(Bloomberg) -- Indonesia will need to reform its state-owned enterprises and build up investment if it wants to hit incoming President Prabowo Subianto’s target of 8% annual gross domestic product growth, said the leader of an influential business association.
Prabowo’s growth target is “achievable,” said Arsjad Rasjid, chairman of the Indonesian Chamber of Commerce and Industry, pointing to other five times Indonesia had done so in the past. But policy reform is a must to take Indonesia to that point in the coming years, he said.
“The question is, how much can the government budget fuel growth?” Rasjid told Bloomberg during an interview on the sidelines of the Association of Southeast Asian Nations summit in Laos. “Let’s say 3-4%. We want to go 8%. We need the private sector.”
“Of course in Indonesia we have state-owned companies, but I think there is a need to reform the state-owned enterprises to be more competitive, to be more efficient,” he said.
Southeast Asia’s largest economy is heading for a leadership change with Prabowo set to be sworn in on October 20. He succeeds President Joko Widodo, who was at the helm for a decade marked by steady 5% economic growth, a surge in foreign investment and Indonesia’s rise as a key player in the supply chain for batteries and electric vehicles.
Prabowo aims to take economic growth even higher to 8% during his five-year term. He’s pledged to continue Jokowi’s push to refine more of Indonesian commodities onshore, as well as accelerate the nation’s green energy transition.
That could have an impact on PT Indika Energy, which Rasjid heads. The energy company has sought to diversify its coal business by going into EVs, logistics and gold mining in a gradual shift away from fossil fuels. Indika’s net income fell 77% in the first half of 2024 amid lower gains from its associated entities and joint ventures.
Rasjid said he will step down as chairman of Kadin, as the Indonesian Chamber of Commerce and Industry is called, following an election which will be set after Prabowo’s inauguration this month. However he added, “due process should be closely followed.”
It comes amid a leadership tussle with Anindya Bakrie, president-director of PT Bakrie & Brothers. Rasjid, who was initially sworn in for a five-year term from 2021 to 2026, had been a major backer of rival presidential candidate Ganjar Pranowo ahead of the vote earlier this year.
“As chairman, my priority is to ensure that all processes are conducted accordingly and held in the best interests of the Indonesian Chamber of Commerce and Industry,” he said in a statement to Bloomberg after the interview.
(Updates with statement from Rasjid)
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