INDONESIAN VISION 2045

Minister of National Development Planning/Head of the National Development Planning Agency

Presented at Business Breakfast Forum Financial ClubJakarta, 25 September 2018

20 Sovereign, Progressive,

Indonesia

45 Just and Prosperous

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Protecting all Indonesian citizen and the whole homeland of Indonesia

Improving public welfare

Educating citizen’s life

Implementing world order based on independence, eternal peace, and

social justice

Drafts of Indonesia’s Vision and Dream 2015 – 2085To accelerate the manifestation of Indonesia’s vision, President Joko Widodo initiates Indonesia’s Dream 2015-2085

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Global Demography

World Urbanization

Emerging Economies Role

International Trade

International Finance Geopolitical Change

Climate Change

Technology

Natural Resources Competition

Middle Income ClassWorld population becomes 9.45 billion (Asia 55%). Global demographic trend promotes urbanization. migration influx. and ageing population.

66 percent of world population lives in cities with 95% increase happening in emerging economies.

Total developing countries output accounts for 71% of world output with Asia as the biggest stimulant of 54%.

Global trade grows at 3.4% annually. Developing countries become the global trade and investment axis with 6% growth per year.

Domination of world currency shifts from US Dollars to multi currency. Emerging economies financial assets projected to exceed developed countries.

GlobalMegatrend

2045

The proportion of middle and upper income class exceeds 84% or 8.1 billion people. which is dominated by Asia and Latin America.

The increase of Asian economy and African population triggers competition to obtain natural resources. Technological advancement increase the efficiency of natural resources exploitation.

Technological change trend is dominated by ICT. biotechnology and genetic engineering. wearable devices. renewable energy. automatization. and artificial intelligence.

The challenge of global warming increases (more frequent extreme weather condition and long-term climate change). Global temperature increases 3-3.5% without initiative to reduce emission.

The increase of China’s role. Middle East’s vulnerability. and the increase of new class and determining group.

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Development Pillar of Indonesia 2045

Workforce Reform KCommitmentTowards the Environment

Strengthened Energy and Water Security

Free and Active Foreign Politics

HUMAN DEVELOPMENT AND MASTERY OF SCIENCE & TECH

SUSTAINABLE ECONOMIC DEVELOPMENT

EQUITABLE DEVELOPMENT NATIONAL RESILIENCE AND GOVERNANCE

Impartial Acceleration of Indonesian Citizen’s Education

Increased Contribution of Science and Technology in Development

Increased Community’s Health Level and Life Quality

Increased Role of Culture in Development

Substantial Democracy

Institutional and Bureaucratic Reform

Enhanced National Justice System and Anti-Corruption

Free and Active Foreign Politics

Integrated and Equitable Infrastructure Development

Increase Investment and Economic Competitiveness

Acceleration of Industrial and Tourism Dev

Maritime Economic Development

Reinforced Food Security and Farmer’s Welfare

Acceleration o f Poverty Eradication

Equal Opportunity and Equitable Distribution of Income

Equitable Regional Development

Indonesian citizens are excellent, cultured, and expert in science tech

Progressive and sustainable economy

Inclusive and equitable development

Democratic, powerful, and virtuous country

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Towards High Income Country andOne of the Highest GDP in the world

Well-implemented structural reformation and world economic growth is relatively high

Baseline ScenarioBusiness-As-Usual

Low world economic growth or global crisis that has great effect on national economy

High Scenario

5.7 % annual GDP growth

USD 23,199 GDP per capita in 2045

Ranked 7th in the world for GDP

Escape from Middle-Income Trap in 2036

5.1 % annual GDP growth

USD 19,794 GDP per capita in 2045

Ranked 8th in the world for GDP

Escape from Middle-Income Trap in 2038

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High Economic Growth ScenarioHigh-Income Country in 2036 and the 7th Highest GDP in the world in 2045Middle-Income Class Increases to 70 percent in 2045

2015 2020 2030 20402035 20452025

3,3774,546

6,3058,804

12,233

16,877

23,1992036

Escape fromMiddle-Income Trap

Middle-Income Class Other Income Class

2010 2020 2030 2040 2045

Indonesia’s Middle-Income Class (million people)GDP per capita (USD)

45

194

85

186

145

151

187

126

223

96

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Demography and Urbanization2010 2045(SP 2010)

238.5 million Population 318.7 million

69.8 year Life Expectancy 72.8 year

11.9 million Senior Citizen (65+) 42.8 million

49.9% Urban Population 69.1%

2045(SUPAS 2015)

318.9 million

75.5 year

44.9 million

72.8%

Dependency ratio reaches its lowest level in around 2030. In the long-term, TFR is maintained to be balance in around 2.1.

Population growth triggers urbanization and the growth of small-and-middle-sized cities throughout Indonesia. Meanwhile big cities and pre-urban area will create mega-urban.

90%

In 2035, almost 90% population in Java lives in the city, concentrated in Jakarta-Bandung (up to 76 million people)

= Projection based on SP 2010

= Projection based on SUPAS 2015

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44

46

48

50

52

54

56

58

20452040203520302025202020152010

50.148.4

47.346.9

47.247.748.6

50.5

46.3 45.5 45.7

47.0

49.0

51.3

53.4

Lowest dependency ratio around2030 (SP 2010) and 2022 (SUPAS 2015)

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Technology DevelopmentTechnology is growing faster and bringing changes to all areas of development and people's

Future technology trends: digital technology (mobile internet, automation, cloud technology), technology that reduces physical and distance limitations (IoT, transportation and distribution, addictive manufacturing / 3D printing, nano technology), energy technology (renewable, solar, wind, nuclear, bio, geo-thermal) and health technologies (genetics, medicine and recovery, health services).

Besides increasing efficiency and new opportunities, technological advances have an impact on labor requirements. Jobs that are routine, manual, and cognitive will decrease.

Indonesia will utilize technological progress for development by minimizing disruption.

E-commerce turns conventional trade into electronic system.Industry 4.0 integrates production processes virtually based on cyber and artificial intelligence.

Blockchain, a combination of AI, big data and IoT, is able to verify real time financial transactions so that no third parties are needed.Genetic engineering improves quality of life.

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IHuman Development and Mastery ofScience and Technology

Indonesian citizen’s quality increases through equally higher level of education; powerful culture; better level of health, life-expectancy, and living quality; and advancement of science and technology.

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Accelerating Equitable Education for All

Increasing Education Quality

2015 2016-2025 2026-2035 2036-2045

Years of Schooling 12Year

Gross Enrollment Ratio (GER) in Tertiary Education

37.7% 50% 70% 90%

29.9% 35% 50% 60%

8.3Year

10Year

12Year

Vocational, Entrepreneurship, and Character Education

Equal Quality and Services in Education

Community’s Role in Educational Development

Teacher Professionalism and Learning Methods Transformation

School and Literacy Culture

Education Development Strategy

Enhancement of citizen’s education level to create high

quality human resources

Labor Force with ≥ Senior High School Education

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Increased Role of Culture in Development

Culture Development

Target

Pancasila as Life Philosophy of the Nation

Appreciation of Diversity

Powerful Nation’s Character

Local Culture –Regional Identity

Education as Intercultural Mediator

Maritime Culture and Knowledge

Increasing role of culture in development through the capitalization of virtuous values of the nation’s culture and the development of work ethic

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Increased Contribution of Science and Technology in Development

Science and Technology Strategy

Cooperation between Government, Industry, and University

Science and Technology Adoption and Implementation

Science and Technology Capability and Independence

Innovation Fund Development

0.08% 1.5-2%2015 2045

Gross ExpenditureOn R&D

Indonesia is directed towards one of science development center in Asia and in the world, especially in Maritime Studies, Biodiversity Studies, Material Technology, and Disaster and Mitigation Studies.

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Increased Community’s Health Level and Life Quality

Comprehension of Healthy Lifestyle Behavior

Responsive Disease Prevention and Control

Health Technology Advancement

Facility and National Health Insurance are in Order and Sustainable

Health Development Strategy

• Free from Nutrient Deficiencies from 2025.

• Longer Life Expectancy accompanied with healthier life.

• Number of illness, disability, and mortality because of illness decreases.

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Workforce Reform

01

2016 - 2025

Reformation towards more flexible and adaptive labor market.

Increased quality of labor education and training through relevance enhancement with industrial needs.

02

2026 - 2035

Institutional empowerment and competency-based education and training access expansion.

Relevance enhancement, especiallyin engineering and technology.

03

2036 - 2045

Consolidation of training and certification system in all economic sector.

Universal expansion of National Social Security System (SJSN) scope.

Stages of Workforce Reform

• Changes in economic structure and technological progress affect the structure of the workforce.

• The labor market needs to be flexible and adaptive.

• Labor productivity is improved and technological progress is utilized to accelerate economic development

• Unemployment is maintained on natural rate (3-4%).

Labor Force Participation Rate 65.8% 78%Male 82.7% 90%Female 48.9% 65%

Labor Force (millions people) 122.4 169.9Open Unemployment Rate 6.2% 3 – 4%Employment in Agriculture 32.9% 13.5%Labor Force with Tertiary Education 39.3% 90%

2015 2045

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Sustainable Economic Development

Indonesia becomes a developed country and one of the world’s largest economy, driven by investment and trade, industry, tourism, maritime, and services; as well as supported by reliable infrastructure and strong resilience on food, water, and energy. Commitment towards the environment is maintained for sustainable development.

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Improved Investment ClimateInvestment climate is increased towards one of the best in the world

Enhancement of Labour-Intensive, Export-oriented, and High Value-added Sectors

Investment Acceleration on Advanced Technology and Highly Innovative Sectors

Sustainable Investment and Ensuring Security on Investment Abroad

EoDB ranking 35Investment to GDP ratio

34.1 percent

EoDB ranking 20Investment to GDP ratio

36.1 percent

EoDB ranking 10Investment to GDP ratio

37.8 percent

2015 -20252025 –

20352035 –

2045

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Open and Just International Trade

Transformation of Export Structure from Commodity to Manufacture and Service

Export of Goods and Services with High Value-Added

World-quality and Innovation-based Goods and Services

1.5%Market Share

World Rank

16th

1.7%Market Share

World Rank

13th

2.0%Market Share

World Rank

10th

2025

2035

2045

Enhancement of Export Regulation

Acceleration of Export Growth

Export Enhancement

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Industry as the Driver for Economic Growth

Enhancing Industrial

Development Pillar

Diversification and Increasing Value Added

Strengthening the Advanced

Manufacturing

Reinforcing Innovation Ecosystem

Enhancing Industrial

Adaptation

Enhancing Industrial

Sustainability

Industrial modernization focused on resource-based manufacturing industry cluster and industrial zone with integrated upstream-downstream supply and value chain. Industry is encouraged to be part of the global value chain (GVC).

Priorities of industry: food and beverage, textiles and apparel, automotive, electronics, and chemicals and pharmaceuticals.

Implementation of smart and sustainable manufacturing to boost national industry efficiency.

Industrial revolutions to 4.0 are adjusted with the characteristics of each industry.

20.8%GDP

21.4%GDP

22,3%GDP

23.4%GDP

24.6%GDP

26.0%GDP

Industry to GDP ratio

(2020) (2025) (2030) (2035) (2040) (2045)19

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Development of Creative and Digital EconomyIncreasing creative and digital economy contribution in development

Enhancement of the Structure of Creative and Digital Economy

Development of Creative Human Resource’s

CompetenceIncreased Scale of Export-oriented

Creative Industry

Enhancement of World-scale Creative

and Digital City/Cluster

2025

2035

2045

Creative and Digital Economy as Sources of Economic Growth

Creative and Digital Economy as Drivers of Innovation-based

Economy

Indonesia as One of theWorld-class Creative and Digital

Economy Centers

Target of Creative and Digital Economy’s Development

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Indonesia as Primary Tourism DestinationIndonesia’s diversity that includes more than 17 thousand islands, more than 300 ethnic groups, more than 700 languages, world heritage sites, as well as the 3rd biggest biodiversity is a great potential for tourism development

Development of Prime Destination

Increasing Competitiveness

Improving Tourism Diversity

Increasing Tourism Integration

Enhancement as Asia’s Primary Destination

Enhancement as World’s Primary

Destination

2020

2025

2030

2035

2040

2045

21.6 millions

31.8 millions

42.8 millions

57.5 millions

65.1 millions

73.6 millions

TotalInternational

Tourists

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Indonesia towards the World’s Maritime Axis

Indonesia is moving towards world’s maritime axis by developing accelerated maritime economy, strong maritime power, and strong maritime culture. The contribution of maritime economy to GDP increases from

6.4% in 2015 to 12.5% in 2045.

Maritime Economy: Increasing the role of maritime economy to around 12.5% of GDP in 2045 by focusing on (1) the development of efficient and effective marine connectivity, (2) sustainable and competitive fishing industrialization, and (3) inclusive maritime tourism.

Maritime Culture: Creating excellent quality of maritime human resources. innovation in marine technology. and strong maritime culture as the basis of maritime culture.

Maritime Power: Actualizing strong and capable maritime security and defense to face regional and global challenge.

12.5% of GDP

9.0% of GDP

6.4% of GDPContribution of Maritime Sector

Maritime Development Strategy

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Consolidation of Food Security andIncreasing Farmer’s Welfare

Integrative Policy from Upstream to Downstream

Increased Entrepreneurship and Farmer’s Institution

Increased Investment and Infrastructure that Supports Agriculture

Increased Productivity and Development of Maritime Agriculture

Increased Education Center and Agriculture Technology

Increased the Education of Agriculture Human Resources and Farmers

Food security that is independent and sustainable, carbohydrate and protein self-sufficient, and increased farmer’s welfare

Farmer productivity in 2045 increased to 4.5 fold compared to 2015

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Enhancement of Water Security

Integrated and sustainable management of lake, swamp, pond, river, and other land water

Improvement of land management along river basin area by involving the community

Development of processing and water quality enhancement technology that is cheap and environment-friendly

Campaign of “Keep, Preserve, and Save Water”

Forest and land rehabilitation along priority river basin area Development of

infrastructure to prevent erosion and

sedimentation

Improvement of hydrology, hydrometeorology, and

hydrogeology information system and development of river basin

area and water resources monitoring system

Implementation of water-use efficiency principles through

reduce, reuse, and recycle principles

Development of water resources

infrastructure

Development of city forest

Development of rain water harvesting

Water security is increased to support strategic sectors, disaster mitigation, andincrease community’s welfare

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Increased Energy Security

Bioenergy Water Geothermal Solar Others

Energy as development assets through increasing the role of Renewable Energy.

• Share of Renewable Energy final energy demand is increased to 30 percent in 2045.

• Power Plant installed capacity continue to increase until more than 430 GW.

• Electrification ratio 100 percent in 2020 and energy consumption is increased to 7,000 kWh per capita.

• Electrical infrastructure development implements archipelago concept.

• Fulfillment of energy needs that considers its impact on environment.

• The possibility of using nuclear energy if other energy sources do not meet.

CURRENTCONDITION

Natural Gas

Renewable Energy

Coal

Oil

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Commitment towards the Environment

Towards green economy, signed by 41% of emission reduction from baseline scenario, Environmental Quality Index > 80, and sustainable biodiversity utilization.

Greenhouse Gases Emission Reduction

Increased Water Quality

Increased Air Quality

Improvement ofLand Coverage Quality

Biodiversity as the Basic Asset of Development

Biodiversity-based National Pharmacy Industry

Carbon Sequestration Ability

Renewable Energy Development through

Local Bio-resources

Increase Biomaterial Industry

Environment Development Strategy

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Equitable Development

Equitable development expands with more income equality across all income-class, decreasing regional disparities, equitable infrastructure, as well as extreme poverty eradication.

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Acceleration of Poverty Eradication

• Inclusive economic growth (in all income quintile) bringspoverty rate towards zero (0.02 percent) in 2045.

• Extreme poverty (0.8 poverty line) is zero in 2040.

Poverty Rate per Province in 2015 and 2045

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0.000 – 1.000

1.001 – 2.500

1.501 – 5.000

5.001 – 7.500

7.501 – 10.000

10.001 – 15.000

15.001 – 20.000

20.001 – 30.000

0

2

4

6

8

10

12

14

16

18

20

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Extreme Poverty (0.8 PL) Poor Vulnerable (1.2 PL)

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Income Equality

0.32

0.34

0.36

0.38

0.4

0.42

0.44

Scenario with Redistribution Intervention Scenario without Redistribution Intervention

• Income inequality falls to ideal level in 2035 and maintain at the safe level.

• Without equal income policy, Gini Ratio will increases towards 0.44 in 2045.

Early stage economic development will induce income inequality, but after a certain income level, inequality will decrease along with democratization and development of citizen’s welfare.

Kutznet’s Hypothesis

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Equitable Regional Development

6.2%PERYEAR

6.7%PERYEAR

8.3%PERYEAR

Kalimantan Sulawesi

7.6%PERYEAR

Papua

6.5%PERYEAR

Bali andNusaTenggara

5.3%PERYEAR

Jawa

5.7%PERYEAR

Sumatra

Maluku

30 Years Before 30 Years After

1983 2013 2015 2045

Java 53.8% 57.1% 58.3% 51.8%

Outside Java 46.2% 42.9% 41.7% 48.2%

KBI 82.5% 80.1% 80.5% 74.9%

KTI 17.5% 19.9% 19.5% 25.1%

Equitable regional development is increased by encouraging growth in the Eastern Region of Indonesia (KTI) while maintaining growth momentum in Java.

Papua

Bali. Nusa Tenggara &Maluku

Sulawesi

Kalimantan

Java

Sumatra

National Food Basis & Resources-based Economic Sector

International Tourism & National Fishery Basis

Food Industry Basis & Gate for KTI

Manufacturing Industry & National Energy Basis

Trade & Services Basis

New Industrial Basis & Gate to Asia Region

Regional Development Direction

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Equitable and Integrated Infrastructure Development

Infrastructure Development Direction:

Increasing Physical and Virtual Connectivity

Promoting Equitable Development between Regions

Legends

Main Road

Rail Road

Big/Medium City

Kota Pelabuhan

Aerotropolis

Dam/Water PP

Nuclear PP

Airport & Pioneer

Palapa Ring

Fulfilling Basic Infrastructure Access

Supporting Urban and Rural Development

Anticipation of Climate Change

• Finishing main road constructions in all islands.

• Rail-based transportation and High-speed Train to anticipate mega urban and urbanization.

• Air and sea transportation to support inter-region mobility and goods distribution.

• Sea transportation as the main element of maritime connectivity.

• Development of aerotropolis area.

• Fulfillment of digital and virtual connectivity for all community.

• Fulfillment of people’s access to basic infrastructure.

• Logistic cost in 2045 fell to 8% of GDP

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Strengthening National Resilience and Governance

National resilience and governance becomes stronger with better quality of democracy, institutional and bureaucratic reform, development of national justice system and anti-corruption, implementation of free and active international politics, and strong security and defence.

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Domestic Affairs

Substantial Democracy

Procedural / Transactional Democracy

Enhancing Political Parties and Regulations Capacity

Enhancing Democracy and Political Participation in Regions

Effective Presidential System

Effective House of Representative

Enhancing Political Constitution

Pancasila Revitalization

National Politics Enhancement Strategy

Indonesia’s democracy quality is increased towards substantial democracy, which is democracy that carries people’s aspiration

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Institutional and Bureaucratic Reform

Structure of Organization

Enhancement Institutional and Bureaucratic Reform to actualize:

a. The role and function of the government in achieving public interests;

b. Bureaucratic institution that is contextual and with proper function and size;

c. Effective, inclusive, participative, and supportive cross-sector governance; and

d. Bureaucratic institution that is reliable and modern with professional and adaptive civil servants.

Bureaucratic Feature

Governance Human Resources’ Culture and

ManagementOrganizational structure that are:• Adaptive,• Based on

issue/thematic,• Cross-sector,• People driven and

locally empowered, and• Responsive towards

international issue.

Inclusive governance and ICT-based . • Creative, systemic, and

evidence-based way of thinking that has global knowledge, inclusive, and able to manage change;

• High work ethic and productive; and

• Proactive service based on public’s needs.

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Development of Justice System and Prevention and Eradication of Corruption

Justice system development is directed to actualize a community with justice culture.

In 2045 all laws of colonial inheritance are replaced by national law

Prevention and eradication of corruption directed to implement anti-corruption community

Justice System Development Objective

Corruption Prevention and Eradication Objective

The integrity and competence of law enforcement and civil

servants

Civil servants and citizens who are compliant to law

Community that has justice culture

System improvement in various public service

Significantly decreasing corruption practice and

behavior, CPI=55-60

Anti-corruption communityCPI=60-65

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Foreign Affairs

Indonesia is still conducting international politics that is free and active to build just world governance, becomes a developed and independent country, and one of the most influential country in Asia Pacific.

International politics is also directed to implement World Maritime Axis roadmap and establish regional arrangements including maintaining ASEAN’s centrality.

The implementation of free and active international politics

Indonesia’s increased role

in regional, global, OIC, and

UN

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Defense and Security

Defense and security is increased to actualize:a. Inclusive community

orderb. Strong defensec. Dignified human

security

Inclusive Community Order

Strong National Defense

Dignified Human Security

Indonesian identity beyond ethnic, tribe, religion, race, and group identity.

Participative community order based on fairness and equality in unity and national insight.

National defense power based on smart power, which has expenditure of 1.5% GDP.

Strong military force equipped with advanced technology armament.

Defense industry that is progressive and healthy, as well as being the main actor in global supply chain.

Safely and peacefully living in Indonesia as civilized human based on the spirit of respect

Human security that integrates with national security based on humanitarian values and partnership with all elements of the nation.

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THANK YOU