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Indonesian and Thai companies can benefit more by investing in manufacturing supply chain industries, a forum was told.
The Indonesian Embassy and the Indonesia Investment Coordinating Board of the Indonesian Investment Ministry held the “Business Forum 2024: Investment Opportunities in Manufacturing Supply Chain Industries of Indonesia” recently to attract Thai investors in Indonesia, especially in the coal and mineral sectors.
Fuad Adriansyah, the Indonesian Embassy’s Deputy Chief of Mission, said the manufacturing sector is the largest contributor to the gross domestic product (GDP) of the Association of Southeast Asian Nations.
It generated US$760 billion (about 25.3 billion baht), accounting for 21% of the Asean total GDP in 2022.
For Indonesia, he said the country has been enriched with abundant natural resources, especially in coals and minerals.
“Minerals such as nickel, tin, bauxite and copper have fuelled many manufacturing industries, especially in the sectors like electrics and electronics, automotive and the new industry of electronic vehicles,” he added.
In addition, the Indonesian government also promoted investment in the supply chain industry as the government has shifted away from mainly exporting raw materials due to the ban on nickel export in 2020 and the bauxite export ban in 2023.
“While the transition has created some challenges, it still creates the opportunities for investors to build supply chain industries [in Indonesia] supported by an abundance of, comparatively, local labour and proximity of raw material sources,” he added.
He said Thailand is a key investor in Indonesia. From 2017–2022, Thai investors poured US$ 1.52 billion (about 54.2 billion baht) into about 1,400 projects across Indonesia. In the first half of 2024, Thai investment value reached US$225 million.
He said the Thai business sector has experience in building the manufacturing supply chain industry, and more than half of Thailand’s supply chain manufacturing production is part of the global supply chain.
With Thailand’s comparative advantages, Thai businesses can pursue better collaboration and grow together with Indonesia, he said.
Tanita Sirisup, executive director of the Foreign Investment Marketing Division from the Thailand Board of Investment (BoI), said that as Asean members, Thailand and Indonesia recognised the importance of improving economic integration across all Asean nations.
She said that amidst global uncertainty, Asean stood out as a bright spot for foreign investment with the combined nominal GDP of the 10 Asean countries estimated at US$3.6 trillion.
It is projected to reach US$4.5 trillion driven by the rising domestic consumption, export-oriented manufacturing and the young workforce.
Asean nations must further deepen economic integration, advance sustainability and digitalisation, and expand trade and investment relations, she said.
Indonesia is one of Thailand’s most important trade and investment partners. It was ranked among the top 10 investors in Thailand in the first half of this year with total investment applications valued at US$230 million, mainly from the projects in the air transport industry.
For Thai investment in Indonesia, many Thai companies invest in energy, mineral mining, retail sectors and agriculture. She said there is still room for further investment.
While both countries continue to strengthen their partnership, it is crucial to focus on future growth engines that will foster sustainable development in both countries.
She said the Thai government focuses on promoting investment in strategic industries including bio-based and renewable energies, smart electronics, new energy vehicles, digital and creative industries, and regional headquarters and international business centres.
“Thailand and Indonesia can work together to achieve economic and industrial development goals because both countries have high potential to build a resilient supply chain through leveraging their raw material, natural resources, manpower and available markets,” she said.
In light of the global shift in supply chain dynamics and increasing need for resource security, Thailand and Indonesia have the potential to collaborate with the manufacturing sector accounting for 34% of Thailand’s GDP and contributing to exports.
Indonesia can make use of Thailand’s strong supply chain in automotive, electronics, chemical and petrochemical, as well as agro-processing. Likewise, Thai companies can benefit from Indonesia’s rich natural, agricultural and fishery resources and large domestic market.
“Together, the countries can work to produce value-added products for Asean and the world. Moreover, areas such as renewable energy, digital transformation, and infrastructure development offer further opportunities for investment and collaboration.
“Both nations are increasingly focusing on sustainable development and there is a great opportunity for Thai businesses to invest in growing green economy and vice versa,” she added.