The Ministry Of Industry Prepares These Three Steps To Save Industry From Global Tensions

Deputy Minister of Industry Faisol Riza (Photo: VOI)

Deputy Minister of Industry (Wamenperin) Faisol Riza stated that the government is preparing three strategic steps to save national industries from the impact of global geopolitical tensions and economic fragmentation.

"The government in the face of increasingly complex global dynamics continues to strive to increase competitiveness and expand market access systematically," said Faisol at a Working Meeting (Raker) with Commission VII at the Parliament Complex, Senayan, Jakarta, Wednesday, July 2.

The first step, said Faisol, is to encourage downstreaming and diversification of manufactured products so that Indonesia's contribution to the global supply chain is even greater. This strategy is at the same time directed to remain in line with environmental sustainability principles.

Second, the government focuses on expanding the export market and strengthening the domestic market. Faisol said the trade agreement between Indonesia and the European Union was nearing its final point and would soon be signed.

In addition, several other countries have also shown similar interest in establishing trade cooperation.

"This is part of our focus on expanding the export and domestic markets," he said.

Third, namely strengthening bilateral and multilateral trade diplomacy as well as anticipating the potential entry of imported goods unfairly due to the phenomenon of trade diversion amid global trade tensions.

Faisol assessed that export products from other countries are now turning to the Indonesian market at unreasonable prices and this is a threat to the national industry.

"For this reason, the government has prepared three main mechanisms, namely anti-dumping and then countervaliding duty or import duties and the third is safeguard, namely security measures," said Faisol.

According to him, geopolitical tensions are currently pushing for investment relocation from major producing countries to Southeast Asia as part of a supply chain diversification strategy.

But on the other hand, pressure on green investment is also increasing as the global energy crisis encourages countries to prioritize short-term energy security.

Based on data from the United Nations Conference on Trade and Development (UNCTAD), direct foreign investment flows (FDI) to developing countries in Asia fell by about 3 percent, from 622 billion US dollars to 605 billion US dollars in 2024.

However, the Southeast Asian region recorded a positive trend with an increase in FDI by 10 percent from 205 billion US dollars to 225 billion US dollars.

Furthermore, said Faisol, the positive trend was also confirmed by Council on Foreign Relations data which shows large companies from the US and the European Union are starting to shift production sources to Southeast Asia.

In 2019, 61 percent of US-based companies and EUs were still dependent on China as production centers. However, in the first quarter of 2025, the figure fell to 42 percent. Meanwhile, Southeast Asia rose from 14 percent to 26 percent.

"This is a positive signal that the production base relocation and diversification strategy is the main choice in reducing tensions against one surrounding country. This condition indicates that Southeast Asia, including Indonesia, has begun to become an increasingly strategic location for global investment relocation and expansion," explained Faisol.