Indonesia set to bounce back stronger post-pandemic

IN Indonesia, there is a strong culture of respect and helping one another as neighbours. There is a proverb - "a good neighbour is a priceless treasure" - which I believe best describes the relationship between Indonesia and Singapore today.

Being assigned in Singapore for nearly a year now, I have seen this proverb in action, with both countries supporting each other throughout the Covid-19 pandemic.

Although 2020 proved to be a tough year, we are optimistic that Indonesia will bounce back stronger, with encouraging signs of economic recovery such as the 7 per cent year-on-year growth in Q2 2021.

To boost economic recovery, the Indonesian government has provided assistance to businesses, such as extending tax incentives for qualifying entities and setting aside 699.4 trillion rupiah (S$63.5 billion) under the National Economic Recovery programme to roll out support packages for healthcare, social protection and businesses.

There are some silver linings arising from Covid-19. One of the most significant developments has to be the rapid pace of digital transformation across all sectors.

Since the start of the pandemic, years-long digital transformation road maps have been compressed into days and weeks as governments, businesses and individuals adapt to the new normal. During this period, Indonesia's digital economy expanded by 11 per cent to US$44 billion in 2020.

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Indonesians are also increasingly accustomed to conducting more day-to-day activities online, with the number of Internet users increasing by 16 per cent year-on-year to reach 202.6 million in the first quarter of 2021.

Build trust in digital systems

To support this growth, Indonesia continues to boost digital connectivity, improve telecoms infrastructure and build trust in digital systems.

We are encouraged that Indonesia and Singapore have forged close and mutually beneficial collaborations in these areas, through the growing of tech talent and IT-related services in Nongsa Digital Park and data centre projects by SpaceDC, Keppel and ST Telemedia, and welcome more Singapore companies to collaborate with Indonesia to strengthen our digital ecosystem.

Covid-19 has also caused disruptions to supply chains and manufacturing activity. This has prompted Indonesia to build resilience in its supply chains, and drive innovation and technological transformation to strengthen the manufacturing industry.

Indonesia was the partner country spotlighted at this year's Hannover Messe, and we will continue to pursue the "Making Indonesia 4.0" strategy to revitalise our essential food and beverages, textiles and clothing, automotive, electronics, and chemical sectors.

Indonesia is also participating in the Industrial Transformation Asia-Pacific event in Singapore this November, and we welcome more Singapore and Indonesia companies to explore cross-country collaborations in the manufacturing sector through this platform.

In particular, we see good potential for such collaborations in the semiconductor industry. Indonesia has placed a stronger emphasis on building up semiconductor production capacity and capabilities, given the ubiquity of semiconductor chips in global supply chains.

The recent global shortage of semiconductor chips also had ripple effects on many industries, such as automotive and electronics manufacturing, causing manufacturers to stall production.

As companies strengthen the resilience of their supply chains, Indonesia hopes to attract more investments into semiconductor production.

Covid-19 has not hindered our commitment to achieve a more sustainable energy mix. We have ambitious targets to have renewables meet 23 per cent of our energy needs by 2025, and to reduce emissions by 29 per cent by 2030.

To ensure affordable and sustainable energy supply, we plan to convert fossil energy plants into renewable energy plants, increase use of biofuels and solar panels, and develop more hydropower and geothermal energy projects.

We are also preparing a Presidential Regulation on renewables tariffs to encourage greater use of renewable energy.

It will take close cooperation from all stakeholders, including the government at central and regional levels, businesses, academics and the community, to develop the renewable energy sector in Indonesia to meet our sustainability goals.

To this end, we are encouraged to see Singapore companies such as Sunseap and Sembcorp Industries that are participating in Indonesia's green energy sector through plans to build solar farm projects. We welcome more Singapore companies into Indonesia.

Ease of doing business

As the largest economy in South-east Asia, with a relatively young population with strong buying power and abundant natural resources, Indonesia has many factors that make it an attractive market.

The government recently enacted the Omnibus Law on Job Creation to streamline the process for foreign companies to set up their business in Indonesia.

We also launched the Online Single Submission system in August 2021 to simplify business licensing in Indonesia. Through this online platform, the process to get a business license has been significantly reduced from several days to a few hours.

Our government agencies continue to provide updates on policies and regulations on our online platforms, making it easier for investors to find information on business opportunities in Indonesia.

The Indonesian Embassy has also established weekly Business Connect sessions in collaboration with the Singapore Business Federation (SBF) to help Singapore businesses better understand market opportunities and related regulations in Indonesia.

In the last 5 years, Singapore has been one of Indonesia's top and major partners in investment, and we are pleased to note that even amid the pandemic, investments from Singapore continued to increase more than 30 per cent in 2020 from the year before.

We work closely with Enterprise Singapore (ESG) to support Singapore companies' interests to trade and invest in Indonesia.

Besides evergreen sectors such as infrastructure and manufacturing, we see rising interest in tech innovation, given Indonesia's flourishing digital economy.

Through its Global Innovation Alliance in Jakarta, ESG supports various Singapore startups such as ACKTEC which are looking to enter Indonesia, and Indonesia startups that are keen to partner Singapore to grow globally.

We invite more Singapore and Indonesia companies to leverage this network to deepen our collaboration in technology and innovation.

Despite the pandemic, we continued to engage Singapore and Indonesia companies through regular virtual business events co-organised with ESG and SBF, such as the Indonesia Investment Webinar Series.

Companies can look forward to more of such events in the coming months, including at the Singapore Week of Innovation andTechnology from Nov 8 to 12, which includes an Indonesia Market Access session to help companies understand market opportunities and engage Indonesian counterparts.

Indonesia and Singapore share deep and long-standing ties, as well as mutual trust and respect. We look forward to strengthening this relationship, including among our businesses, as we move towards post-pandemic economic recovery.

• The writer is Indonesia's Ambassador to Singapore.