Jakarta. The Donald Trump 2.0 administration could mean massive business relocations from China to ASEAN countries, including Indonesia. However, Indonesia still needs to make domestic reforms to be able to tap into the opportunities, economists said on Wednesday.

Trump’s return to the White House has triggered the world talking. His comeback has led to an escalated trade war between the US and China. Lili Yan Ing, the secretary-general of the International Economic Association, stated that Trump’s second presidency could mean dollar signs for ASEAN.

“There are opportunities that emerge [from Trump 2.0 administration],” Lili told the Indonesia Economic Summit in Jakarta.

Trump’s second presidency can create an opening for ASEAN to supply the goods that the US typically imports from its top rival China. The heightened tension might also prompt Chinese companies to relocate their factories to Southeast Asia in an attempt to maintain access to the American market while avoiding Trump’s high tariffs on goods coming directly from China. This will likely boost foreign direct investment (FDI) inflows to Indonesia. 

“But the key for us [to seize these opportunities] is to make domestic reforms,” Lili said.

Indonesia is way behind its ASEAN neighbors in terms of the net FDI-to-gross domestic product ratio, thus reflecting the need for Jakarta to make major changes. 

Lili added: “Indonesia’s FDI-to-GDP ratio reached 1.6 percent in 2023 … and it even declined to 1.4 percent last year.”

The World Bank data showed Singapore’s FDI-to-GDP ratio at 34.9 percent in 2023. Close neighbor Malaysia recorded a 2 percent ratio in the same year, while Vietnam was higher at 4.3 percent. 

“This is a big homework for Indonesia. How can we tap into the FDI relocations if we don’t do domestic reforms properly? Simplifying investment procedures is something that we should highlight,” Lili said.

Mari Elka Pangestu, an economic advisor to President Prabowo Subianto, said she was aware of the problems often encountered by investors who wish to come to Indonesia. This includes the time taken for a foreign investor to register their company in the Southeast Asian country. 

“The World Bank reports that it takes 65 days [for a foreign company] to start a business here. Apparently, three days is the best practice. I remember the Investment Ministry said that they would reform that and shorten it to 10 days. So that’s something concrete that we have to work on,” Mari Elka told the same forum.

Indonesia recorded Rp 1,714.2 trillion (around $105 billion) in combined domestic and foreign investments throughout last year. About 52.5 percent of those investments came from international investors, official figures showed. The government reported that Indonesia was popular among American and Chinese investors that year. Indonesia logged $8.1 billion in FDI inflows from China and another $8.2 billion from Hong Kong. The US invested $3.7 billion in Indonesia last year.