By Layan Damanhouri
Saudi Gazette
JEDDAH — Many countries in the Muslim world have young demographics which offer an opportunity for governments to have prosperous economies, according to Sri Mulyani, Indonesia’s finance minister who previously served as the World Bank’s CCO.
“An economy with a young demographic usually has growing a labor force which is going to be positive in contributing to the economy. If you compare with countries like China or Japan that have aging populations and declining very fast, this young demographic is providing a real advantage for many of the IDB member countries,” said Mulyani in an exclusive interview with Saudi Gazette on the sidelines of the Islamic Development Bank Group’s 42nd annual forum that was attended by 57 finance ministers of the IDB member countries recently.
However, economic policies need to be able to create jobs and allow youth to become innovative and productive, she said, adding that cooperation between member countries need to be further strengthened ahead of global challenges.
“It requires a lot of policy design from the macro level to the sector level as well as education and health. The opportunity is that they are able to bring progress in the future but they can also create a lot of challenges when they are not given adequate knowledge, education, and skills to make them ready for the job market,” she said.
The young demographic in many of the IDB member countries have a higher unemployment rate that has increased from 12.5% in 2016 to 13% this year.
“This creates a lot of frustration among the youth so it is a timely issue,” she said. “The policymakers’ response needs to be fast enough. The IDB can be useful by providing a platform of exchange where youth around the world can meet and learn from each other. Policymakers can also benefit from each other in determining obstacles of growth, job creation, improving education, better managing the government budget in serving the youth.”
A G20 member, a major shareholder in the IDB and the largest economy in Southeast Asia, Indonesia called on the IDB to continue its reforms to become relevant and be “efficient and flexible in responding to the needs of the member countries” and supported its course to becoming a knowledge bank.
“Under the leadership of the new president Mr. Bandar Hajjar, we support many of the priorities he’s outlined such as the focus on human development,” Milyani said. “We want to support the role of the IDB to become effective by not only addressing development, but also articulating what does it mean to become an Islamic bank in order to create a much better perspective of Islam and showing the operational relevance of this kind of institution for both member countries and the global economy.”
Commenting on the Saudi Vision 2030, Mulyani said diversifying the economy and implementing reforms is critical. “As we can see from countries around the world, you cannot survive on one commodity even if you have plenty of it. It cripples the potential for other economic activity to prosper.
The government has to make sure they can neutralize this as much as possible. When the oil prices go up and then declines, it creates volatility that is not good for the economy.”
She added “as an Islamic country located by the Two Holy Mosques, there is a responsibility to show a vibrant, growing and healthy economy with Islamic values of justice, equality, and productivity and innovation.”
In addition, addressing soft infrastructure such as education, innovation, research, and technology are “key to compete in the world in the near future.”
