According to the Bank’s website, due to the coronavirus disease (COVID-19) pandemic and the restrictions put in place to contain the spread of the virus, Indonesia's annual gross domestic product (GDP) growth contracted by 2.1% in 2020, grew at a slower rate of 3.7% in 2021 and estimated to grow at 5.0% in 2022. To sustain economic recovery, Indonesia has to safeguard health and human development; reopen the economy, create jobs, and boost consumption; and pursue broader and deeper structural reforms to raise productivity and growth.
Prior to the pandemic, the main factor constraining economic growth had been a flat productivity rate partly attributed to limited technology sophistication in Indonesian industries. A study by the Asian Development Bank (ADB) and the Ministry of Finance indicates that the adoption of new technologies could result in an additional annual GDP growth of 0.55 percentage points over the next two decades, thereby putting Indonesia's economy in the high-income group.
Indonesia's policy on science and technology, and innovation is framed under the National Medium-Term Development Plan (RPJMN), 2020-2024, especially its pillar 1 and pillar 2. Pillar 1 emphasizes human development and mastery of science and technology, while pillar 2 focuses on sustainable economic development. The plan prioritizes the development of five STPs under the following higher education institutions (HEIs): Bogor Agriculture University (IPB), Institute of Technology Bandung, Gajah Mada University, University of Indonesia, and Institute of Technology Sepuluh Nopember. Indonesia has also taken important steps to strengthen its innovation system through new fiscal incentives for R&D;, large investments in digital infrastructure, and new funding mechanisms to support research.
Responsible ADB Officer: Chong, Fook Yen
Responsible ADB Department: Southeast Asia Department
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