Introduction: As the fourth most populous country in the world, Indonesia has long failed to live up to its potential.
With globalization showing signs of unsustainability,Companies that are eager to move their manufacturing out of China are mostly looking beyond Indonesia
Even when geopolitical tensions force Western companies to look for alternative production locations outside of China, Indonesia is not a favored "plus option".
Indonesia, India and Vietnam are vying for the next Asian economic centerApple recently chose India, and Nike has Vietnam as the number one producer of sneakers.
The number of Indonesian companies supplying Apple has halved, from four in 2017 to two in 2022, while India has soared from four to 14.
Vietnam has also been very successful, with Western manufacturing companies in different fields, from Lego to American semiconductor packaging companies, expanding their industrial production bases in Vietnam.
Although Indonesia is rich in minerals, India has a large labor marketHowever, there is a problem of relatively low quality of labor
Indonesia has achieved economic growth of around 5% every year, except during the pandemicBut Indonesians have not experienced an export-led manufacturing boom.
Economies such as South Korea and Taiwan have become the "Asian Tigers" driven by the manufacturing boom, and Indonesia will have to upgrade its domestic industry before it can become more competitive.
More than two-thirds of Indonesia's population is of working age, and this demographic dividend is expected to last until the 2030s.
Indonesia needs to create good jobs, a lot of jobs, otherwise a large number of young people will grow old before they get rich, and as a result, it will be difficult to catch up with the standard of living in developed countries.
To raise Indonesia's $5,500 per capita GDP to a level close to that of South Korea or ChinaThe traditional path of development has been to employ large numbers of workers to produce goods for the whole world
Some economists say this pattern of enrichment has been broken, because the developed countries of the West are determined to keep more manufacturing at home.
And now there are advanced robots for manufacturing, and China's efficient production methods make it difficult for any up-and-comer to compete.
Since the start of the war, the proportion of manufacturing in the economies of Southeast Asian countries such as Cambodia, Vietnam and Malaysia has risen, while Indonesia has continued to decline.
The data shows that foreign investment in Indonesia has stagnated in recent years, and a large part of foreign investment is concentrated in mineral processing, rather than labor-intensive manufacturing.
Usually companies come to Indonesia only for the local market, and despite the heavy investment in roads and ports, the logistics costs are much higher than in many other developing countries.
Transport connectivity is critical to Indonesia's developmentBecause Indonesia is made up of 17,000 islands, spread over three different time zonesAnd the capital, Jakarta, is sinking
Since Widodo announced the construction of the new capital two years ago, related industries have begun to flourish, and the new capital is expected to have a population of two million by 2029.
Indonesia's recent deregulation package has been welcomed by investors, but the perception of the country's difficulty in doing business and the country's bureaucratic complexity remains unchanged.
At the same time,In the first priority development of electric vehicles, power batteries and semiconductors and other advanced technology fieldsSkilled manufacturing workers are scarce.
Economists have long considered Indonesia to be a land of potential
A large youth population lays the foundation for a breakthrough in manufacturing, thousands of islands are a tourist paradise, fertile tropical soils make it a major agricultural exporter, and huge mineral resources.
In the 80s of the 20th century, industrialization officially started, and Indonesia became the world's leading merchant of simple goods such as furniture, clothing, toys and footwear.
Bali is a major tourist attraction, palm oil is Indonesia's main export, and Indonesia is the world's leading source of nickel minerals.
All of this, combined with strong consumer spending, puts Indonesia among the top middle-income countries, surpassing India and Vietnam.
But Indonesia aims to become a developed country by 2045, the 100th anniversary of independence, and the economic take-off needed to achieve that goal is yet to come.
Indonesia's finance minister said that in order to achieve this goal,Indonesia's economy must grow by 6-7% per year, which is currently 5%.
The boost to Indonesia's economy from manufacturing peaked in 2002 and then declined as a result of domestic turmoil and the rise of China.
Nearly 60% of Indonesian workers work in the informal sectorFor example, driving a motorcycle taxi or working as a cart vendor makes a small contribution to the Indonesian economy.
The demographic dividend must be harnessed, and the 5% economic growth rate is only short-lived, and it is unknown whether Indonesia will be able to realize its potential and seize the opportunities.
These issues are the top concerns of Indonesian** candidatesIndonesia's next inmate** will be inaugurated in October this year, and different candidates are giving different directions.
However, the same challenge is how to accelerate economic growth and get Indonesia out of the middle-income trap before time runs out, and during his current tenure, Jokowi has focused on industrializing Indonesia's mineral resources, starting a nickel processing boom and providing raw materials for the electric vehicle industry.
Jokowi is pinning his hopes on factory investments from top battery and electric vehicle manufacturers, which need large quantities of Indonesian nickel, but these investments have been slow to arrive.
This is despite the fact that the boom in supplying nickel to electric vehicle companies has made Indonesia the world's largest nickel countryBut the long-awaited Tesla factory has not arrived
One of Indonesia's ** candidates pledged to continue pushing Jokowi's electric vehicle program and said Indonesia should also produce airplanes and more trains.
"We don't want our children to be low-wage laborers forever, and it's still deeply misunderstood relative to the potential of our country," he said. ”
Nickel is an important component of electric vehicle batteries, and high-nickel batteries have a higher range, and Indonesia is by far the world's largest producer of nickel.
However, deforestation and polluted waters have caught the attention of environmentalists and caused problems for electric car makers such as Tesla.