US-Indonesia Economic Ties At $90 Billion: Report

A new report argues that the relationship is more valuable than often appreciated and holds great promise.

Prashanth Parameswaran
US-Indonesia Economic Ties At $90 Billion: Report
Credit: White House Photo

The value of the U.S.-Indonesia bilateral economic relationship is over $90 billion a year and could grow by up to nearly 50 percent in the next five years, a new report released this week has found.

The report, entitled “Vital and Growing: Adding up the U.S.-Indonesia Economic Relationship” and released by the U.S. Chamber of Commerce and AmCham Indonesia, values the bilateral economic relationship by using not just trade and foreign investment, but also finance, government revenue, and domestic sales. If these five components are added up, the report argues, they amount to $90.1 billion for the latest available year of 2014, a figure higher than those traditionally cited.

In addition, it projects that the best case scenario for U.S.-Indonesia economic ties is a value of $131.7 billion by 2019, which would constitute an increase of 46.2 percent over just five years.

That said, the report also cautions that Indonesian government policy will be central in determining whether this best scenario can actually be realized over the next few years.

Though it acknowledges that Indonesian president Joko “Jokowi” Widodo has already begun to undertake certain economic reforms, it highlights priorities for further change, including promoting greater legal certainty, boosting communication with the private sector, incentivizing innovation and risk-taking as well as expanding bureaucratic and policy reforms like ending the Negative Investment List (DNI), rationalizing the work permit process, and streamlining permitting at all government levels.

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Apart from the aggregate numbers, the report also looks at nine industrial, extractive, and service sectors. It concludes that finance, infrastructure, and creative economy have a high degree of future potential when assessed through a ranking system developed in the report. Oil and gas, consumer goods, and agriculture have average prospects, while extractive, information communications technology, and pharmaceutical/healthcare/life sciences are seen to have an even lower potential.