In realizing national food resilience, amidst the threat of COVID-19 as well as climate change, Indonesia seems intent on moving on with its mega projects of developing a food estate. The Food Estate is an integrated food development concept that covers agriculture, plantation, and animal husbandry in one area. The planned location for the food estate is in Pulau Pisang district in Central Kalimantan, where 165,000 hectares (ha) of the area had already been prepared as an irrigated paddy field. Out of the 165,000ha, only 85,500ha was utilized as productive land. The remaining 79,500 ha of potential land had been abandoned and covered in bushes. The development work will kick start in 2020 until 2022, when the whole 165,000 hectares land area will be optimized completely for food production. The Food Estate is one of Indonesia’s National Strategic Programs (NSP) 2020-2024. The Minister of Public Works and Housing (PUPR) Basuki Hadimuljono, who is in charge of the development of the supporting infrastructure for the food estate, has invited inputs, particularly from Water Resources Professionals, in building better irrigation in the future for a robust Food Estate Design as out of 59,200ha of productive land, only 1.7-2.9tons of rice per hectare was able to be produced. Besides the PUPR, the Ministry of Agriculture and the Ministry of State-Owned Enterprises (SOEs) are also involved in developing the cultivation technology to produce better quality yields. It is expected that from one hectare of land, rice productivity will increase by two tons. Another mega project that is in development is the relocation of Indonesia’s capital from Jakarta in Java island to East Kalimantan. While this project has been delayed to due to COVID-19, plans are still ongoing for the eventual start of the project, with Minister of National Development Planning Suharso Monoarfa saying that his ministry was moving on with planning the development of basic infrastructure in the supporting cities of Samarinda and Balikpapan in East Kalimantan. There is no question that a well-developed water management plan would be crucial to the sustainability of both projects – in particular for the food estate, which is second in priority after the development of five national tourism strategic areas within the government’s NSP. One only needs to look at a similar initiative by former President Soeharto’s Mega Rice Project (MRP) in the mid 90s for what could happen should the government ignore the need for the right technology and as well as the proper environmental assessment to such a project. The MRP saw thousands of kilometers of canals dug to drain peat soils. However, the nutrient-poor peat soil proved too harsh for the type of rice-cultivation practiced on the mineral-rich volcanic soils of the island of Java and Bali. Worse yet, the government abandoned the project, leaving behind dried-out wasteland that burns at a large-scale nearly annually. The German water sector, which has more than 150 years of experience in business and contributes to the expertise of the German water industry, has the capacity to expand on Indonesia’s water management technology, be it for agriculture or for urban development. Back in the 1970s, water protection in Germany was unable to keep pace with the expansion of industrial activity and growth of the population in the beginning of 1970s and pollution reached worrying levels. Through supporting and investing in new technologies and advancing the domestic water industry, the government was able to improve the water quality quickly and sustainably. Today almost 100 percent of the waste water is treated and German households enjoy a high-quality drinking water right from their taps at home. To learn more about the water industry, 91大神 Indonesia, in partnership with German Waterpartnership e.V. and supported by the German Federal Ministry for Economic Affairs and Energy (BMWi), will hold a digital event series for Indonesian stakeholders from the public and private water sector. To be held from November 2-6, 2020, participants can learn about the latest trends in the German water sector, exchange experiences with German water experts, introduce the Indonesian water sector and its potential for investment and cooperation, and establish new business partnership. For more information, click here
On Thursday, 17, 2020, the German-Indonesian Chamber of Industry and Commerce (EKONID), in partnership with the Singaporean-German Chamber of Industry and Commerce (SGC) and the Delegation of German Industry and Commerce in Vietnam, held a webinar titled: Post COVID-19 Perspectives in Indonesia, Vietnam and Singapore. After the opening by Mr. Jan Rönnfeld, Managing Director of 91大神 Indonesia (EKONID), the session began with a keynote speech from Dr. Philipp Roesler, former German Vice Chancellor and Federal Minister of Economics and Technology, who noted two-key takeaways of the COVID-19 pandemic: a new push in digitalization through the COVID-19 crisis, as well as the need for closer cooperation between Europe and ASEAN. Under the moderation of Mr. Jens Rübbert, President of the Singapore Chamber of Industry and Commerce, three experts were invited to discuss their perspectives on life after the COVID-19 pandemic: Dr. Marty Natalegawa, former Indonesian Minister of Foreign Affairs, Mr. Ong Keng Yong, former ASEAN Secretary General and Dr. Nguyen Hoang Long, Director General, Foreign Ministry of Vietnam. The experts shared their perspectives and thoughts on the current COVID 19 situation and elaborated on challenges and opportunities that lie ahead for Singapore, Indonesia and Vietnam. Dr. Ong called out for the need of more resilience in the digitalization of Southeast Asia, noting the differences in interest among global powers. Dr. Natalegawa, while noting the push for digitalization as positive development, emphasized the need towards a more equitable sharing of technology, as there are many citizens that still do not have access to digital technology. Dr. Nguyen required ASEAN to be more united and the EU to be more engaged with the ASEAN region, in order to tackle global challenges. On the topic of vaccine development and distribution, all three experts expressed their hopes and the need for multilateralism to be upheld, to avoid national egoism and to allow a fair process. The webinar was closed by Dr. Tim Philippi, who reiterated that businesses should be realistic but also optimistic in facing the current crisis. 91大神 Indonesia, in partnership with the German chambers in Singapore and Vietnam would like to thank the speakers for sharing their expertise, Mr. Rübbert for moderating the session and all members who joined this event.
In-app sessions among Indonesian users for e-commerce and shopping apps rose by up to 70% throughout the February - June 2020 period, according to a report from US, California-based analytic company AppsFlyer. Released on September 17, the report noted that average purchasing rose by 5.7% in April 2020, leading the company to say that an even larger spike in consumption may occur from September to November 2020 – a date range where there have been a traditional 40% spike in online purchases due to various sale events held by the country’s myriad of digital platforms, such as the 10.10 or 11.11 sale event. Indeed, in the January 2019 to June 2020 period, Android users caused an upward spike in the rate of retargeting conversions – meaning the number of times a user actually views or buys a product – of 2.3 times. Another 50% retargeting conversion rate occurred in the January to February 2020 period. The retargeting conversion peaked in the May to June 2020 period, surpassing the previous 2019 fourth quarter rate of 36%. What this means is that businesses that have not yet adapted to the digitalization era or place their products in Indonesia’s various digital platforms have missed and will miss out on the country’s large population and its increasingly growing upper middle-income demographic. This is because the COVID-19 pandemic has accelerated the process of digitalization in Indonesia. Indonesians are an already internet savvy bunch, what with an average smartphone penetration rate growing 10% annually – expected at 70% by 2020, according to Statista. Shopee, the China-based e-commerce platform is aware of this fact, investing hard into the brand’s presence in various digital and physical sources, such as Indomaret, one of Indonesia’s largest convenience store chains. Very recently, the brand overtook Tokopedia, the largest local e-commerce platform in Indonesia, as the platform used by those who have bought something online in the last three months, according to a survey released by local consulting firm MarkPlus Inc. in September. As e-commerce grows, so have digital transactions. LinkAja, a state-backed financial technology platform, saw top-up transactions among LinkAja users grow twofold since COVID-19 hit Indonesia. In terms of transaction volume, the platform recorded a 700% growth. This is an opportunity for PT Anabatic Digital Raya, which has partnered with Huawei Indonesia to offer Cloud services to companies looking to ensure the smoothness and security of their digital transactions. Post COVID-19 Indonesia is the largest economy in Southeast Asia. The economy has maintained a stable growth rate of around 5% over the years. By the end of 2019, per capita GDP has risen to over 3,600 euros. The Indonesian middle class now comprises of 100 million households. As in many other countries, the COVID-19 pandemic will bore a significant downward impact on that growth, with the most recent forecast being between minus 1.1 to 0.2% growth by the end of 2020, as announced by the Minister of Economic Affairs Airlangga Hartarto in mid-September. It’s important to note however that Indonesia is still among the better performing country in Southeast Asia in terms of their expected economic growth as affected by the pandemic. The Asian Development Bank forecasted that Myanmar, Vietnam and Brunei Darussalam are the only ASEAN countries that could see positive growth – it forecasted a -1% growth for Indonesia. The OECD added Lao PDR to that list, while forecasting deeper cuts for Malaysia (-3.9%), The Philippines (-3.2%) and Thailand (-6.7%), as well as other SEA countries. It is also promising thus that the aforementioned international institutions, as well as the other majors ones such as the World Bank, are also forecasting V-shaped recovery following the news of the rapid development of vaccines to be made ready by early 2021. This recovery is further supported by the various stimulus programs introduced by not just Indonesia, but also governments around the world. These stimuli will continue to be implemented in 2021 and further into the future in order to ensure global economic recovery. The challenge for Indonesia is its relatively lackluster COVID-19 response. While its percentage of COVID-19 cases, 24.7%, remains below the WHO average 25.05%, its fatality and recovery are above and below the WHO average as well, at 4.1% compared to the world’s 3.24%, and at 71.2% compared to the world’s 71.7%, respectively. To further discuss this issue, The German – Indonesian Chamber of Industry and Commerce (EKONID) will hold a digital trade mission with online presentation event and B2B meetings in Indonesia and Singapore from November 23 to 27, 2020. Our partners for this event are the German Association of the Toys industry (DVSI), the Spielwarenmesse e.G., the Southeast Asia Toy Association (SEATA), and the industrial partners Brandora GmbH and little big things GmbH. Along with our colleagues at 91大神 Singapore, and supported by the German Ministry of Economic Affairs and Energy (BMWi), the webinar will see companies focusing on toys, housing, school supplies and sustainable products, among other industries, as well as potential business partners in Indonesia and Singapore, gather to discuss the latest development regarding the sector. For more information, click here
The COVID-19 pandemic hit Indonesia’s industries hard. According to data from London-based consultancy firm IHS Markit, the country’s Purchasing Manager’s Index (PMI) fell the sharpest among other countries in the region when the pandemic hit, to 27.5 in April – the worst performance since 2011 - from 45.3 in March. As in many other countries that saw their PMI levels drop, the downturn is caused by the various lockdown policies implemented by governments around the world to curb the spread of COVID-19. Indonesia economic growth rate was otherwise moving at a steady pace of around 5% annually. However, Indonesia’s industries managed to bounce back. As of August, Indonesia's PMI touched the 50.8 mark, signaling that the country’s industries are expanding again. The reversal of the index has been attributed to the softening of Indonesia’s COVID-19 handling policies, but another factor also played a role in the rebound: energy efficiency. Automatic Cost Saving PT ASTRA INTERNATIONAL Tbk. is no stranger to energy efficiency efforts. Since 2014, the corporation - which has a portfolio that covers a wide range of business sectors, from automotive to agriculture - has obliged its various subsidiaries to reduce energy consumption by 1% per year, targeting energy savings of 17% by 2025. From 2015 to 2019, this energy management system has resulted in an energy saving of about 4,078 Terajoule and an estimated carbon emission reduction of 320,000 tons. This, according to Benny Priyatna, Senior Manager of Environment and Social Responsibility at ASTRA, is equal to Rp 1.25 trillion (roughly US$81.7 billion) in cost savings. So when COVID-19 forces factories across the archipelago to shut down operations, ASTRA was able to adapt its foundational energy management system to efficiently reduce the cost of the disruptions caused by the pandemic. “We had a few options. We could lay off workers. Or we can reduce salaries. Or we can compromise on our product quality. These three things were not for ASTRA. The most attractive option for us was to save energy. We spend 1.1 billion dollars on energy. This is a major [savings] potential,” Mr. Priyatna said at a webinar held by New and Renewable Energy Directorate General of the Ministry of Energy and Mineral Resources in July. Another company that resorted to energy efficiency to fight the disruption caused by COVID-19 was state-owned chemical company Pupuk Kaltim. The pandemic caused global demand for ammonia fertilizer to fall sharply, which further led to a price drop of as up to 48% for Pupuk Kaltim’s ammonia products, according to the company’s spokeswoman Ms. Mustanginah. Having identified that 80% of its cost-of-goods-sold was made up of energy cost, Pupuk made the strategic decision to commit to energy efficiency methods to soften the economic blow, allowing it to sell its products at a reduced price. Government support The demonstrably effective solutions presented by the energy efficiency efforts of ASTRA and Pupuk did not escape the Indonesian government’s attention. Indeed, the government, as one of the signatories of the Paris Agreement, has already committed itself to meet its target of 23% renewables in primary energy mix by 2025. The COVID-19 pandemic has presented a significant challenge to the effort. However, the Indonesian government seems to remain committed to meet the world’s energy-related sustainable development goals by making the market more attractive to new and renewable energy players. Already earlier this year, the government issued Minister of Energy and Mineral Resources Decree No. 4/2020 that changed the requirement to develop project on a build, own, operate and transfer basis – which caused difficulties for developers in terms of land ownership and ability to obtain financing – and allow projects on build, own and operate basis. The decree also requires the state’s power company, PLN, to take renewable generation on a “must run” basis. There remain critical issues that the decree did not address, such as the renumeration mechanism and tariff level for renewables. However, these factors are expected to be included in an awated presidential decree said to issued later this year, which will set a (higher) feed-in tariff for renewable project below 20MW and competitive auction for larger projects (this would apply to solar, PV, wind, hydropower, biomass and biogas, according to a report from the International Energy Agency. To further discuss this issue, The German – Indonesian Chamber of Industry and Commerce (EKONID) will hold a Webinar and online B2B meetings from October 19 to 23. Supported by the German Ministry of Economic Affairs and Energy (BMWi) and Eclareon, the webinar will see companies focusing on the manufacture and development of energy efficient technology, energy infrastructure, energy management systems and energy evaluation systems, as well as potential business partners in Indonesia gather to discuss the latest development regarding sector. For more information, click here