American Indonesian Chamber of Commerce


March Crazy Weather

March Crazy Weather

Commentary by Wayne Forrest

Where I live, 20 miles north of New York City, March is a complete mix of weather patterns. Snow one day, warm temperatures the next. “In like a lion and out like a lamb”, goes the saying. To read about developments in Indonesia is to experience this ambiguity firsthand.

Here are a few crocuses pushing through as well as some harsh winds.


China Plus One: AICC office is getting more calls from companies and entrepreneurs looking to relocate all or part of their production from China. This development is not new; it began with the Trump administration’s tariffs on Chinese goods. Among the products are wood furniture, electric lighting, and plastic drinking cups.

GSP Renewal: Somewhat tied to the previous is the reauthorization of GSP, a tariff reduction facility for manufactured goods. After a lengthy review, Indonesia re-qualified, but the program lapsed two years ago. However, according to AICC member White & Case “renewal of GSP is still on the agenda for the 118th Congress. Senator Mike Crapo, Ranking Republican on the Senate Finance Committee, and Rep. Adrian Smith, the new chair of the House Ways & Means trade subcommittee, both recently called its renewal a priority.” The bill could tighten requirements, but if Indonesia remains in the program, importers will be refunded their marginal duty payments.

Herbals Products and the US opioid crisis: Indonesia rainforest cornucopia has yielded many medicinal products not just for Indonesians but the rest of the world. Researchers at the Bogor Agricultural University believe Indonesia’s rainforests hold 80% of the world’s medicinal plants. At the G20 last year participants received 4 plant extracts with known positive results as an antioxidant, immune booster, cancer cell growth inhibitor, or anti-diabetic. Indonesia is also a major source of the anti-malarial quinine, from the bark of the cinchona tree imported by Dutch planters from the Andes. Leaves from the kratom tree, native to Indonesia, have been used by Indonesian healers for centuries as pain relievers and anti-depressants and a market in the US is growing. US scientists at Johns Hopkins and other institutions have begun extensive studies on the plant’s alkaloids as well as kratom’s use by millions of US consumers, many of whom find the product useful in treating the harmful effects of opioid use and withdrawal. Kratom’s development into a mature commodity is hampered by an FDA import alert that many health policy experts and scientists find unwarranted. After years of unsuccessful efforts by consumers to request the FDA modify the alert, the AKA is now launching legislation in Congress that would help force the FDA’s to lift the alert and work more cooperatively with researchers, vendors and consumers to create a safe supply chain.

Digital: At an Asian American community event in Queens, NY headlined by NY Governor Kathy Hochul, a young Chinese American entrepreneur told me he was interested in investing in Indonesia information technology because it was like “China 20 years ago”. I may not necessarily agree with his assessment but interest in Indonesia’s digital sector is growing as evidenced by the VC firm, 500 Global, with US$2.7 billion in assets under management, announced it is hiring for its southeast Asia fund, including at least one position for Indonesia.

Carbon Trading: Indonesia is nearing the completion of a national carbon-trading mechanism, but for the measure to be effective, the country needs to begin tightening emissions quotas for coal-fired power plants, an expert says. Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), said implementing strict emissions quotas would have a positive impact on the government’s efforts to finance renewable energy projects. “The tighter the emission quotas, the more new opportunities for renewable energy development will emerge”.

Harsh Winds

Coal gasification project scuttled: A March 12 Jakarta Post story reported that Air Products and Chemicals (APC) had pulled out of all its coal gasification projects in Indonesia. It runs counter to the narrative of Indonesia transitioning from coal to renewable energy. APC has other operations in Indonesia that presumably will remain, but for now at least, it won’t be going forward with the $15 billion of projects it had announced with Pertamina and state miner Bukit Asam to create coal-based substitutes for imported LPG (liquefied petroleum gas) as well as ethanol. A similar $6 billion project by US chemical company Celanese a decade ago to convert low grade coal to ethanol also never materialized. Indonesia does have a policy to reduce carbon emissions and the US is a leader in the multinational Just Energy Partnership Transition, a $20 billion facility to assist Indonesia convert from coal power to renewable energy. (Air Products did not respond to a request for comment)

Sri Mulyani in Tears: It was very disturbing to see Indonesia’s world-class Finance Minister have to tearfully explain a State financial transactions watchdog audit that revealed that there had been $20 billion in suspicious transactions involving ministry personnel since 2009. As reported by Bloomberg, “Public furor erupted last week after videos and photos of the lavish lifestyles of tax and customs officials (some of whom were only mid-level officials), and their children, circulated on social media, prompting questions of how they could afford such luxury on a civil servant’s wage.” Over 400 officials apparently had been flagged, but no action was ever taken. The minister herself is not under suspicion, and has begun taking steps to fire employees and investigate many others: “Sometimes even the best is not always enough to withstand a disaster,” she said.

Election Postponement: Those who thought President Jokowi had fully tamped down efforts to postpone the 2024 national and Presidential elections, had to scratch their heads this week when reading that the central Jakarta court had ruled that because an obscure Indonesian political party had not received “due process” by the national elections commission (KPU) the whole process had to be restarted with elections postponed until 2025 or later. Its not yet clear who was behind the case, but legal scholars are saying that the court had no jurisdiction in the case and that the decision would likely be overridden on appeal. Jokowi’s reaction was not as forceful as some would have liked: “We expect election preparations to continue. This is indeed a controversy that has triggered pros and cons. But the government supports the KPU in filing an appeal.” I suppose the pros are keeping Jokowi in office, but the cons are clearly much greater.

April, though generally calmer, could turn out to be just as turbulent. After all, the national and Presidential elections are next February.

(These comments are the author’s only and may not reflect those of the American Indonesian Chamber of Commerce or its members)