The heavy flow of investment into Indonesia has not yet fully correlated positively with an improvement in the quality of jobs. Although national investment realization in the first quarter of 2026 reached IDR 498.8 trillion, observers assess that there is still a gap between the generated economic value and the welfare of the domestic workforce.
Economist from the Center of Reform on Economics (Core) Indonesia, Yusuf Rendy Manilet, highlighted the current economic paradox. On one hand, national economic growth remains steady around 5%, but the purchasing power of the middle class is under pressure. This condition is suspected to occur because investment is still dominated by capital-intensive sectors with minimal absorption of formal labor.
Yusuf emphasized the need for a paradigm shift in granting investment incentives. The government is advised not to merely chase investment volume or export value, but rather to prioritize projects capable of creating productive jobs accompanied by technology transfer for local workers. This is deemed crucial so that sectors like downstreaming, property, and financial services can provide a broader welfare impact on society.
In addition, strengthening business competition policies is an important note in efforts to improve the economic structure. According to Yusuf, the future accumulation of national wealth should originate from corporate innovation and efficiency, rather than rent-seeking practices or exclusive access to specific policy concessions.
Data from the Ministry of Investment and Downstreaming/BKPM recorded labor absorption in Q1 2026 reaching 706,569 people, or an increase of 18.9% compared to the same period in the previous year. Although the absorption figure increased, the challenge to ensure that the created jobs have high productivity remains a major task for the government amid increasingly challenging global geopolitical and geoeconomic dynamics.
