As trade tensions between China and the West push companies to adopt a “China plus one” strategy (expanding their operations to other countries to reduce their risk and dependence on the East Asian giant), countries such as India, Vietnam, Thailand and Malaysia have emerged. as key beneficiaries of the diversification wave.

Despite predictions that Indonesia will be one of the winners in the supply chain shift, the country is struggling to replicate the success of its neighbours, according to Josua Pardede, chief economist at Indonesia’s Permata Bank.

Josua said multinational companies often have to navigate Indonesia’s complex business rules. “In contrast, Vietnam and Thailand have established more favorable business environments with simplified procedures to attract foreign investment,” he added.

Indonesia needs to streamline its bureaucracy and regulatory environment in local and national governments to persuade foreign companies to invest, said Siwage Dharma Negara, a senior researcher at the Singapore-based ISEAS-Yusof Ishak Institute.

“The country is known for its lengthy bureaucratic processes that create additional costs and risks, thus inhibiting investments,” said the coordinator of the institute’s Indonesian studies program.