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January 21, 2025 | 04:56 pm
TEMPO.CO, Jakarta - The US-ASEAN Business Council (USABC), in partnership with the University of Indonesia’s Institute for Economic and Community Research (LPEM UI), launched its sector overview report today, January 21, following leadership transitions in Indonesia and the United States, seeing them as a chance to expand business opportunities and strengthen economic ties between the two nations and the broader ASEAN region.
The report titled “Navigating Opportunities: Nurturing Dynamic Economic Policies in Indonesia” provides recommendations for the new government under President Prabowo Subianto to focus economic growth across seven key sectors.
According to the report, Indonesia’s economic opportunities are plentiful. So which key sectors should the Prabowo government focus on to seize this potential?
Indonesia's Tech Take-off: Seizing ICT Growth Opportunities
Indonesia’s digital economy experienced a 400% growth between 2017 and 2021, with the USABC forecasting it could rise further.
For Indonesia to turn its potential into prosperity, USABC recommends the Prabowo administration invest in improving digital infrastructure and data governance in a bid to attract companies to build data centers, telecommunications infrastructure, and artificial intelligence models in Indonesia.
Indonesia’s regulatory environment also needs to be more business-friendly, according to USABC.
The report states that “the regulatory environment, which is marked by forced localization and inconsistent policies, may deter foreign investment and limit the growth potential of the ICT sector.”
To emerge as an ASEAN digital powerhouse, Prabowo’s government needs to ensure that Indonesia does not miss the opportunities in the ICT sector.
Tourism Transformation: Dispersing Indonesia’s Tourism Industry to Fuel Growth
For years, the Indonesian tourism industry has been centered in Bali, while many travel destinations across the archipelago remain largely unnoticed by visitors.
The USABC points out that dispersing tourism through improved infrastructure in secondary travel destinations and better community and private sector collaborations could unlock Indonesia's potential as a tourism powerhouse.
To accelerate Indonesia’s tourism transformation, Prabowo needs to prioritize key investments in these areas over the next five years of his administration.
Boosting Trade: ‘The Key’ to Elevating Indonesia’s Economic Future
According to USABC, Indonesia's potential to become a trading powerhouse has faced significant challenges due to protectionist policies and excessive regulations.
Specifically, USABC recommends that the Prabowo Government revisit Regulations 31 and 36 issued by the Ministry of Trade in 2023, which significantly complicate Indonesia’s import policies and trade restrictions for foreign investors.
Complicated import administration and paperwork and the delays attached to processing times have long served as a deterrent for some companies seeking to invest in Indonesia.
If Indonesia intends to become a trade-friendly country like its ASEAN neighbors, Prabowo’s administration should aim for a more coherent long-term trade policy that is accessible to foreign direct investors.
As both countries settle into their leadership changes, the US-ASEAN Business Council remains optimistic that a renewed focus by Prabowo’s administration on the ICT, tourism, and trade sectors will unlock Indonesia’s significant economic potential. By fostering innovation, resilience, and growth, these efforts will not only benefit Indonesia but also strengthen economic ties across the ASEAN region.
ARIS SCHULER SHAH
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