Is Prabowo’s growth target for Indonesia realistic? ‘Delusional’ plan could be costly for economy, analysts say

In his wide-ranging speech, the former general highlighted an ambitious plan to raise the tax-to-GDP ratio from 10 to 16 per cent and become a food exporting nation in the next four years.

Other economists and financial experts are not as bullish as Prabowo, either.

Indonesia’s economic growth has not held above 5 per cent since Widodo first took office in 2014.

“Our economy relies heavily on agriculture and the processing industry. Agriculture [output] has been disrupted by the weather, while labour absorption in the sector has actually weakened,” Bhima said.

“Farmers are not benefiting from rising food prices, with inflation at 8.4 per cent. In fact, in the next few years, we will import food in quite large quantities.”

Prabowo, 72, has also signalled that he could raise the budget deficit cap, which is set by law at 3 per cent of gross domestic product, and expand the government debt-to-GDP ratio from the current level of 38.11 per cent.

He made no mention of his preferred new deficit cap, but his campaign team implied in November it could be raised to 6 per cent of GDP.

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In his speech, Prabowo also said he had sought advice from experts on potential new sources of tax revenue. Indonesia’s current tax ratio of around 10 per cent is lower than the Asia-Pacific average, which was 19.8 per cent in 2021, according to a report by the OECD issued last year.

Bhima of Celios, however, said that should Prabowo end up raising taxes for the country’s 52 million middle class, it might affect their purchasing power and household consumption, one of the main drivers of the Indonesian economy.

Esther Sri Astuti, executive director at the