Indonesia stands to gain from US-China trade war, Lembong says

Jakarta. Indonesia is among countries set to benefit from companies relocating factories from China because of its trade war with the US, according to Tom Lembong, chairman of the country’s Investment Coordinating Board.

While countries like Indonesia, Vietnam, Bangladesh and Cambodia are seeing relocation of factories from China, the trade tension will cause downturns in demand and confidence as the sparring nations account for one-third of the world demand, Lembong said in an interview with Bloomberg TV on the sidelines of the World Economic Forum on Friday.

Indonesia is struggling to attract investment with foreign direct investment falling 20 per cent in the third quarter from a year earlier, official data show. Lembong said last month that 2018 was probably the first year of negative investment growth since President Joko Widodo came to power in 2014.

Indonesia still has room to improve its supply side to boost the economy and has learnt its lessons from the past and is reforming to boost investments, Lembong said.

Southeast Asia’s largest economy was hit hard in 2018 by an emerging-market rout, which saw its rupiah fall to a two-decade low against the dollar, prompting the government to adopt measures, including higher tariffs on some goods. The central bank also raised interest rates six times to stem the market rout.