Didik J. Rachbini, a senior economist at the Institute for Development of Economics and Finance (Indef), has criticised the government's economic policy for being too focused on the domestic market while neglecting the foreign trade sector. He says the government needs to change its approach by adopting outward-looking policies to drive stronger economic growth.
According to Didik, the main weakness of current economic policy is the neglect of the foreign sector, with all efforts focused solely on the domestic market, which has produced moderate growth of around 5 percent. Government spending merely prevents growth from falling below that figure but is unsustainable because it faces constraints from fiscal revenue and expenditure, Didik told Republika on Sunday (9/8/2026).
He added that public consumption can no longer be relied upon entirely because the middle class continues to shrink. Indonesia does have a large domestic market, but businesses need to be encouraged to compete in the global market so they can move up in class and generate larger foreign exchange revenues, said Didik.
If the government continues with an inward-looking approach, economic growth is predicted not to surpass current levels because exports have not yet become a sufficiently strong growth engine, according to Didik. For a country the size of Indonesia, the domestic market is indeed important but insufficient to produce world-class industrialisation.
Didik emphasised that the only path to world-class industrialisation is to manage the foreign sector through export-oriented policies.
