We believe Indonesia has both serious challenges and bright opportunities. Healthcare supply chains are an essential case in point.

Last year, Indonesia enjoyed several notable successes in attracting FDI, such as the Pegatron factory in Batam and Toyota’s investment in electric vehicle production but missed many potential investments that relocated to Vietnam. The competition rages on, and President Joko “Jokowi” Widodo’s administration is determined to ensure a more investor-friendly climate, especially through the omnibus bill on job creation.

With both President Trump and Democratic challenger Joe Biden calling for supply chains to shift, how can Indonesia seize this opportunity? There has been some excitement in the press over reports from Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan that Presidents Jokowi and Trump agreed that Indonesia should receive factories owned by American companies relocating from China, many of which could be located in the Brebes industrial zone in Central Java under favorable terms of occupancy. 

The main issue, though, seems less what either president wants but rather what policies best attract business and investors. Here, Indonesia is poised to use several advantages.

Transportation and infrastructure: Investments in the past 15 years are paying off not only in Indonesians’ daily lives but in making Indonesia a more attractive investment destination.  Better logistics will also help.

Well-educated, motivated workforce: Despite Indonesia’s often higher wages than some other FDI destinations, in the new reality of supply chains, the price of labor is not the only (or increasingly, even the principal) determining factor for locating many investments. With the pandemic, reliability of supply becomes more important.

Popular

Mass poisonings cast doubt on free meals reforms

New data rules could unlock cross-border data flows

Malaysia must not breathe Indonesia’s governance failure