Jakarta, 19 February 2025: ERIA President Tetsuya Watanabe, alongside several ERIA experts, participated as speakers at the Indonesia Economic Summit (IES) 2025, held at the Shangri-La Hotel, Jakarta, from 18 to 19 February.

Organised by the Indonesian Business Council, IES is a high-level forum bringing together business leaders, policymakers, and experts to discuss Indonesia’s development trajectory. The event featured over 100 distinguished speakers from Indonesia and beyond.

Strengthening Regional Growth

On the first day, President Watanabe spoke in a session titled ’A Stronger Partnership for Regional Growth.’ He noted that ASEAN’s rapid economic expansion has driven a surge in energy demand, with fossil fuels still comprising 80% of the region’s primary energy mix. While a complete transition to renewables is unrealistic in the short term, ASEAN must develop clear roadmaps, deploy existing decarbonisation technologies, and adopt sector-specific solutions in power, transport, and industry.

He emphasised ASEAN’s diverse energy profiles – Indonesia’s reliance on coal versus Cambodia’s greater share of renewables – highlighting the need for initiatives like the ASEAN Power Grid and a regional carbon market. He urged ASEAN to take ownership of its energy transition, shaping its own policies rather than being subject to external pressures.

President Watanabe shared the stage with Satvinder Singh, Deputy Secretary-General of ASEAN for the ASEAN Economic Community, and R.M. Marty Natalegawa, former Foreign Minister of Indonesia, amongst others.

Indonesia Amidst Global Trade Tensions

On the second day, Dr Lili Yan Ing (Senior Economist) and Prof. Fukunari Kimura (Senior Research Fellow) joined a panel titled ’Ensuring Indonesia Stays on the Winning Side of Global Trade Wars,’ alongside speakers such as Deborah Elms (Hinrich Foundation) and Mari Elka Pangestu (Vice Chair, National Economic Council and Presidential Special Envoy for International Trade and Multilateral Cooperation).

Dr Ing highlighted Indonesia’s ongoing economic challenges despite ASEAN’s overall growth. She noted Indonesia’s limited participation in global markets, with its Global Value Chain Participation Index ranking amongst the lowest in ASEAN, ahead of only Myanmar. Foreign direct investment (FDI) remains weak, with an FDI-to-GDP ratio of just 1.61% – far behind Singapore (34.95%) and Viet Nam (4.31%). Additional concerns include high tariffs, trade deficits, regulatory inefficiencies, and uncertainties in US trade policy. However, she emphasised that Indonesia can attract greater investment and strengthen its regional position by implementing business-friendly policies and streamlining FDI procedures.

Prof. Kimura examined shifting investment trends in ASEAN. While Japan has historically been a key investor, its inflows are slowing, while China and the US are expanding their presence. He pointed to the trade diversion effect, where US tariffs on China have pushed companies to relocate production, benefiting Viet Nam, Malaysia, Singapore, and Thailand – particularly in high-tech sectors like semiconductors and data centres. Indonesia, however, has yet to fully capitalise on these shifts and must take more proactive steps to attract industries diversifying away from China.

Energy Transition and Security

Dr Nuki Agya Utama (Director for Energy Policy and Head of the Asia Zero Emission Center) joined the panel ’A Multi-Pronged Strategy for an Energy Transition to Safeguard Energy Security.’

In addition to introducing the Asia Zero Emission Community’s initiatives, he outlined Indonesia’s challenges in balancing energy affordability with a transition to cleaner alternatives. The country’s reliance on fossil fuel subsidies keeps energy costs low, but sudden subsidy removals could trigger price shocks. Conversely, prolonged subsidies risk deterring investment in renewables. Dr Utama proposed a phased approach: subsidising renewable infrastructure (solar, wind, hydro, geothermal), supporting cleaner public transportation, and expanding incentives for battery storage and energy efficiency programmes.

ERIA’s Contribution

By participating in IES 2025, ERIA reaffirmed its role as a leading regional policy think tank, offering expert insights on economic integration, trade strategies, and sustainable energy solutions. ERIA remains committed to enhancing Indonesia’s and ASEAN’s economic resilience and competitiveness in an evolving global landscape.