Jakarta, February 19, 2025 - Mari Elka Pangestu, Vice-Chair of National Economic Council; Presidential Special Envoy for International Trade and Multilateral Cooperation, said Indonesia should remain steadfast in its commitment to be a member of the global trade system and become more integrated in the region as the rule-based international trade system is facing major disruptions.

Speaking in the first plenary session titled “Ensuring That Indonesia Will Be on The Winning Side in The Global Trade Wars” during the second day of the Indonesia Economic Summit, Mari Elka Pangestu said Indonesia should not get distracted and pursue a strategy of retaliation against the constant and changing threats of tariffs and non-tariff barriers lodged by US President Donald Trump.

“Let’s not get distracted between ourselves, between each other. We need to not retaliate and follow the path of making Indonesia great again, and protect ourselves. That’s not what we should be doing. We should continue complementing each other increase regional economic integration, deepen regional cooperation, and do domestic reforms to take advantage of what will happen in the reshaping of the global value change, becoming more regional,” said Mari Elka Pangestu.

The benefits of opening global trade is well-documented. The World Trade Organization (WTO) said in its 2024 World Trade Report that reduction in the cost of trade had raised the global real GDP by 6,8% between 1995 and 2020, and by 33% in low-income economies. The 2024 World Trade Report also highlighted that low and middle-income economies saw their poverty ratio declined to 40.3% in 1995 to 10.6% in 2022, at the same time that their share of trade in GDP doubled to 32% from 16%.

Deborah Elms, Head of Trade Policy at the Hinrich Foundation; Founder of Asian Trade Center (ATC), said disruption against the rule-based international trade regime happens at a speed that is unprecedented and will have consequences for everybody. Against this backdrop, policymakers must be more creative and decisive in decision making, according to Deborah Elms.

Lili Yan Ing, Secretary General of the International Economic Association (IEA), said Indonesia, and the Association of Southeast Asian Nations (ASEAN), can emerge stronger from the rising trade protectionism because ASEAN can provide substitutions for goods affected by the international trade disruptions, and can be the recipients of investment relocation from China.

The way forward for Indonesia is to increase the share of Foreign Direct Investment (FDI) as Indonesia’s ratio of FDI to GDP was relatively low when compared with that of other ASEAN peers. Lili Yang Ing said the Indonesian Government must make more efforts to attract FDI into shipping, railway, semiconductor, fisheries and seafood products, and renewable energy.

Indonesia’s ratio of foreign direct investment to GDP was 1.6% in 2023, lower than Vietnam’s 4.3%, the Phillipines’s 2.1%, and Malaysia’s 2.0%, according to the World Bank.

About the Indonesia Economic Summit (IES): The Indonesia Economic Summit (IES) is an annual initiative of the Indonesia Business Council (IBC). Initiated as a high-level forum for collaboration and innovation, IES seeks to promote competitiveness, inclusive growth, and sustainable prosperity for Indonesia. This forum reflects IBC’s commitment to advancing Indonesia’s role in the global economic arena.

About the Indonesian Business Council (IBC): The Indonesian Business Council (IBC) is an association of CEOs and business/industry leaders of leading companies in Indonesia, established in February 2023. IBC seeks to promote and strengthen Indonesia’s competitiveness, encourage collaboration, and enhance the contribution of the Indonesian private sector to economic growth and prosperity, through advocacy. For media inquiries, please contact:
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