Masterplan for Acceleration and Expansion of Indonesia's Economic Development

Masterplan for Acceleration and Expansion of Indonesia's Economic Development
Name	Masterplan for Acceleration and Expansion of Indonesia's Economic Development
Abbrev	MP3EI
Country	Indonesia
Launched	2011
Coordinator	Coordinating Ministry for Economic Affairs
Status	Implemented

Masterplan for Acceleration and Expansion of Indonesia's Economic Development is a national development blueprint aimed at accelerating growth and expanding industrialization across the Indonesian archipelago through infrastructure, investment, and policy reforms. Conceived under the Presidency of Susilo Bambang Yudhoyono and coordinated by the Coordinating Ministry for Economic Affairs (Indonesia), the plan aligns with regional initiatives such as the ASEAN Economic Community and global frameworks including the World Bank development agendas. It emphasizes spatial development across the islands of Sumatra, Java, Kalimantan, Sulawesi, and Papua to transform Indonesia into a major emerging market.

Background and Rationale

The blueprint was formulated amid post-2008 financial crisis recovery efforts, drawing on analyses from the Asian Development Bank, International Monetary Fund, World Economic Forum, and Indonesian institutions like the Bank Indonesia and the Ministry of National Development Planning (Bappenas). It responded to structural constraints identified in reports by the OECD, United Nations Development Programme, and the United Nations Conference on Trade and Development regarding infrastructure deficits, logistics bottlenecks highlighted in studies by the World Bank Logistics Performance Index and investment barriers noted by the World Investment Report. Policy lessons were taken from comparative programs including China's Belt and Road Initiative, India's Five-Year Plans, and Brazil's Growth Acceleration Program.

Strategic Objectives and Guiding Principles

Primary objectives mirror targets set by the Masterplan's architects: raise GDP per capita, increase manufacturing share, reduce regional disparities, and boost export diversification, referencing benchmarks used by the G20, OECD Better Life Index, and UN Sustainable Development Goals. Guiding principles incorporate spatial economics from Jakarta-centered models, inclusive growth concepts championed by the Asian Infrastructure Investment Bank, environmental safeguards informed by the Ministry of Environment and Forestry (Indonesia), and legal certainty anchored in the Indonesian Constitution and Investment Law. Cross-cutting themes draw on frameworks from the Millennium Challenge Corporation and UNIDO for industrial development.

Priority Sectors and Regional Development

The plan prioritizes sectors including energy (linked to projects by Pertamina and PLN), transportation (projects involving Pelindo ports and PT Kereta Api Indonesia rail), agriculture (initiatives with the Ministry of Agriculture (Indonesia)), mining (regulatory interfaces with Ministry of Energy and Mineral Resources (Indonesia)), manufacturing clusters near Jakarta, Surabaya, and Medan, and tourism corridors in Bali, Raja Ampat, and the Komodo National Park. Regional strategies reflect corridor development across the Sumatra Economic Corridor, Java-Bali Corridor, Kalimantan Corridor, Sulawesi Corridor, and Papua-Maluku Corridor, borrowing logistics models from the Port of Tanjung Priok expansion and the Trans-Sulawesi Highway planning. Linkages were planned with private operators like Freeport-McMoRan, Vale S.A., and international partners including JICA, KfW, and Eximbank.

Policy Measures and Implementation Framework

Measures include deregulation and incentives referencing the Investment Coordinating Board (BKPM), streamlined permitting influenced by the Omnibus Law on Job Creation, and land acquisition processes guided by precedents in Land Acquisition Law (Indonesia). Infrastructure delivery modalities draw on procurement standards from World Bank and ADB projects, public service delivery reforms echoing Pemda decentralization debates, and workforce upskilling partnerships with Ministry of Manpower (Indonesia) and vocational institutions like BPPT. Trade facilitation steps coordinate with Directorate General of Customs and Excise (Indonesia) and compliance with WTO commitments. Environmental and social safeguards interface with the Ministry of Environment and Forestry (Indonesia) and conservation entities such as WWF.

Financing, Investment and Public–Private Partnerships

Financing strategies combine fiscal allocations from the Ministry of Finance (Indonesia), sovereign and project bonds issued in collaboration with Bank Indonesia and state-owned banks Bank Mandiri, Bank Rakyat Indonesia, and Bank Central Asia, with multilateral financing from the World Bank Group, Asian Development Bank, and Islamic Development Bank. PPP frameworks adopt models tested in projects with JICA, China Development Bank, and bilateral partners including Japan and China. Private investment attraction referenced incentives offered by BKPM and concessions negotiated with corporations like Ciputra Group, Lippo Group, and Astra International. Risk mitigation instruments included guarantees from agencies similar to Multilateral Investment Guarantee Agency and hedging via IFC arrangements.

Institutional Coordination, Governance and Regulatory Reforms

Implementation required coordination among central ministries—Coordinating Ministry for Economic Affairs (Indonesia), Ministry of Finance (Indonesia), Ministry of Public Works and Public Housing (Indonesia)—and subnational governments including provincial administrations of West Java, East Java, North Sumatra, and South Sulawesi. Anti-corruption measures invoked standards from the Corruption Eradication Commission (KPK) and transparency frameworks aligned with Transparency International recommendations. Regulatory reform processes incorporated stakeholder consultations with chambers like the Indonesian Chamber of Commerce and Industry and labor unions such as the Confederation of Indonesian Trade Unions.

Monitoring, Evaluation and Performance Indicators

Performance tracking adopted indicators comparable to World Bank metrics, ADB scorecards, and UNDP monitoring frameworks, including GDP growth, employment rates from the Central Bureau of Statistics (BPS), foreign direct investment flows reported by BKPM, logistics performance via the World Bank Logistics Performance Index, and poverty reduction benchmarks tied to Susenas household surveys. Periodic reviews involved presidential task forces, cabinet-level evaluations, and peer assessments with entities such as OECD and ADB to calibrate policy, fiscal allocations, and regulatory adjustments.

Category:Economy of Indonesia