Optimism Ahead of 2019

KOMPAS/WAWAN H PRABOWO

President Joko “Jokowi” Widodo delivers a speech at the opening of the Kompas 100 CEO Forum 2018 at the Jakarta Convention Center (JCC) in Senayan, Jakarta, on Tuesday (27/11/2018). The Kompas 100 CEO Forum was aimed at promoting optimism ahead of the general election in 2019 and in the face of global economic instability.

President Joko Widodo urges the business community to look to 2019 with optimism to grasp opportunities in the global economy.

It is predicted that, after a rough 2018, things will not get easier in 2019. Global geopolitical and economic uncertainties will remain. Apart from that, we are facing many kinds of disruptions from how digital technology has revolutionized the way we work.

The President provided a sobering example at the Kompas100 CEO Forum held in collaboration by Kompas daily and state electricity company PT PLN in Jakarta on Tuesday (27/11/2018). He said that the Asia-Pacific Economic Cooperation (APEC) Summit earlier this month in Port Moresby, Papua New Guinea, failed to produce a joint declaration due to the deep discord between the US and China.

The Sino-American trade war is expected to get worse in 2019. The US Federal Reserve may also increase its interest rates, while potential geopolitical tensions in the region may lead to higher oil prices.

Furthermore, we need to respond to the challenges of digital technology posed by the emergence of Industry 4.0. As start-ups and big companies race against each another to adopt digital technology, we are confronted with the fact that more than 50 percent of our workforce has, at best, only middle school education. A large part of our workforce is composed of elementary school graduates.

As a country with a huge population, we should ideally be able to rely on our human resources. A demographic bonus of a young and working population should give us an advantage over other countries, not only as a potential market, but also as a productive workforce.

Several Indonesian digital companies have been wildly successful, attaining unicorn status. However, we still have millions of workers without digital skills that we must train in order to improve our competitiveness in industry.

The Sino-American trade war, which primarily affects Chinese trade considering the country’s large export volume, will cause the price of Chinese products, including consumer goods, to increase. Several Chinese companies are already looking at moving their factories to ASEAN, because of the region’s relatively cheap wages and production costs. Similarly, American companies are also looking into the possibility of moving their factories or switching to supply chains outside China.

This is an opportunity for our corporate world to find strategic partners and develop Indonesian businesses. We need midstream companies to process the raw materials from our abundant resources and supply our downstream industries. We also need export companies to close our trade deficit.

The government is facilitating this opportunity by loosening taxes with a tax holiday. It is our collective challenge to implement the program, especially in relation to smoothing licensure at central and regional governments and combating corruption that leads to high costs and uncertainties to reduce our competitiveness.