May 9, 2022
JAKARTA – The Indonesian Chamber of Commerce and Industry (Kadin), the organizing committee of Business 20 (B20) Indonesia, has just ended a business roadshow to the United States. This trip was special as it was aimed not only at enhancing bilateral economic cooperation but also to promote Indonesia’s Group of 20 (G20) presidency this year and B20 as its business engagement group.
The visit created positive impressions among the US counterparts as Indonesia has made remarkable progress in mitigating the impacts of COVID-19 pandemic. Indonesia’s high vaccination rate and rising export and consumer spending growth have helped us build confidence and trust in the business partnership. More importantly, Indonesia has opened new sectors of the economy to foreign investment and is implementing reforms in labor law, taxes and other sectors.
This B20 special roadshow also came at a critical juncture when a geopolitical shock added to the world’s economic challenges. This disruption has the potential to further destabilize countries across the G20. Impacts such as food shortages, increasing fuel and other commodity prices, rising inflation rates have the potential to slow down the economic recovery.
Our main discussions focused on how Indonesia’s presidency of the G20 can be used as an opportunity to enhance an already strong bilateral partnership and collaborate in the face of global challenges. The B20 Indonesia Summit in Bali this November, along with the G20 Summit, aims to stimulate inclusive, innovative, resilient growth leading to a stronger recovery and sustainable impact. As an essential part of the G20, the B20 will deliver policy recommendations to the G20 governments.
The Indonesia-US economic partnerships have achieved a lot in the last few decades. However, there remain many opportunities ahead. Indonesia is a significant economic partner of the US with about US$30 billion in two-way trade and $18 billion in US foreign direct investment (FDI) in Indonesia. Hence, the COVID-19 pandemic and the recent shifts in geopolitical and economic landscapes underscore the importance of creating a more diverse and resilient supply chain. President Joko “Jokowi” Widodo’s emphasis on three key issues for Indonesia’s G20 leadership, namely health care, digitalization and energy transition, will also open more doors for cooperation. The reinvigoration of the Jakarta-Washington partnership must be supported with higher participation by business sectors.
Our programs in the US started with the Bloomberg New Economic Forum in New York, where business leaders and investors explored growth opportunities in the transition to net-zero carbon emissions and sustainable financing mechanisms. We also agreed to host a special one-off BloombergNEF Summit Bali on Nov. 12, ahead of the B20 Summit, providing Indonesia more space to drive global movement to a net-zero carbon emission economy. In Washington DC, Indonesia’s business delegation held talks with leading economic, trade and financial institutions such as the US-ASEAN Business Council (USABC), US Chamber of Commerce, US Trade Representative (USTR), the World Bank, Millennium Challenge Corporation (MCC) and many others. We also hosted an Indonesia-US Business Forum attended by hundred business leaders, discussing their involvement in the upcoming B20 Summit and several investment projects.
Several investment projects mainly in eco-tourism, solar panels and battery storage and many other business opportunities in energy transition were presented to US business leaders. Numerous prominent family foundations and well-known private equity funds expressed great interest in the projects. The US International Finance Development Corporation (DFC), which provides private investment opportunities for emerging markets also responded positively
The delegation also met John Kerry, the US president’s special envoy for climate change, and deeply engaged in a conversation on how business sectors can end the country’s reliance on non-renewable energy and to help sustainably use the ocean resources for economic growth through the optimization of the blue economy. In this very special session, we presented some of Kadin’s initiatives in pushing for a greener world through our Net Zero Hub and B20 Legacy in Carbon Market Center of Excellence. The administration of President Joe Biden has just proposed the Indo-Pacific Economic Framework (IPEF), which envisions the return of Washington to the regional economic dynamics through a variety of priority issues: fair and resilient trade; supply chain resiliency; infrastructure, clean energy and decarbonization; also, tax and anticorruption reforms.
Indonesia’s economy also offers an immense opportunity for US foreign FDI, particularly in the technology space. Indonesia’s digital potential is considerable given the size of its growing market, and the US must boost its economic penetration and presence. Indonesia is also in the process of ratifying the Regional Comprehensive Economic Partnership (RCEP) Agreement, expected to be done before the G20 Summit. It will enable greater regional supply chain connectivity between ASEAN and its regional partners, allowing Indonesia to be a good alternative production base in the region to diversify US supply chain reliance on China.
It is worthy of note that the US and ASEAN leaders will hold a special summit in Washington DC on May 12-13, when the Biden administration will announce $102 million in new initiatives to expand its engagement with ASEAN in post COVID-19 recovery and health security, and other fields like the fight against the climate crisis, broad-based economic growth, gender equality and people-to-people ties. Indonesia-US proximity highlights Washington’s recognition of the critical role Jakarta plays in the global economic growth particularly in ASEAN and the Indo-Pacific region’s recovery. Through the B20 leadership, Indonesian business sectors are poised to enhance partnerships with many of our partners, and that is how we can bring about tangible impacts of Indonesia’s G20 presidency on our world, nation and society.