South Sumatra Launches 2027–2045 Economic Transformation Plan

The Economic Transformation Plan provides a shared framework to promote economic diversification, strengthen regional competitiveness, and advance inclusive and sustainable development.

Palembang, 22 October 2026 – The South Sumatra Provincial Government launched the South Sumatra Economic Transformation Plan (RTE) 2027–2045, a shared framework for building a more diversified, competitive, value-added, inclusive, and sustainable regional economy. The launch, held at The Arista Hotel in Palembang, marked an important milestone in presenting South Sumatra’s economic transformation priorities and agenda, while reaffirming stakeholders’ collective commitment to moving from planning to implementation.

The South Sumatra Economic Transformation Plan was developed to translate the province’s long-term development objectives into a more concrete implementation agenda. The document outlines priority economic activities, foundational elements for transformation and a just transition, stakeholder roles and responsibilities, implementation phases, potential financing sources, and adaptive monitoring and evaluation mechanisms.

Approximately 150 participants attended the event, representing ministries and government agencies, provincial and district/municipal governments, businesses, industry associations, financial and banking institutions, universities, research institutions, trade unions, civil society organisations, women’s groups, local communities, the media, and development partners.

“The South Sumatra Economic Transformation Plan, which has been developed collaboratively, serves as an important instrument for aligning various regional initiatives with regional development priorities. The multi-stakeholder approach established through the Regional Consultation Forum is a particular strength. Amid fiscal constraints, collaboration with businesses, academia, communities, and other stakeholders is essential. The Forum can serve as a platform for bringing stakeholders together, building a shared understanding, and encouraging collective contributions to the implementation of economic transformation,” said Edward Candra, Regional Secretary of South Sumatra Province, in his statement regarding the South Sumatra Economic Transformation Plan.

South Sumatra’s economy remains significantly dependent on the coal mining sector, which accounts for approximately 16 per cent of the province’s gross regional domestic product (GRDP). While the sector has long made an important contribution to the regional economy, heavy reliance on commodities also increases vulnerability to fluctuations in global prices and demand, technological developments, policies in export destination countries, and the transition towards low-carbon energy systems.

The mining sector’s substantial economic contribution is not always matched by its capacity to generate employment, given its relatively capital-intensive nature. Economic diversification is therefore essential to creating new sources of growth and employment opportunities, increasing the added value of local resources, and strengthening regional economic resilience against potential external shocks.

South Sumatra’s economic transformation is not simply about shifting from one sector to another. The process must also ensure that workers, small and medium-sized enterprises (SMEs), farmers and plantation growers, women, young people, local communities, and areas historically dependent on extractive industries can participate in and benefit from these changes.

From Multi-Stakeholder Dialogue to a Shared Framework

To ensure a participatory transformation process, the South Sumatra Provincial Government established the Regional Consultation Forum for Accelerating South Sumatra’s Economic Transformation (FKD) through South Sumatra Governor’s Decree No. 95/KPTS/BAPPEDA/2025.

The FKD serves as a multi-stakeholder collaboration platform bringing together government institutions, businesses, industry associations, academia, research institutions, trade unions, civil society organisations, women’s groups, financial institutions, local communities, and development partners. The Forum provides opportunities for stakeholders to share perspectives, identify risks and opportunities, establish priorities, and define their respective contributions to the transformation process.

Since its establishment in 2025, the FKD consultation series has discussed transformation targets and actions for priority economic activities and foundational elements, including responsible institutions, implementing partners, collaboration requirements, potential financing sources, and monitoring and evaluation mechanisms.

Through studies, data analysis, interviews, focus group discussions, and multi-stakeholder consultations, stakeholders have been involved not only in identifying economic potential but also in formulating targets, developing actions, and defining their respective roles. As a result, the RTE is intended to serve not merely as a planning document, but as a shared framework to be translated into measurable policies, programmes, investments, and partnerships.

“The Regional Consultation Forum serves as a platform for cross-stakeholder collaboration in shaping the direction of regional economic transformation. Through the FKD, stakeholders can engage in dialogue, exchange perspectives, and agree on collective actions that form the basis for developing the South Sumatra Economic Transformation Plan. We hope that the RTE will serve as a strategic reference for promoting economic diversification, strengthening regional competitiveness, and achieving inclusive and sustainable development for the people of South Sumatra,” said Dody Eko Prasetyo, Head of the South Sumatra Provincial Development Planning Agency (Bappeda).

The South Sumatra RTE identifies 12 priority economic activities with the potential to generate new sources of growth and added value for the province. These include oil palm and crude palm oil; coffee; rubber; pangasius catfish and snakehead fish; vannamei shrimp; electricity generation from new and renewable energy sources, including solar, hydropower, and geothermal energy; biomethane; oleofood and oleochemicals; sustainable aviation biofuel (bio-aviation fuel); pineapple natural fibres; waste-to-energy processing; and gastronomic tourism.

The selection of these activities takes into account local resource potential, opportunities for increasing added value, demand prospects, employment generation capacity, business readiness, social and environmental impacts, and opportunities to develop supply chains and processing industries in South Sumatra.

Action plans for each economic activity cover improvements in productivity and sustainability standards, downstream industry development, capacity building for farmers and SMEs, infrastructure and technology provision, product certification and traceability, improved access to markets and financing, and workforce skills development.

The RTE also establishes eight foundational elements as enabling conditions for economic transformation: post-mining land transition and repurposing; infrastructure development; management of social and environmental impacts; strengthening the role of SMEs; skills development and employment; empowerment of women and young people; improved governance; and financing and investment.

These elements are essential to ensuring that economic transformation is supported by adequate governance, a workforce equipped with relevant skills, access to financing, infrastructure readiness, social and environmental safeguards, and the participation of diverse community groups.

The South Sumatra Economic Transformation Plan 2027–2045 was formally adopted through South Sumatra Governor’s Decree No. 632/KPTS/BAPPEDA/2026, dated 12 October 2026, providing a foundation for integrating the economic transformation agenda into regional development planning and implementation processes.

Linking Regional Priorities with National Development

The participation of representatives from the Ministry of National Development Planning/National Development Planning Agency (Ministry of PPN/Bappenas) at the RTE launch reinforced the alignment between South Sumatra’s economic transformation agenda and Indonesia’s national development vision towards Golden Indonesia 2045.

Regional economic transformation plays an important role in strengthening national economic resilience, creating new growth centres, increasing the added value of resources, and ensuring that the benefits of development are more widely shared across society.

“Regional economic transformation is an important part of Indonesia’s efforts to build a more resilient, productive, inclusive, and sustainable economy. The South Sumatra Economic Transformation Plan demonstrates how regional potential can be developed through participatory long-term planning that takes into account economic, social, technological, and environmental changes. The next step is to ensure that the agreed directions and priorities are translated into policies, investments, and programmes that deliver tangible benefits to communities,” said Dr. Riatu M. Qibtiyyah, Special Advisor to the Minister, Ministry of PPN/Bappenas.

The RTE launch also featured discussions on operationalising the FKD, utilising land surrounding mining areas to support RTE implementation, and planned contributions from civil society organisations and research institutions to South Sumatra’s economic transformation.

The transformation action plans will be implemented in phases, based on urgency, readiness, financing requirements, and interdependencies among actions. The initial phase, from 2027 to 2029, will focus on strengthening the foundations for transformation, including improving regulations and governance, establishing baseline data, conducting feasibility studies, preparing projects, improving production practices, strengthening SME institutions, developing workforce skills, and managing social and environmental impacts.

Subsequent phases will focus on expanding investment, developing infrastructure, advancing downstream industries, increasing production capacity, integrating supply chains, and strengthening access to domestic and international markets towards 2045.

The RTE also identifies financing requirements according to the characteristics of each action. Revenue-generating activities may be supported through private investment, banks, non-bank financial institutions, and other commercial financing instruments.

Meanwhile, activities that provide public goods or are not yet commercially viable—such as policy development, feasibility studies, site preparation, basic infrastructure provision, strengthening training centres, social protection, and capacity building—may require support from the state budget (APBN), regional budgets (APBD), intergovernmental fiscal transfers, blended finance, public-private partnerships, grants, corporate social responsibility programmes, and development partners.

An annual monitoring and evaluation mechanism, coordinated by South Sumatra’s Bappeda in collaboration with regional government agencies, businesses, and civil society stakeholders, is also an integral part of the RTE. This mechanism will assess progress towards targets, implementation impacts, challenges, necessary adjustments, and follow-up actions for each group of activities.

Through this mechanism, the RTE is expected to go beyond a planning document and translate into policies, programmes, investments, partnerships, and concrete actions that can be regularly reviewed and updated.

Sustaining Transformation Through Regional Ownership

The development and launch of the RTE form part of the collaboration between the South Sumatra Provincial Government and the Innovation Regions for a Just Energy Transition (IKI JET) programme. IKI JET supports the development of economic transformation and just transition strategies through multi-stakeholder dialogue, strengthened policy frameworks, skills development, social protection, and the implementation of transformation measures at the regional level.

The launch of the RTE also marks the conclusion of IKI JET’s technical assistance in South Sumatra. However, the end of this support does not signify the end of the transformation process. Instead, it opens a new phase in which the South Sumatra Provincial Government and regional stakeholders take the lead in driving implementation.

“Sustainable transformation can only be achieved when the process is owned and carried forward by stakeholders at the regional level. Through the FKD, South Sumatra has established an important foundation of multi-stakeholder dialogue, action plans, and clearly defined roles. The next step is to sustain this collaboration so that the RTE can be translated into policies, green investments, decent employment opportunities, and tangible benefits for communities,” said Ade Cahyat, Implementation Manager of IKI JET, GIZ Indonesia & ASEAN.

The success of South Sumatra’s economic transformation will depend on sustained multi-stakeholder collaboration and the ability to translate the RTE into policies, programmes, investments, and concrete actions. The FKD can continue to serve as a platform for monitoring implementation, building partnerships, addressing cross-sectoral challenges, and adapting action plans to evolving regional circumstances.

Building on the shared understanding established through this process, South Sumatra is expected to develop new sources of economic growth while ensuring that the transformation remains inclusive, just, and delivers tangible benefits to workers and communities.

About Innovation Regions for a Just Energy Transition (IKI JET)

Innovation Regions for a Just Energy Transition (IKI JET) supports coal-dependent regions in planning and implementing just energy transition pathways towards low-carbon energy systems. The programme promotes inclusive and sustainable economic development, decent job creation, social protection, social dialogue, and meaningful participation by communities and groups potentially affected by the transition.

In Indonesia, IKI JET supports stakeholders in East Kalimantan and South Sumatra in developing economic transformation and just transition strategies through multi-stakeholder dialogue, strengthened policy frameworks, skills development, social protection, and the implementation of transformation measures at the regional level.

IKI JET is implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in partnership with Climate Action Network International, the International Institute for Sustainable Development, the International Labour Organization, and the Wuppertal Institute for Climate, Environment and Energy. The programme also collaborates with the Solidarity Center and Union Aid Abroad-APHEDA.

IKI JET is part of the International Climate Initiative (IKI) and is funded by the German Federal Government through IKI, with co-financing from the European Union for relevant programme components. The Ministry of PPN/Bappenas serves as the programme’s political partner in Indonesia.

For more information: www.jetknowledge.org
 

About GIZ

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a German federal enterprise working in the field of international cooperation for sustainable development and international education. For more than 50 years, GIZ has worked with governments, the private sector, civil society, research institutions, and international partners to develop solutions that create better prospects for people and sustainably improve living conditions.

GIZ supports the German Federal Government and various public and private commissioning parties in achieving their international cooperation objectives. Its areas of work include economic development and employment, energy and the environment, climate, governance, social development, peace, and security.

In Indonesia, GIZ works with the Government of Indonesia and its partners to support sustainable development, including the energy transition, climate and environmental protection, green economic development, skills development, and institutional and stakeholder capacity building.

For more information: www.giz.de