Government targets emerging economy Indonesia in export drive

Published 19 May 2017 in:

Utrikesdepartementet på Gustav Adolfs torg i Stockholm. Foto: Jacob Nyström

By 2020, more than half of the world’s economic growth is expected to take place in Asia. This means it will be increasingly important for Swedish exports to move beyond Europe and reach new distant markets. The Swedish Government’s focus on Indonesia will therefore concentrate on these new business opportunities.

Most of the world’s largest and fastest growing economies are already in Asia.

Indonesia is a blind spot on the map for many Swedes. But during the ‘Business opportunities in Indonesia’ seminar, organised by the Ministry for Foreign Affairs and Business Sweden, many arguments were presented for why Sweden should build long-term relations with this country. The country, which takes seven hours to fly over and comprises around 17 000 islands, is expected to be the world’s fourth largest economy by 2050 and already has many active consumers. For example, the country has 330 million active mobile phone subscribers. “With a population of around 260 million, Indonesia is the world’s fourth most populous country. It also has the largest economy in South-East Asia,” says Tobias Glitterstam, Regional Manager for Asia Pacific at Business Sweden. He illustrates this by showing a world map on which Asia is circled, stating that there are more people inside the circle than outside it.

Despite the fact that over half the world’s population lives in Asia and despite the very positive outlook for Asian economies, only 12 per cent of Swedish exports went to Asia in 2016. “This is about the same as we export to Norway, which is why there is great business potential for Sweden in Indonesia,” says Mr Glitterstam. Minister for EU Affairs and Trade Ann Linde confirms this: in the near future, global transitions such as urbanisation, the digital transformation, energy transitions and climate change will require major investments in modernisation and the expansion of infrastructure and systems around the world. “Such societal challenges increase global demand for smart system solutions, and this is where Swedish business, education, research and innovation are at the absolute forefront,” says Ms Linde. Ms Linde also strikes a blow for Swedish exports in general. “Around 1.4 million Swedes have a job to go to thanks to exports. This is proof of how dependent Sweden is on its exports,” she says. The Government’s Export Strategy was launched in September 2015. It proposes a series of initiatives to strengthen export opportunities for Swedish companies in several important markets. One such initiative are the recent visits by Team Sweden delegations to countries such as Brazil, India and the Philippines.

The Government is also working with sectors in Sweden with untapped export and internationalisation potential, and whose expertise to solve societal challenges is attractive to foreign interests. The Swedish Government has identified Indonesia as one of 26 priority countries for its export strategy.

Anders Wickberg, Trade Commissioner for Business Sweden in Jakarta, has noted a growing interest in Indonesia by Swedish companies; 95 per cent of the Swedish companies already operating in Indonesia are planning to grow. Moreover, negotiations have been under way since last year on a free trade agreement between the EU and Indonesia, which would further pave the way for Swedish companies in the country.

Indonesia has also chosen to join the ‘Global Deal’, an initiative taken by Prime Minister Stefan Löfven to highlight today’s challenges in the global labour market. The Global Deal encourages governments, employers and trade unions to work towards improving dialogue between the social partners. The initiative will promote decent work, increased productivity and greater equality.

“The importance of a good relationship between managers and employees is self-evident for Swedish companies. We also know that social dialogue strengthens Swedish companies. Globally, it is evident that an efficient labour market is a defence against emerging protectionist forces,” says Ms Linde.

The ‘Business opportunities in Indonesia’ seminar was part of the run-up to the Swedish State Visit to Indonesia starting on 22 May. The State Visit will be accompanied by a Swedish business delegation.