By: Prabowo Subianto [excerpt from “Strategic Transformation of the Nation: Towards a Golden Indonesia 2045”, pp. 53-54, 4th edition]
Indonesia is currently facing both global strategic challenges such as climate change, geopolitical conflicts, and the rapid expansion of artificial intelligence, as well as pressing national issues.
One of the major challenges is the imminent closure of the demographic dividend window. The nation is experiencing a continuous outflow of wealth, with an economy marked by inequality and lack of uniformity. Additionally, excessive financial influence in politics compromises the country’s democracy.
The ability of Indonesia to progress into a developed and prosperous nation depends on its capability to address and overcome these global and domestic challenges.
The Diminishing Window of the Demographic Dividend
Indonesia’s population, with a median age of 29 years, is considered an asset, as the majority of the population is in their most productive years for learning and working efficiently.
However, this youthful demographic profile is not expected to last indefinitely. As the rate of population growth slows down, the proportion of young individuals in Indonesia will decrease, leading to an increase in the median age. According to projections from the National Development Planning Agency (Bappenas), the median age is projected to rise by 2035.
Historically, countries have struggled to achieve wealth and prosperity once their population ages beyond the productive prime. Indonesia, currently a middle-income nation, aims to transition into a high-income status. To achieve this, the GDP per capita needs to reach $14,000, or approximately IDR 210 million per year, equating to a monthly income of around IDR 17.5 million per resident.
With just 13 years to avoid the middle-income trap and prevent becoming an old nation before achieving wealth, Indonesia must strive for rapid economic growth to attain prosperity before the demographic profile ages significantly, similar to what occurred in Thailand.
