In the face of the era of geo-economic fragmentation and escalating techno-nationalism in the global market, the Indonesian government has designated its focus on the semiconductor sector as a strategic step to fortify economic sustainability and technological resilience domestically. The pursuit of semiconductor investment opportunities is not merely a response to global economic dynamics but also a proactive measure to establish a self-reliant and competitive technological foundation.
Geo-economic fragmentation, exacerbated by international trade tensions and inter-country competition, has prompted many nations to explore ways to reduce dependence on global supply chains. Indonesia, as a key economic player in the Southeast Asian region, responds to this dynamic by seeking diversity and economic sustainability through investments in the semiconductor industry.
Understanding the Causes of Geopolitical Shifts and Their Impact on Semiconductor
Abdurohman, Head of the Macroeconomic Policy Center at the Fiscal Policy Agency (BKF) within the Ministry of Finance, sheds light on the escalating geopolitical shifts and techno-nationalism since the onset of the Covid-19 pandemic. This global phenomenon initiated with disruptions in supply chains across the globe during the pandemic, leading to challenges in the movement of goods to various countries. Nations, in response, began safeguarding their supplies, particularly in crucial technological domains.
Abdurohman emphasizes, “Certain critical technologies were safeguarded to prevent their unrestricted distribution. The United States, for instance, enacted the chip act, restricting high-tech investments in China.”
This global trend has palpable repercussions for Indonesia, prompting the country to engage in a process of adapting and seizing opportunities. Abdurohman underscores the need for Indonesia to actively attract investments, particularly from suppliers dealing in essential components.
Indonesia Has Resources to Revitalize the Semiconductor Industry
Yustinus Prastowo, Special Staff of the Minister of Finance for Strategic Communication, underscores Indonesia’s resource potential to nurture the semiconductor industry.
“With our available resources, downstreaming is advantageous, creating added value. However, we remain mindful of the upstream components,” notes Yustinus.
On the Indonesian front, there’s a recognition that further strengthening is required, accompanied by mapping out opportunities and addressing challenges stemming from techno-nationalism.
Moreover, the Ministry of Industry (Kemenperin) previously supported the downstreaming of silica commodities, which holds significant potential for development as a raw material for the semiconductor industry. The industry is seen as having prospects as a forex earner and a creator of substantial employment.
Ignatius Warsito, Expert Staff for Strengthening Domestic Industry Capabilities at Kemenperin, emphasizes the necessity for Indonesia to drive the development of upstream and intermediate industries through the downstreaming of silica. This involves the transformation of silica into Solar Grade Silicon (SGS) and Electronic Grade Silicon (EGS) based silicon wafers.
He explained that silicon wafers are the building blocks for the semiconductor and solar cell industries. However, the industry processing silica into solar-grade silicon wafers is currently not available in Indonesia.
The downstreaming of silica into silicon wafers is expected to support the self-sufficiency of the domestic photovoltaic (PV) module and semiconductor industries. To achieve the downstreaming of silica into silicon wafers, several supporting activities are needed, such as drafting a silicon wafer industry roadmap and creating a comprehensive industry tree.
Boosting domestic semiconductor investment is expected to yield significant economic and social benefits. In addition to creating new job opportunities, this investment is also anticipated to support the development of skilled and competitive human resources in the high-tech sector.
In conclusion, the Indonesian government’s search for semiconductor investment opportunities reflects its commitment to addressing the challenges of geo-economic and techno-nationalism with strategic measures. By building a robust technological foundation, Indonesia aims to reduce dependence on the global market and strengthen its position as a key player in the technology industry. This step will not only provide short-term economic benefits but also shape a sustainable and innovative future for the nation.
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