

26. Indonesia’s Doing Business Rank 2014
Source: World Bank 2013: Doing Business 2014

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. Investor Confidence Index 2013
Source: The 2013 A.T. Kearney Foreign Direct Investment Index

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. 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. 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