While global and domestic challenges to economic growth—particularly in the logistics sector—remain substantial, the potential for continued growth in 2025 still exists. This growth can be realized if existing opportunities are effectively leveraged.
Yukki Nugrahawan Hanafi, Chairman of the Supervisory Board of the Indonesian Logistics and Forwarders Association (ALFI/ILFA) emphasized this during a discussion on business opportunities and challenges for the coming year.
Yukki, who also holds as Chairman of the Regional Asia Pacific (RAP) of the International Federation of Freight Forwarders Associations (FIATA) expressed a mix of optimism and realism regarding the economic landscape. He acknowledged that while both external and domestic economic challenges have the potential to dampen growth, Indonesia’s projected economic growth of 5-5.1% remains achievable.
“Despite risks such as domestic purchasing power and public consumption being under pressure from policies like the 12% VAT increase and a 6.5% UMP (minimum wage) hike, we remain optimistic that government spending will be a key driver for the national economy, helping us maintain our growth targets,” said Yukki.
Yukki outlined three major factors that will influence the global and domestic economy in the coming year; first, trade tensions, particularly the US’s tightening of import policies and the potential impact of increased tariffs under the new administration. Second, the Federal Reserve’s interest rate decisions, which have been lower than market expectations, and third, geopolitical tensions in the Middle East, which could disrupt global supply chains and affect commodity prices.
Yukki also highlighted the potential for disruptions in global supply chains, including a shift in production and logistics centers. ASEAN countries, including Indonesia, are increasingly being considered as alternative production hubs for the global market.
“As the largest economy in ASEAN, Indonesia stands to benefit significantly. If ASEAN is viewed as a new economic center, we must seize this opportunity,” he continued.
Downstreaming and Green Investments as Growth Drivers
Yukki emphasized that two crucial areas could serve as the pillars of Indonesia’s economic growth in 2025: downstreaming and green investment. He sees downstreaming—adding value to raw materials—and sustainable green investments as fundamental to supporting the national economy.
“New Renewable Energy (EBT), green infrastructure, and digital technology will play pivotal roles. Additionally, infrastructure projects, including the government’s plan to build 3 million houses, as well as food security initiatives, are key areas that will foster growth,” he said.
To achieve the desired growth, Yukki stressed the importance of boosting domestic purchasing power, particularly among the middle class, which accounts for more than half of the national GDP. Incentives to stimulate consumer spending will be essential to maintaining economic momentum.
Opportunities for National Logistics Companies
Despite the challenges, Yukki urged national logistics companies not to be overly cautious but to actively pursue the opportunities available. He believes that Indonesian logistics firms can expand their market share, especially given the geopolitical issues and global trade tensions.
“The ongoing trade war will likely lead to an increase in foreign investment in Indonesia, boosting national production and driving growth in export volumes. We’re already seeing increased interest from foreign investors, including those from China. This presents a significant opportunity for Indonesia,” said Yukki.
He explained that foreign companies may choose to set up manufacturing facilities in Indonesia to avoid the high tariffs imposed on exports from China to the US. This could create a favorable environment for Indonesia to attract more foreign investment while offering growth opportunities for local logistics companies.
“Rising demand for Indonesian products will help drive export volumes, which will, in turn, benefit our domestic logistics industry,” he added.
Yukki also noted that increased demand would stimulate the growth of local industries. “With greater demand, local industries will expand, and foreign investment will continue to flow into Indonesia,” he said.
However, he cautioned that the government must ensure that local businesses, including logistics service providers, also benefit from these opportunities.
“We welcome foreign investment, but it’s crucial that national companies are more involved. The government needs to ensure that foreign investment brings tangible benefits to Indonesia’s logistics sector,” he concluded.