Jakarta (ANTARA) - The Institute for Policy Studies (IPS) assesses that President Prabowo Subianto's economic strategy reflects the mandate of Article 33 of the 1945 Constitution through a state-led growth approach that integrates industrialization, investment, and strengthening economic sovereignty as a national development framework.
State-led growth is an economic model in which the government actively directs development through direct intervention, capital investment, and ownership of state-owned enterprises (SOEs).
IPS researcher Dr. Indra Kusumawardhana in a written statement received in Jakarta on Tuesday said that the strategy does not position industrialization, investment, and economic sovereignty as conflicting choices, but as complementary instruments in strengthening national economic capacity.
"President Prabowo's economic direction is not merely pursuing short-term growth, but building national economic capacity as a constitutional mandate. The challenge is to ensure that state intervention truly generates productivity, deeper industrialization, and stronger economic bargaining power," Indra said.
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In its study, IPS stated that the state-led growth approach places the state as the director of development without abandoning market mechanisms. This model is realized through strengthening downstream processing, accelerating investment, building national industry, and managing strategic sectors to support more inclusive and sustainable economic growth. At the same time, the state maintains fiscal discipline, policy certainty, macroeconomic stability, and openness to global investment and technology, or a state-guided market.
IPS noted that Indonesia's economy shows a positive trend with gross domestic product (GDP) growth of 5.61 percent year-on-year in the first quarter of 2026, higher than the same period last year at 4.87 percent. Investment also grew with realization reaching Rp498.8 trillion, while downstream investment contributed Rp147.5 trillion or about 29.6 percent of total national investment. However, IPS assesses that the quality of growth still needs to be strengthened.
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Manufacturing industry growth of 5.04 percent is seen as a positive signal, but downstream processing needs to be pushed toward industrial deepening through the development of high-value-added manufacturing, technology transfer, strengthening domestic supply chains, and creating quality jobs.
IPS concludes that the success of the government's economic strategy will be determined by its ability to maintain a balance between growth, stability, and economic sovereignty.
To that end, the institution recommends that downstream investment be directed to produce tangible productive impacts, government spending become more selective and productivity-based, and the economic sovereignty strategy remain open to global investment and technology while safeguarding national interests.
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