Nearly 250 years ago, James Watt’s innovations on an earlier steam engine model launched the  first industrial revolution. The resulting advances in economic growth and human prosperity have been powered by the consumption of fossil fuels and led to the wide-scale conversion of land use for industrial purposes, which together have contributed significantly to the climate change crisis we face today. Its perhaps  fitting that, in this time of peril for the planet, world leaders meet for COP26 this month in Glasgow, the city where James Watt launched his new designs in 1776.

Whilst infection rates have continued to fall sharply, bene tting from the continued imposition of social distancing controls and increased vac- cination rates, the relaxation in certain sectors has resulted in a positive im- pact. Based on the IHS Markit Indonesian Manufacturing PMI report, manu- facturing activity returned to positive territory in September with the index at 52.2% versus 43.7% in August. However, it also noted the pressure on prices and supply chains caused by the continuing disruption in many markets from the pandemic and lock-downs.

Indonesia celebrated the 76th anniversary of its independence on August 17, although the continuing social restrictions made the celebrations more muted than usual. The above theme for Presiden Joko "Jokowi" Widodo address, Resilient Indonesia, Growing Indonesia, encapsulated the spirit which is needed to maintain positive momentum during the pandemic and to capitalize on the bright future which the country undoubtedly has. Looking economically, Indonesia’s public sector debt-GDP ratio has climbed 10% since the outset of the crisis due to the measures undertaken to combat the effects of COVID-19 spread, but at 40.5% it remains in the lower 20% in the ranking of government indebtedness among G20 countries.

With the current suspension of the US government debt ceiling coming to an end on 31st July 2021, the 5th such suspension along with over 40 increases since 1982, the title of Blancmange’s UK Hit from that year would seem to be an apt description of where US federal debt has been over the last 40 years.

Reminiscent of the popular children’s game, the progress of most countries around the world in their efforts to achieve a smooth exit from social distancing measures and to re-open their borders seems to remain a matter of four steps forward, three steps back. Locally, the vaccination roll-out gains traction but a surge in COVID-19 cases has placed extreme pressure on the capacity of hospitals to manage an increase in serious cases, resulting in the implementation of new lockdown measures for the first weeks of July. This has dealt a blow to efforts to try and boost the recovery among the travel and hospitality sector as domestic travel is curtailed and plans for an opening of international travel to Bali and other destinations are put on hold. Those countries with high vaccination rates are now debating pathways for increased international travel, including the differentiation of quarantine restrictions for vaccinated and non-vaccinated travelers, and the sector will be watching closely as it seeks to recover from the impacts of a 77.6% decline in international arrivals year to date May 2021, which follows a 75% decline across 2020 as a whole.

Whilst Indonesia’s tech unicorns have been at the forefront of the business news, most recently due to the $18 billion merger of Tokopedia and Gojek, several of its banks have also been featured in the Forbes’ global lists published during May. Bank Rakyat Indonesia ranked 362nd in the 2021 Forbes Global 2000 list of the World’s Largest Public Companies, heading a trio of fellow banks and 2 other companies as six Indonesian entities were featured. Also published this month was Forbes’ 2021 list of the World’s Best Banks, compiled from over 43,000 customer interviews across 28 countries. 

A centuries old aphorism, popularized by William Shakespeare in his play The Merchant of Venice, could be an apt description of current investment market trends with surging digital assets and digitally enhanced companies driving the markets. After growing 3.3x in 2020 to $668 billion, the market capitalization value of all cryptocurrencies and tokens has soared dramatically in 2021, standing presently at over $2 trillion according to the cryptocurrency tracking site coinmarketcap.com. 

The accelerated embracing of technology solutions and platforms by companies and consumers alike has been the over-riding theme of business changes during the pandemic. Also regularly in the head-lines is the potential of reversing some of the negative climate change impacts which economic developments globally over recent decades had deepened. Whilst there is a long way to go, the period of limited activity during 2020 showed the potential for rapid improvements in air and water quality that a lowering of pollution could bring. Several cities are now adopting new regulations to embrace eco-friendly activities to capitalize on the improvements made already whilst the convergence of technology and environmental solutions is being seen through the number of telecommunication related technology companies seeking to partner in the investment into electric powered vehicles and power cells. With Indonesia already on the path to the development of electric vehicle battery technologies there is much opportunity for this to become an important economic success story locally.

The second phase of the Indonesian government’s vaccination drive has now been launched with the elderly and those in the public-facing workforce being prioritized. This includes hospitality and tourism related workers, a positive step to help the recovery in a sector which represented around 8% of GDP before the pandemic, but one which is still most dependent on the future relaxation of social distancing and travel restrictions. With between 12 and 15 months anticipated as required to complete the initial target of vaccinating around 182 million people, approximately 70% of the population, the need to couple this health drive with continued fiscal stimuli to ensure a smooth economic recovery is the challenge facing the government in 2021. It’s a situation not unique to Indonesia with several countries announcing in recent weeks, significant investments in measures similar to those announced here, where almost Rp700 trillion has been ear-marked in the current state budget to support Indonesia’s national economic recovery program. With Indonesia’s balance of trade remaining positive on the back of stronger exports, the rupiah stable, inflation low and consumer confidence showing signs of improving, Bank Indonesia last month also lowered by a further 25 basis points, its 7-day reverse repo rate to also help stimulate demand further.

 INDONESIA HAS EXPERIENCED an upsurge in digital content consumption in the past few years. Fueled by rising internet adoption, huge consumer population, smartphone ownership, and heavy use of social media platform, the trend will maintain heading north going forward. The trend has also begun shifting of ads spending from conventional media of print, radio, and television to digital platforms. Data from market research company Nielsen showed that advertising spending in those conventional media are declining, growing only by 2% from the third quarter of 2018 to the second quarter of 2019, compared to 6% grown in the same period of 2017 to 2018. On the other hand, despite lacking clear data about the actual ads spending in digital platforms in Indonesia, people believe the numbers are going up inline with the viewers.

Our warm best wishes for a healthy and prosperous 2021 to all our readers. Perhaps more so than recent years, this new year brings an increased expectation of renewal, both of personal ambition and expectation for a better year ahead and for companies, which while needing to continue to adapt the new business conditions brought about by the pandemic, most of whom will start the year with a fresh financial slate after closing out a 2020 significantly impacted by public health measures across the globe. 2020 saw many companies which had already embraced technology, not just those labeled as tech-companies, survive and thrive in a stressed business environment whilst many others accelerated their conversion of off-line processes to on-line ones. 

As the calendar rolls into its last month each year, it’s usually a time to reflect on the 12 months past and look forward on an optimistic note to the opportunities ahead. The clarity of thought and action, or in some cases, a lack of it, by the world’s governments to control the virus has resulted in developed countries finishing the year on quite different recovery curves. Whilst the recent positive news on vaccines will give optimism to all of them, the need to roll out vaccination programs will still leave at least the first half of 2021 with a significant overhang before global trade and travel can truly begin to recover.

With Indonesia recording a decline in GDP during Q3 2020 of 3.49%, the country has for the first time in over 2 decades, entered a technical recession. It’s a position shared with many other countries and reflecting the continuing slowdown in business activity and trade which the responses to the pandemic have induced. After stabilizing in July and August, Bank Indonesia’s latest consumer confidence index recorded a decline of 3.5 points to 83.4 with a negative sentiment being seen in 13 out of 18 cities surveyed following the latest round of PSSB social distancing restrictions implemented in Jakarta. On the positive side, the decline in retail sales has shallowed, inflation registered a small uptick but remains low at 1.44% in October and the PMI rose to 44.91% in Q3, up from 28.55% in Q2, still in negative territory but reflecting a significantly improved outlook in the manufacturing sector.

When the economic slow-down initiated by the COVID-19 induced shut-down was in its early stages, most optimistic scenarios hoped for a V-shaped recovery whilst a U- or W-shaped one were already becoming apparent in some markets and business sectors just a few months into the crisis. Whilst those countries which acted early and strongly, for example China and Vietnam, are today showing signs of a V-shaped recovery driven largely by domestic consumption, it is not the case everywhere and the lexicon of letters economists use to describe the global recovery is now more frequently using that usually silent letter in the English language, K. This reflects the disparity now apparent in recovery scenarios being faced between countries, industries and social classes with very differing time-frames and depth of impact being faced across different markets. Policy packages are going to need to become more specific in their application if we are going to help those sectors and workers in areas more deeply affected, catch-up again with those returning to stability and growth more quickly.

The economic impact of reduced demand is seen in the recently released statistics with inflation falling 0.1% month–month to an annual rate of 1.54% in July 2020, the producer price index falling 1.44% in the second quarter and second quarter GDP being reported at -5.32% on an annual basis. With the de- cline in exports holding up better than the reduction in imports, -9.9% versus -32.55%, Indonesia reported a healthy trade surplus in July 2020. The government continues to focus on strategic areas to reduce Indonesia’s reliance on imports and in addition to agricultural initiatives already in the pipeline pre-covid, the dependency on imported raw materials for drug manufacturing has been added as a critical risk area to be addressed as a result of the disruptions to the supply chains caused by the crisis.

Several countries have spent the past six months tackling the COVID-19 crisis seemingly with a hope that if one can hold one’s breath long enough, it will pass and life can go back to normal. The recent resurgence of the virus in countries that seemed to have gotten over the worse of it, coupled with the beginnings of a greater understanding of the severity of the medical conditions it can cause, indicates we are in for the long haul. Even if a vaccine can be developed quickly, it is still to be proven how effective it will be, how long a dose will last, and how fast it can reach sufficient people to create “herd immunity” on a global scale. All of these will have a great role in restoring the confidence needed to kick-start local consumer- driven and global trade-driven recoveries.

This month, we continue our articles on businesses adapting to the new economic dynamics whilst our cover features Hermanto Tanoko, a suc- cessful second-generation entrepreneur from Surabaya. After working in and helping develop his father’s Avian branded paint business, Hermanto branched out together with his wife into property and then bottled water. Their diversified business interests today also cover manufacturing, F&B, consumer goods, retail, and hospitality businesses, all managed under the holding company, PT Tancorp Abadi Nusantara.

With th most countries now moving, or shortly moving, from contain- ment policies to measured re-openings, the cost of the COVID-19
pandemic is still mounting socially and economically. Although 
China began its re-opening phase in April, marking the early part of that month as the peak of global economic inactivity, much of the rest of the world is only now in the early stages of re-opening, so the true depth of the pandemic’s impact is yet to emerge. As more data becomes available, ana- lysts from across the spectrum of governments, policy makers and scientists will all be able to step through the looking-glass to reflect more deeply on what needs to be done to mitigate the impacts of the current crisis, in both human and economic terms, and on what should be done to be better pre- pared for a future pandemic.

These challenging times make it important we share ideas and collaborate to find previously unforeseen opportunities. At Forbes Indonesia, COVID-19 has encouraged us to explore new channels to facilitate such collaboration, including preparing several webinar series' and opening up our digital channels for columnists and professionals to share their thoughts. Like the Asian Monetary Crisis which led to improvements in the Banking and Financial sector, we believe there is much to learn together and improve on after the pandemic ends.

Mari Elka Pangestu (63), former Minister of Trade and later Minister of Tourism and Creative Economy, has been appointed Managing Director in the World Bank as from March this year. She is the second Indonesian ever to hold the position since Sri Mulyani Indrawati, a fellow economist, left to take the position of Finance Minister. Befittingly, Mari graces the cover of this month’s issue.

The good news: The US has recognized Indonesia as a developed country, following the decision of the US Trade Representative Office (USTR) to revoke the special preferences for Indonesia and other developing countries in the World Trade Organization (WTO).
The bad news: The decision, issued last month, makes Indonesia no lon- ger eligible to receive Special Differential Treatment (SDT) from the WTO’s Agreement on Subsidies and Countervailing Measures. In plain terms, this allows the US to impose higher tariffs on Indonesia’s exports.

Forbes Indonesia took a big step last year by presenting our very own 30 Under 30 list. We have seen many of last year’s honorees gaining significant tractions in their achievement, further growing their business, extending their networks to facilitate more substantial impact, and, most importantly, inspiring more young generation across the country.
That being said, this year, we are proud to present Forbes Indonesia 30 Under 30 2020. From the submissions we received, we were able to see the enthusiasm of aspiring youths in Indonesia. They have proven themselves that age is not an issue when it comes to contributing to society, innovating, and making achievement.

In a narrow business and economic sense, 2019 was arguably the year of millennials and the digital economy. Both are two sides of the same proverbial coin, and they appear set to become – if not already – gamechangers in this country. In practical terms, they had defined the shape of business to come in ways that Indonesians have never experienced before.

There are five new names, among them Ferrari fan and construction tycoon Donald Sihombing, who founded and runs the company that built the Four Seasons hotel in Ja- karta, Totalindo Eka Persada, as well as Winarko Sulistyo, who sold a 45% stake in packaging paper producer, Fajar Surya Wisesa, to Thailand’s Siam Cement in May for $557 million. (He and his family still own 44%.)

INDONESIA’S DIGITAL ECONOMY is flourishing. In October, the Minister of Communication and Information Technology Rudiantara welcomed payment platform OVO as the country’s fifth unicorn. With the previous four being the ride-hailing app Go-Jek, online booking platform Trav- eloka and ecommerce platforms Tokopedia and Bukala- pak. He added that the next potential unicorn could come from the health and education sector.
Forbes Indonesia has been covering the journey of the country’s digital economy since its early days. In 2014, we released a special cover themed “The E-Gang” featuring entrepreneurs behind several local startups and venture capital companies. Since last year, we began extending the support by creating a special event, the Forbes Indonesia Digital Conference (FIDC), to bring the most prominent people in the digital industry and also the conventional family business and corporations to discuss the future of Indonesia’s digital economy.

Conventional wisdom dictates that if you gather five economists for a roundtable discussion, they are likely to come up with a list of of conclusions exceeding their number. This rather peculiar theory seems to hold up albeit on a smaller scale recently when Country Director of the World Bank Indonesia, Rodrigo A. Chaves, last month met with President Joko Widodo (Jokowi) to remind him of a possible global economic weakening.

The months leading to the new year promise to be exhilarating times for us. For one, the current president, Joko “Jokowi” Widodo, is ready to be sworn-in for the second time, in October, setting the stage for him to address the nation’s underperforming human capital in the next five years.
His first term (2014-2019) proved to be, by all measures, a resounding success in terms of rebuilding the nation’s much neglected infrastructure. His post-elections statements are fraught with a strong resolve to bring Indonesians on a par with at least neighbours Malaysians and Singaporeans, prompting much praise from the nation’s wide political and social spectrum.

The month of August marks the occasion for this magazine to celebrate high-performing companies that excel in their respective fields. For a publication that promotes entrepreneurship and advocates the free market system, it is only appropriate for the editors to hand out kudos to companies that in the past year stood out in the nation’s ever-widening business horizon.

Our underlying message in featuring these high achievers is the desire to instill encouragement in other companies to emulate their more successful peers. For the more successful they become, the better the prospects are for job creation which in turn will turn the economic wheel further and faster.
Thanks to the combined forces of sharp business acumen, sound management and, perhaps more importantly, good fortune, the companies featured in this issue have made it with flying colors.

Forbes Indonesia’s Local Champions highlights and celebrates the success of entrepreneurs and business leaders who have built successful business from the rural and regions. In this edition we feature a young entrepreneur from Yogyakarta who runs a fast growing beauty and skincare business, the next generation of tea business from Solo who is now trying to educate and tap the market on premium tea, Sidoarjo-based seed producer Bisi International who controls the biggest market share in hybrid maize seed and exporting horticultural seed, Bali local football team who recently went public, and a Cornell University graduate who prefers to start a coco sugar export oriented business from Purwokerto. These entrepreneurs and companies should be a source of inspiration, as not only they help create employment and local economy to thrive, but also manage to create successful business in a more challenging manner.

The luxury business is a niche segment, where brands offer high price in exchange for superior quality of products and services, from luxury cars, watches, to concierge assisted travel. The small number of people that can afford to be in this segment is continuously increased by the new creation of wealth, hence sustaining these businesses to grow and prosper. Here are some successful examples of luxury business players in Indonesia.

November 2021

October 2021

September 2021

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July 2021

June 2021

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April 2021

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February 2021

January 2021

December 2020

November 2020

October 2020

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August 2020

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