The polemic of the 2019 trade war and the Covid-19 pandemic have exacerbated the risk of 'middle-income trap' in 2030 as Indonesia's population begins to age, said Budi Hikmat, Macroeconomics and Director of Investment Strategy of PT Bahana TCW Investment Management.

This statement responds to the World Bank's 2014 report "Indonesia: Avoiding the Trap," Indonesia is at risk of growing old before growing rich " if the average economic growth in the 2013-2030 period is only around 6%.

To prevent misfortunes from occurring, the government has made efforts to strengthen infrastructure and human resources, following the World Bank's recommendation for 'closing infrastructure and skill gaps.'

"However, accelerating the provision of infrastructure to spur productivity and competitiveness has worsened the financial condition of state-owned companies," Budi said in a press release on Monday (25/1).

According to him, Indonesia must increase GDP per capita, currently around US$ 4500 per year, to a minimum of US $ 12,000 per year within ten years to 2030, which needs around 10.3% annual growth in dollars.

Meanwhile, the state's burden will increase if the BUMN goes bankrupt and leaves an infrastructure that has not produced results. Also, interest payment expenses have increased, from around 12% of state revenue to 21%.

"The burden is extraordinarily high, which limits the state in debt," Budi continued.

Externally, an extraordinary abundance of liquidity inundates the world post-pandemic. The excess liquidity, reflected in low-interest rates, could trigger asset reflation in addition to the weakening of the dollar. Geopolitical conflicts and the anticipation of a recurring pandemic have started changes in business strategies and supply chains.

"And, Indonesia, which has a growing middle-class segment and abundant natural resources, is considered to have the opportunity to be part of the new supply chain system," he said.