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Jakarta Post

Healthcare, IT open new road to India-Indonesia friendship

Jakarta   /   Thu, August 15, 2019   /   05:14 pm
Healthcare, IT open new road to India-Indonesia friendship Indonesia-India partnership. (Shutterstock/File)

Indonesia’s US$5 billion pharmaceutical market is dominated by 178 domestic companies, four state-owned and 24 multinational players, and one of the biggest challenges facing health care in the country today is getting access to medicines at lower prices.

In the past few years, the Indonesian government has relaxed norms to create more flexibility in healthcare rules, paving the way for many foreign companies, including from India, to enter the country’s pharmaceutical market.

The registration process for medicines marketed in Indonesia has become smoother, and Indonesia today provides greater flexibility for foreign players to invest in the active pharmaceutical ingredient (API) sector and is also looking at allowing 100 percent foreign direct investment (FDI) for foreign firms to set up formulation plants in the country with local partners.

Indian pharma companies can capitalize on this push with their technology, knowledge and expertise to set up formulation plants and API manufacturing facilities to reduce Indonesia’s dependence on imported API. India’s Hetero Pharma is among the first players to tap the Indonesian formulation market with a local partner.

With the biopharmaceuticals industry in Indonesia still in its infancy, trade in high-tech and biotech products related to serious diseases like cancer, blood-related, antiretroviral (ARV) and others, API can significantly contribute to India’s trade with Indonesia.

However, industry experts say that, while the Indonesian Food and Drug Monitoring Agency has been very supportive of foreign players, government bodies like customs still need to become more aligned.

While the country doesn’t offer many long-term benefits to foreign drug formulation players, such as tax incentives, tender or listing inclusion, the API manufacturing market in Indonesia remains very small.

But the government’s push has attracted a lot of interest among Indian companies, as evinced in a few healthcare conferences held earlier this year. More government support could prove to be a game changer in the long run.

Overall investment of India in Indonesia is also increasing. According to the Indian government, there are about 30 Indian investment or joint venture projects in Indonesia.

 

India as a technology leader is getting more popular among the Indonesian bigwigs,

 

Indian investment in Indonesia amounted to only US$82 million in 405 projects in 2018. The Indian Embassy’s assessment, however, quantifies Indian investment in Indonesia at around $15 billion, with most investment coming through Singapore and other gateways.

In terms of technological innovation, India has much to offer in areas like data analytics, machine learning, artificial intelligence, the internet of things (IoT), blockchain and robotics.

But it is not only Indian information technology players that are gearing up to ride Indonesia’s digital technology wave, even Indonesian stalwarts are entering different types of partnerships with Indian companies to capitalize on their technology expertise.

This trend clearly highlights how technology is bringing two countries closer together.

While one of India’s largest software companies, TCS, has been handling the software services for Indonesia’s flag carrier Garuda Indonesia, Indonesian unicorn Gojek has acquired three Indian start-ups and is aggressively hiring top-level Indian executives to lead the business in Indonesia.

Clearly India as a technology leader is getting more popular among the Indonesian bigwigs, the same way China and Japan continue to have a big influence in other areas.

India is a supplier of software and applications to even the United States in major sectors and services, and thus this growing synergy in the technology space between India and Indonesia can benefit Indonesia in not only accessing best technologies at low cost but also in developing its human resources, which is among the priorities of reelected President Joko “Jokowi” Widodo.

Indonesia has also stepped up its game when it comes to investment in India, which totaled $627 million from April 2000 to March 2017.

Some of the Indonesian companies that have invested in India are Sumber Mitra Jaya, which has undertaken four projects for the National Highways Authority of India, Bukaka Group, which is supplying aerobridges to the Airports Authority of India, Garuda Foods, which has set up a joint venture with Polyflex Foods in Bangalore, and Bank International Indonesia (BII), which has opened a branch in Mumbai with a capital base of $28 million.

One of the biggest FDI announcements in India in recent times came from Indonesia, through Sinar Mas subsidiary Asia Pulp & Paper (APP).

Early this year, APP and the Andhra Pradesh Economic Development Board signed a memorandum of understanding to invest $3.5 billion in a pulp and paper manufacturing unit in a South Indian district.

This investment announcement comes as a big boost for the region, creating jobs for thousands of people and benefitting more than 50,000 farmers at the same time.

The latest developments indicate that steps are being taken to advance economic relations between the two countries, with considerable potential for expanding bilateral trade.

Both India and Indonesia are countries that are in their development phase, where strengths of each other can complement their respective growth.

Entrepreneurs of both countries have been playing a bigger role in paving the way to prosperity for the two nations, the very reason why they declared independence this week more than 70 years ago.

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The writer works for Dealstreetasia and is a former journalist with CNBCTV 18. The views expressed are her own.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.