Repositioning Indonesia in the post-COVID-19 global value chains

Author name: 
Andree Surianta
Arianto A. Patunru

As the Global Value Chains (GVC) struggle to restructure around COVID-19 transport restrictions and its economic fallout, Indonesia faces an uphill battle to restart its economy and stave off ballooning unemployment. With stagnant economic growth now turning into recession, President Joko “Jokowi” Widodo pushes for the biggest regulatory reform in recent history through the Omnibus Law on Job Creation. Many have hoped that the amendment to thousands of articles in old laws will finally remove barriers to foreign direct investment; however, this legislation seems to have morphed from one seeking to bolster inward investment into one extending massive support to micro and small enterprises. In a rudimentary nod to the GVC model, the law urges supply chain partnerships between small businesses and large corporations. However, an overreaching implementing regulation may turn this partnership push into a new investment barrier for large multinationals, undermining the goal of deeper integration into the global production networks.

JEL Codes: O14, O19, O53, F23 Key words: Indonesia, COVID-19, global value chain, foreign direct investment

Updated:  19 May 2022/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team