ADB sees Indonesia escaping middle-income trap but flags weak tax collection
The bank’s Indonesia director said the tax ratio remained around 9%, despite two decades of development progress.
Indonesia has strong prospects of escaping the middle-income trap under its Indonesia Emas 2045 vision, but tax collection remains a fiscal weakness, according to Asian Development Bank Indonesia director Bobur Alimov. He made the assessment in Makassar on 21 October 2026.
Alimov said Indonesia’s tax ratio had stayed at about 9% over the past 20 years and was the lowest among ASEAN countries. He said the government was seeking to improve compliance among large companies, with ADB analysis identifying problems at some larger businesses.
On debt management, he described Indonesia’s debt-to-gross-domestic-product ratio of 30–40% as safe. He also said he expected the country’s ADB financing eligibility classification to rise rather than fall. Indonesia currently holds a C2 classification.
His confidence drew on development changes he had observed since working in Indonesia as an ADB environmental economist 20 years earlier. He cited Jakarta’s MRT and improvements in hospitals, adding that other countries in the region wanted to learn from Indonesia’s experience.
Alimov said the government’s infrastructure push had been followed by investment in human development, including the Makan Bergizi Gratis (MBG) school meal programme and efforts to make education more accessible. He stressed the importance of investing in children’s nutrition and education to support the transition to high-income status.
He also called for a larger role for high-value manufacturing and said ADB was working with the Indonesian government on developing the country’s semiconductor industry.
