Indonesia Urges to Speed up Industrialization to Escape Middle-Income Trap

RRI.CO.ID, Jakarta - Indonesia needs to accelerate industrialization, technological development, and human capital development to escape the middle-income trap and move toward becoming an advanced economy. Minister of Higher Education, Science, and Technology Brian Yuliarto, said in Jakarta, on Thursday, 10, September 2026, the transformation requires more than economic growth and must be supported by stronger national industries and globally competitive innovation.

Speaking during a dialogue with the broader family of the Alumni Corps of the Islamic Students Association (KAHMI), Brian called for collective confidence and a shared commitment to set ambitious national targets. He said Indonesia needs to raise its income per capita to above 15,000 US dollars, compared with the current level of around 5,400 to 5,500 US dollars.

“This is a measure of our nation’s dignity, a measure of our nation’s pride before other nations,” Brian said. “We must build confidence that our nation is capable, and industrialization is a necessity for us.”

He also affirmed that Indonesia cannot rely solely on consumption-driven economic growth or exports of raw materials to achieve higher levels of prosperity. Industrialization, he said, is essential to increase productivity, create jobs, strengthen exports, and generate greater added value within the country.

The push for industrialization has become increasingly important as Indonesia faces the challenge of deindustrialization, with the number of industries declining over the past two decades. Brian said strengthening domestic industries could directly contribute to job creation, higher incomes, and reduced dependence on imported products.

Technology and innovation, meanwhile, are needed to ensure that industrialization does not stop at manufacturing products but also enables Indonesia to master the technologies behind them. Brian cited Japan, South Korea, and China as examples of countries that built stronger economies through sustained industrial development, while pointing to Indonesia’s own experience in developing the N250 aircraft.

Indonesia also has a significant opportunity through its large productive-age population, but Brian warned that the demographic window will not remain open indefinitely. He said the opportunity to make a major transition out of the middle-income group is available only until around 2040, making improvements in human capital, productivity, technology, and industrial capacity increasingly urgent.

Brian said realizing this opportunity requires cooperation among universities, academics, professionals, businesses, government institutions, and society, with KAHMI holding a strategic position because of its broad networks across various sectors. He also highlighted the development of electric vehicles as an example of how technological mastery can strengthen domestic industries while reducing dependence on imported fuel.

The minister stressed that Indonesia’s natural and human resources must be transformed into economic strength through technology, innovation, and industrialization. He said collective efforts to develop nationally produced goods and strengthen domestic technological capabilities will be essential for Indonesia to build a more competitive economy and achieve its ambition of becoming an advanced nation.