This Center is dedicated as a platform for various scholarly approaches towards solving Indonesia’s economic and financial challenges. Indonesia faces significant economic barriers that hinder its financial advancement and long-term growth potential. The declining share of manufacturing in GDP signals a weakening industrial base, while a shrinking middle class and an expanding vulnerable population erode consumer purchasing power. Additionally, the state budget is under increasing strain due to volatile commodity prices, growing subsidy demands, and rising debt interest payments. The financial sector further exacerbates these issues with limited access, shallow markets, and inefficiencies that contribute to high funding costs. Without urgent reforms to address these fiscal and financial constraints, Indonesia risks falling behind its regional peers and missing critical opportunities for sustainable growth.
ECONOMY
Welcome to
Center for
Economic & Financial
Development
Indonesia faces structural economic and financial challenges...
Indonesia’s industrial power is weakening, as seen in the declining share of manufacturing in GDP, signaling a shift from its once-dominant economic sector
Manufacturing Contribution to GDP (%)
The shrinking middle class and growing vulnerable population signal a decline in consumer purchasing power
Population Based on Economic Class (in million)
The state budget remains exposed to commodity price fluctuations, high subsidy costs, and increasing loan payment obligations. In the 2025 budget, debt interest payments account for one-fifth of the total, nearly four times the amount allocated for capital spending.
State Budget (%)
With an M2 to GDP ratio of 43.8%, Indonesia’s shallow financial pool reflects slower money circulation and higher funding costs, lagging behind regional peers
M2/DPG (%)
Access to finance remains limited, with only 51% of the population holding a bank account in financial institutions
Have Account in Financial Institutions(%)
Financing in Indonesia is costly, with lending rates surpassing those of regional peers, driving up the cost of funds
Lending Interest Rate (%)
These challenges require immediate:

COLLABORATIONS

ACTIONS

SOLUTIONS
Collaborations. Actions. Solutions.

Financial Development for Strong and Equitable Growth
The Indonesian Business Council (IBC) embarked on a comprehensive research study to identify strategic policy recommendations aimed at enhancing financial access, inclusivity, and competitiveness in Indonesia’s financial sector. The overarching goal of this research initiative was to bolster the efficiency and stability of Indonesia’s financial landscape, thereby fostering sustainable economic growth and development. The research encompassed seven key policy areas that were deemed essential for improving financial development in Indonesia such as financial product innovations, tax reforms, advancement of non-bank institutions, enhancement of credit information and collateral regulations, support for bank consolidations, fiscal and macroeconomic management and NPL management improvement through Asset Management Companies (AMCs).
The study underscored the importance of evidence-based policymaking, stakeholder engagement, and empirical studies to refine and implement these policy recommendations effectively. By addressing these structural challenges and implementing the proposed policy measures, Indonesia aims to enhance its financial competitiveness, attract more foreign investments, reduce borrowing costs, and promote sustainable economic growth. This holistic approach is crucial for overcoming the barriers to financial development and advancing Indonesia’s position in the global economic landscape.
Forecasting the Course Ahead
The Indonesian Business Council (IBC) hosted the ‘IBC Business Competitiveness Outlook 2025,’ emphasizing four key approaches to enhance collaboration with the business sector and attract investment. These include governance reforms to improve ease of doing business, private-public collaboration in infrastructure development to boost socio-economic quality, advancing industrialization through downstream strategies, and promoting a green economy. Explore the IBC’s 2025 Outlook.
Analyzing the Issues
Agendas
Indonesia Economic Summit 2025
IES is a high-level forum designed to bring together international business leaders, policymakers, thinkers, and industry champions. The forum will explore Indonesia's current and future economic development, and how it...
Fellows

Kahlil Rowter, S.E., M.A.
Senior Fellow

Prof. Dr. Telisa Aulia Falianty, S.E., M.E.
Senior Fellow

Adelia Surya Pratiwi, S.E., M.Sc.
Fellow

Citra Handayani, S.Sos, M.P.A
Fellow

Alifa Salsabila, S.T.
Fellow
