TEMPO.CO, Jakarta - A member of the National Economic Council (DEN), M. Firman Hidayat, highlighted deregulation as a key factor behind Indonesia's impressive economic growth in the 1980s. He noted that Indonesia achieved an economic growth rate of 9.1 percent in 1989, with an average growth of 7.8 percent during the deregulation period of 1986-1996.
"Once again, we see that deregulation was one of the factors. We were able to grow above 7 percent, [reaching] 7.8 percent, with investment averaging a double-digit growth at 12.3 percent," Firman said during a discussion on "Indonesia's Accession to the OECD for Sustainable Economic Transformation" on Monday, July 28, 2025. The discussion was broadcast via the YouTube channel of the Center for Indonesian Policy Studies.
Firman explained that the government at that time implemented various deregulation policy packages, spanning the banking sector, taxation, investment, and the capital market. He asserted that these policies, in place from 1982 to the early 1990s, directly contributed to economic growth rates exceeding 8 percent.
However, he emphasized that investment alone was not sufficient. He stressed the critical importance of export orientation and job creation within the growth strategy.
"The deregulation policy was focused on export orientation, including changes to the negative list and minimum investment value, which we deregulated at that time. We even facilitated foreign labor, among other measures," he added.
Firman also cautioned that deregulation efforts were not always smooth. He believed that certain groups opposed these changes because they benefited from the existing, complex system. "There were many groups that would go against it. Groups that benefited from the complexities of deregulation would definitely try to prevent it," he said.
Previously, Finance Minister Sri Mulyani Indrawati revised down the projection for Indonesia's economic growth in 2025 to a range of 4.7 to 5 percent from 5.2 percent.
"We estimate the economic growth in 2025 to be in the range of 4.7 to 5.0 for the second semester. So, overall [growth] will be between 4.7 to 5.0," the state treasurer said during a working meeting with the Budget Committee of the DPR at the Parliament Complex, Senayan, on Tuesday, July 1, 2025.
Anastasya Lavenia Yudi contributed to the report
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