UOB Gateway to ASEAN Conference 2023

This session discusses Indonesia's importance to ASEAN and its key strengths and opportunities that can be tied with deeper economic cooperation with other ASEAN member countries, and/or ASEAN with rest of the world.

Indonesia as the largest economy in ASEAN can serve both as a key production hub for the region and as a hub for e-commerce and services, presenting the country as a unique investment proposition with significant runway to monetise its potentials. One estimate suggests that Indonesia can derive a USD 600 billion e-commerce market, the largest in ASEAN, by 2025 and years to follow. Digitalization becomes a key enabler for the ecosystem to thrive, and further discussions in this area would bring about more executable insights for business.

Another key area of opportunity would be the visionary project of relocating the current capital Jakarta to the new capital, coined Ibu Kota Nusantara (IKN). As an important breakthrough to realise Indonesia 2045, IKN is planned and designed as a new growth zone with three key criteria: smart, green, and sustainable.

How can foreign investors and domestic players alike benefit from IKN? How are broad-based structural reforms promoting an enabling business environment and FDI attractiveness for long-term sustainable growth, and where are the opportunities for ASEAN cooperation in this area?

Indonesia is taking greater control of its natural resources - domestically adding value and incentivising investment in processing facilities, shifting the international balance of economic power. For example, Indonesia's nickel ore output is on an upward trend, with all of it being sold and processed domestically in 2021. Exports of nickel-containing metals have increased rapidly. Much of the metal sector investment has flowed into the nickel sector, turning Indonesia's nickel ore into nickel pig iron for stainless steel production. Several companies are also planning to turn this ore into intermediate products that will eventually go into the manufacturing of batteries powering the burgeoning electric vehicle (EV) market.

What are the lessons to be learnt here? What opportunities does this present for foreign investors? How does this impact other downstream players in the value chain? Is the shift towards higher value creating new challenges as well as prospects?

This panel discussion aims to imbue participants with:

1. An overview of the key legislations and economic impetus surrounding the move towards value-adding in the commodities sector, and its impact on long-term growth and sustainability / transition considerations for the Indonesian and ASEAN economy.
2. Areas of investment opportunities within the metals and mining value chain, including both upstream and downstream.
3. The need for greater financial connectivity and the resulting, evolving role for financial institutions.

Indonesia's connected citizens are tech-savvy, but Internet penetration is low. If Indonesia embraces digitisation, it can realise an estimated USD150 billion in growth —10 percent of GDP— by 2025. Digital technologies offer ways to boost productivity across sectors and expand participation in the economy to all segments of the population. But accelerating Indonesia's digital progress will require businesses to step up to the challenge and fundamentally transform themselves.

Three mega-trends that will enable Indonesia to capture its digital potential: infrastructure, consumers, and businesses.

1. Infrastructure Opportunity – increasing digital connectivity: Indonesia needs to invest in modern digital infrastructure to enhance connectivity both domestically and internationally. This includes improving its domestic cable network and building its 4G and 5G capabilities.
2. Growing Digital Consumer Base: Indonesia is the 11th largest market for eCommerce with a predicted revenue of US$45.28 billion in 2023. Revenue is expected to show a compound annual growth rate (CAGR 2023-2027) of 10.4%, resulting in a projected market volume of US$67.30 billion by 2027. User penetration will be 70.8% in 2023 and is expected to hit 85.5% by 2027. Furthermore, Indonesia is a mobile-first nation; approximately 75 percent of the online purchases are made via mobile devices. The usage statistics far exceed that of digitally mature countries such as the United States, where these media have been around longer and are firmly established.
3. Thriving Startup Culture: Despite low digitisation across Indonesia's key sectors, start-ups are proliferating and thriving across the board. In 2016, the total disclosed funding of start-ups in Indonesia is estimated to have reached USD 1.7 billion. Along with Jakarta, Bandung, and Surabaya are emerging as innovation hot spots.

The opportunities at hand are many-fold for Indonesia's growth.

This panel discussion aims to imbue participants with:

1. An overview of the immense and long-term economic potential presented by Indonesia's growing digital economy and the need to invest at scale, supported by insights and case studies from leading industry players.
2. Partnering the right foreign investors, to accelerate Indonesia's digital evolution, creating new value chains whilst augmenting traditional growth sectors such as mining, electronics, and transportation.
3. The need for greater financial connectivity and the resulting, evolving role for financial institutions.