By Sherine Chen    Photo：CANVA

In the face of the rising issue regarding the U.S.-Mainland China trade war, the “China plus one” strategy has emerged. This strategy is a business strategy for China-based companies to expand their operations by establishing production facilities or sourcing from another country alongside China. Initially, the strategy aimed to save costs by moving production to low-cost countries. However, in recent years, companies have used it to protect their supply chain and export markets from possible issues caused by conflicts between the US and Mainland China.

Since the U.S-China trade war began, Vietnam has become a top choice for companies due to its proximity to China, rapidly growing economy, and low labor costs. Despite Vietnam’s advantages, Indonesia could also offer the most potential for foreign investors looking for long-term opportunities. Being the largest economy in ASEAN, Indonesia presents significant growth prospects for foreign investors.

Despite the challenges present in Indonesia, there is also a promising future ahead. This is because the country possesses an enormous labor pool, growing middle class, and abundant natural resources. Standard Chartered Bank predicts that Indonesia's economy will expand from $4.2 trillion in 2020 to $10.1 trillion by 2030, positioning it as the fourth-largest economy globally in terms of purchasing power parity. 
 

Indonesia stands out among other ASEAN countries because of its large size and abundant resources. With a young workforce and a growing middle class, Indonesia is predicted to become on the world’s largest economies. As a “China plus one” option, Indonesia emerges as a strong alternative for addressing rising expenses in China and navigating uncertain situations such as trade disruptions. 

As an ASEAN member, Indonesia has signed and joined the two largest FTA in the world: ASEAN Free Trade Area and the Regional Comprehensive Economic Partnership. In addition to these two major FTAs, Indonesia has also been actively forming other trade agreements in recent years. 

Investing in Indonesia offers significant opportunities for foreign investors looking to expand alongside their operations in China. However, it also comes with notable challenges. For investors seeking long-term commitments and new growth prospects, Indonesia emerges as an appealing choice to complement their operations in China. Among its ASEAN counterparts, Indonesia's large size and abundant resources set it apart.
 

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