Jakarta – Indonesian policymakers love targets, and always have, and the administration of President Prabowo Subianto is no exception. The problem is that targets can come back to haunt their creators.

Early last year, top presidential advisor Hashim Djojohadikusumo, who is also the President's brother, expressed confidence that Indonesia would achieve at least 8 percent year-on-year (yoy) economic growth in the fourth quarter of 2025, thanks to the government's food and housing programs.

We do not have the official figure yet, but it certainly will not be near 8 percent. Where does this leave us? While positive thinking has its merits, it does not build an economy. The government might want to make a healthy dose of realism in its resolution for 2026.

The Prabowo administration appears to have overestimated its capacity to generate economic activity strictly through food and housing programs. While state-led initiatives can provide a significant impact through multiplier effects, they cannot replace private investment. If we look back at economic policymaking in 2025, the first full year under Prabowo's leadership, one thing stands out: The government sees itself as a business actor rather than a business enabler.

State asset fund Danantara is a case in point. It is conceived as the key tool to get things done. Whether tackling the waste crisis, reducing malnutrition, addressing the housing shortage, upgrading petrochemical industries or solving any other socioeconomic obstacles on our way to becoming an advanced economy, Danantara is the first thing that comes to the government's mind.

Rather than taking a step back to consider how to encourage private investment, the immediate reflex is to throw money at the problem, perhaps after creating a special task force first. However, the state's resources are limited, and many of our development gaps are, in fact, opportunities for private-sector engagement, provided there are targeted regulatory changes.

Danantara encroaching on promising business fields, on the other hand, may discourage private sector engagement. While the government keeps stressing its openness to public-private partnerships, many corporate leaders might prefer to have full control of projects.

Consequently, investment in 2025 was well below the amount targeted in the National Medium-Term Development Plan (RPJMN) 2025-2029. The latest official investment report for the third quarter of last year shows a year-on-year decline in foreign direct investment (FDI), marking the second consecutive decline.

Without a massive increase in investment, our economy will diverge further from the RPJMN road map, which envisions a gradual increase in gross domestic product growth from 5.3 percent in 2025 to 8 percent in 2029. We are not off to a good start.

To be fair, last year was hardly favorable to Indonesia's ambitions, with world trade in disarray and protectionism on the rise globally. However, that context just underscores the need for us to do our utmost to draw investment, both from within and from outside the country.

In hindsight, it feels like the only economic goals pursued with vigor last year were the free nutritious meal and the 3-million-homes programs, as well as Danantara. The first made good progress, despite widely reported hygiene problems, the second fell behind target and the purpose of the third remains vague to many.

There is nothing wrong with the food and housing programs, which come with noble intentions to meet basic needs, but the government's focus on these programs must not slow down efforts to improve the overall investment climate. Without regulatory changes that address private-sector concerns, the GDP targets neatly stipulated in the RPJMN for each year are just fantasy.

We don't need wishful thinking but a plan to achieve 6.3 percent in 2026 and 7.5 percent in 2027. Business procedures and licensing, logistics costs, clean energy supply and industrial estate development, including the prevention of extortion and other harassment, all require the government's undivided attention this year.

Addressing these basics, rather than setting lofty targets, is the only path to strong growth.

Source: https://asianews.network/we-can-do-better-in-2026-the-jakarta-post