INDONESIA-GVC Report.pdf

Islamic Development Bank has partnered with Asian Development Bank in a new study that could transform Indonesia’s participation in global trade and development.

The study titled The Evolution of Indonesia’s Participation in Global Value Chains, discovered a significant decline in participation between 2000 and 2017 which can be resolved if Indonesia reshapes its industrial strategy to become more closely integrated into global production networks and enjoy the long-term benefits of growing global trade.

This forms part of IsDB’s commitment to equipping people to drive their own economic and social progress at scale, putting the infrastructure in place to enable them to fulfil their potential.

The study makes four recommendations to support Indonesia’s participation in global value chains including:

  1. Forging stronger links among domestic industries to help firms to innovate, expand, and offer greater value to companies overseas. This can be done through coordinating industrial policies and addressing governance bottlenecks to help firms thrive
  2. Investing in infrastructure to ensure efficient transportation of goods and people and fast transmission of information. Reliable energy is also needed, particularly for capital-intensive manufacturing firms. 
  3. Considering labour policies that encourage agricultural workers to shift to other sectors and to ensure workers can upgrade their skills to remain relevant to industry needs.
  4. Attracting foreign direct investment in non-extractive and research and development industries, notably those that are closely linked to other sectors within the domestic economy. 

IsDB is committed to supporting Indonesia’s efforts to build collaborative partnerships and increase Participation in Global trade and development.

We continue to work with all our member countries to work towards the UN Sustainable Development Goals, by harnessing the power of science, technology and innovation and fostering ethical and sustainable solutions to the world’s greatest development challenges.