The main economic challenges for the Prabowo government – Academy

Jokowi has laid important foundations, especially in infrastructure, to guide Indonesia towards its goal of becoming a high-income country. His administration saw the completion of some 200 infrastructure projects, from roads, dams and ports to the highly ambitious new capital, Nusantara. However, the new leadership faces the challenge of ensuring that these projects actually serve Indonesia’s larger vision.

An important part of this vision, known as Golden Indonesia 2045, is based on leveraging already built infrastructure. The question is how the new government can maximize these resources to address Indonesia’s three key structural challenges: uneven regional development, a significant gap in human capital, and the pressing need for environmental sustainability. One of Indonesia’s most glaring problems is regional disparities.

While Java dominates the country’s economy, contributing more than 58 percent of its gross domestic product, the rest of the archipelago, especially eastern regions such as Papua, Maluku and Nusa Tenggara, lag far behind. For too long, development has been concentrated in Java and other large cities, leaving these areas with fewer job opportunities, lower incomes and limited access to services.

Jokowi’s administration took major steps to address this imbalance, investing in ambitious projects such as roads and ports in underdeveloped regions. The move of its capital to Nusantara is a bold move aimed at redistributing economic growth. But building infrastructure alone is not enough. The real challenge for the Prabowo and Gibran government is to ensure that these projects work efficiently to uplift the people who need them most.

A central part of this strategy should be improving connectivity between regions. Improving transport and logistics networks, especially between Java and other key islands such as Sumatra, Borneo and Papua, is critical. Lowering the cost of transporting goods and improving trade routes could spur growth in industries such as agriculture, fishing and tourism, sectors with untapped potential in historically neglected areas. The government must also review existing Special Economic Zones (SEZs) to ensure that they fulfill their role of promoting regional development. Another essential aspect of connectivity is digital infrastructure.

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Expanding Internet access to rural and remote areas will help reduce the digital divide and open up new economic opportunities. Indonesia’s digital economy is booming, especially in sectors such as e-commerce and financial technology. By expanding projects like the Palapa Ring and leveraging newer technologies like Starlink, the government can offer rural businesses access to larger markets and digital financial services, increasing productivity and growth.