An Economy Recovery from COVID-19 Pandemic

If Indonesia can quickly return to pre-pandemic growth rates, the country may become the world’s seventh-largest economy by 2030, from its 16th position in 2019, rising above Italy, Russia, South Korea, and other countries. To achieve this goal, the country must focus on building productivity and competitiveness once the COVID-19 pandemic subsides, an effort that requires immediate priority.

Recovering from the COVID-19 Pandemic, it seems the Indonesian economy is resilient. Compared to other G20 countries, Indonesia shows more stable economic growth and continually sees increased positive rates.

In the post-pandemic period, the Indonesian economy contracted in the second quarter of 2020 (-5,32%) but afterward, Indonesia’s GDP continued to grow and even reached the highest growth (7,07%). Post pandemic, Indonesian Export-Import has grown consistently with China as Indonesia’s largest non-oil and gas exporter, followed by the US, Japan, and India.

Indonesia Focus on Strategic Actions

1. Established trade promotion and selected potential promotion partners.
2. Established and improved trade relations through all possible alternatives to include digital system, trade groupings, local and international webinars, trade incentives to include improved trade policies.
3. Established trading house to cater to offline and online trading.
4. Provide better and easy access trading information portals and provide a one-stop business/ investment portal for business/investment information, regulation, and registration. 
5. Tariff barriers solution and bilateral trade agreement.

All these strategic actions are taken to improve Indonesia’s economic growth in better ways, to come back at cost. For most of the past two decades, Indonesia’s annual GDP growth rates have fluctuated around 5%, reaching as high as 6,3% in 2007 before drifting back to 5% in 2019.

The COVID-19 pandemic hit the economy hard, however, and in January 2021, Oxford Economics estimated the economy would contract by 2,2% in 2020. Despite the setback, it is estimated that the economy could rebound to 6% growth in 2021, driven by increases in consumer and infrastructure spending.

Starting from the 1960s, Indonesia has shown a small but stable increase in domestic production of coffee. However, according to data from Statistics Indonesia, the size of coffee estates in Indonesia are in decline as farmers have shifted their focus to products from the oil palm (Such as crude palm oil and palm kernel), rubber, and cocoa which all have higher yields on the international market. Coffee estates – or parts of such estates – have thus been transformed into plantations of other commodities.

Indonesia Coffee Industry Overview

1. Indonesia is a producer country with ample opportunities 80% are commodities grade.
2. Indonesia is the fourth largest coffee producer in the world with 720.000.000 metric tons per year.
3. 97% of the coffee plantations in Indonesia are owned by small-scale plantations equivalent to 1,528,000 hectares. Only 3% of coffee plantations in Indonesia are owned by big companies and state-owned plantations.
4. The US is Indonesia’s biggest coffee exporter with 16.49% of total coffee exports followed by Italy (9,97%), Japan (7,19%), Malaysia (9,74%), and Egypt (9,64%).
5. Coffee demand growth in Indonesia is robust, one of the highest in the world of the annual growth rate >6%.
6. The growth is driven by coffee shop and consumer demand.
7. Indonesia’s strength is in commodities grade coffee, Kenya’s strength is specialty grade coffee.

In 2012, approximately 70% of Indonesia’s total annual coffee bean production was exported, mainly to customers in Japan, South Africa, Western Europe, and the USA. However, as Indonesia’s domestic consumption of coffee has been growing, exports have declined. Coffee consumption in Indonesia rose by a Compound Annual Growth Rate (CAGR) of 7,7% in the years 2011-2014.

Still, at 1,0 kilogram (2014 data), per capita consumption of coffee remains low in Indonesia. But to bring the economy to the seventh rank globally, annual growth must be pushed to around 7%, a faster pace than the dynamic pre-pandemic levels of about 5%. Weighing all the factors at play, we propose ten ideas that could help unleash the true power in Indonesia’s economy, allowing it to emerge from the crisis stronger than before.

Enter the Indonesian Market with BRIGHT Indonesia

Because of the huge impact of the economy and business sector in Indonesia, of course, it takes a lot of in-depth research about market access in Indonesia. So, to enter the Indonesian market, you need the right local partner to assist you.

BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

1. Assist you in expanding and developing your business by identification of potential partners.
2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.

*This article is written by Dafiena Hardianti Arifien