Client: Trade Cooperation Facility

In 2014, Titik Anas and Dionisius Narjoko, commissioned by TCF to conduct a study on Integrating Indonesia Manufacturing into Global/Regional Pro-duction Networks (IPNs). The aim of this study is to evaluate Indonesia’s engagement in IPNs and to provide useful insights for policy formulation to strengthen and deepen the level of participation. The study found that Indonesia has relatively low engagement compared to others East Asia countries, shown by relatively low share in share of machinery trade in total manufacturing trade, and total trade in parts and components in 2010-2013 and the global value chain (GVC) participation index from OECD Trade in Value Added data for 1995 to 2009.

Although current condition shows lower engagement in IPNS, the authors suggest that Indonesia actually has prospects to increasing participation in IPNs. Indonesia has potentials in parts and compo-nents, such as electronics EQUIPMENT, telecommunication equipment, road vehicle, textile and yarn, apparel, telecommunication equipment, road vehicle, textile and yarn, apparel, clothing and rubber manufacturing. For other manufacturing products, which are not classified as parts and components, Indonesia has potentials in items such as textile and yarns, footwear, furniture, apparel, pharmaceutical, non-ferrous metal, paper/board/article, organic chemicals, perfume, rubber manufacturing and cork and wood manufacturing.

Policy recommendations that came out from these studies includes awareness raising on the importance of GVC, improvement in effectiveness of support productivity policy implementation, lowering the impediments to trade such as improving connectivity and ease of doing business and Foreign Direct INVESTMENT (FDI) policies supporting the higher engagement to IPN. http://www.euind-tcf.com/global-value-chains/.