Interview: Yukki Hanafi, Acting Chairman, Indonesian Chamber of Commerce and Industry (KADIN)
Which key industry segments should be prioritised to enhance economic growth and international competitiveness in the coming years?
YUKKI HANAFI: Indonesia achieved 5.3% economic growth in 2022 and a peak in export value of $291bn. Aligned with the Golden Indonesia 2045 vision – launched in September 2023 – the country aspires for resilience while embracing inclusivity and sustainability. Strategic priorities to enhance global competitiveness include strengthening domestic pharmaceutical and medical equipment capacity, advancing technology in manufacturing, elevating value-added processes in the food and beverage and agriculture segments, and developing renewable energy capacity.
The country seeks to move away from raw material exports and develop its downstream industries: promoting sustainability entails prioritising industries that balance growth with environmental responsibility. Building downstream processing capacity for the country’s natural resources will be crucial. This includes the production of nickel and cobalt for the electric vehicle industry, aligning with the country’s net-zero target.
How can new technologies elevate industrial productivity, innovation and global competitiveness?
HANAFI: Indonesia has made progress in technological advancement, with major industries implementing advanced Industry 4.0 technologies in the manufacturing process. Nonetheless, the country lags behind some neighbouring countries in terms of industrial productivity. For example, among 132 companies in the World Economic Forum’s Global Lighthouse Network – a community of manufacturers that integrate advanced technologies into factories, value chains and business models – only two operate within Indonesia’s borders.
Acknowledging the long journey ahead in this digital era, ongoing government support for industrial automation and digitalisation will be crucial. Collaboration to reskill and upskill the Indonesian labour force to meet the needs of Industry 4.0 will also be pivotal. Other priorities include supporting the development of micro-, small and medium-sized enterprises and enabling their integration into the global value chain.
In which ways is Indonesia encouraging entrepreneurship and the creation of innovation centres to drive technological advancement?
HANAFI: Indonesia is fostering innovation and entrepreneurship to propel technological advancement and economic growth. Major banks, venture capital firms, telecommunications entities and other large companies actively endorse techno-entrepreneurship, incubating over 2000 start-ups. Global giants like Apple and LG Electronics are setting up research and design centres in Indonesia – with optimism that more will follow. This underscores the country’s commitment to boosting technological progress and economic expansion.
What initiatives are helping to promote sustainable practices within the industry sector, and how do these support broader goals?
HANAFI: Indonesia committed to an enhanced nationally determined contribution (NDC), under the Paris Agreement, in September 2022. The revised NDC commits to a 32% unconditional reduction in greenhouse gas emissions by 2030, rising to 43% conditional on international assistance for finance, technology transfer and capacity building. The country is also moving towards net-zero emissions by 2060. The government has implemented key initiatives towards these goals, including a carbon market, green bonds, and incentives for enablers of the renewable energy transition, such as the production of electric vehicles, while also promoting the circular economy within industries. Strategic initiatives to support the government’s agenda include the KADIN Net Zero Hub, launched in 2022 to assist private Indonesian companies on their net-zero journey by the provision of toolkits, resources and guidelines.
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