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Repositioning Indonesia in the post-COVID-19 global value chains

Author

Listed:
  • Andree Surianta
  • Arianto A. Patunru

Abstract

As the Global Value Chains (GVC) struggle to restructure around COVID-19 transport restrictions and its economic fallout, Indonesia faces an uphill battle to restart its economy and stave off ballooning unemployment. With stagnant economic growth now turning into recession, President Joko “Jokowi” Widodo pushes for the biggest regulatory reform in recent history through the Omnibus Law on Job Creation. Many have hoped that the amendment to thousands of articles in old laws will finally remove barriers to foreign direct investment; however, this legislation seems to have morphed from one seeking to bolster inward investment into one extending massive support to micro and small enterprises. In a rudimentary nod to the GVC model, the law urges supply chain partnerships between small businesses and large corporations. However, an overreaching implementing regulation may turn this partnership push into a new investment barrier for large multinationals, undermining the goal of deeper integration into the global production networks.

Suggested Citation

  • Andree Surianta & Arianto A. Patunru, 2021. "Repositioning Indonesia in the post-COVID-19 global value chains," Departmental Working Papers 2021-17, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2021-17
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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2021-07/acde_td_surianta_patunru_2021_17.pdf
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    More about this item

    Keywords

    Indonesia; COVID-19; global value chain; foreign direct investment;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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