Trade Shocks Are Here to Stay, Indonesia Must Seize the Moment

The latest McKinsey Economic Conditions Outlook – June 2025 offers a stark message for global business: we have entered an era where trade disruptions—not inflation—pose the greatest risk to growth. Executives around the world now rank shifts in trade policy and relationships as the top threat to their economies and companies.

For Indonesia, this moment calls for clear-eyed urgency—but also bold optimism. We are not merely bystanders in this economic realignment. We are one of the few nations that can offer both scale and stability in a world hungry for supply chain security, digital growth, and green transformation.

Trade Turbulence: A Global Reset We Must Prepare For

From tariffs and sanctions to regional trade blocs and friend-shoring, the rules of global commerce are changing rapidly. Over 65% of companies surveyed globally have adjusted their business models in response to US trade policy shifts. In China, that figure rises to 94%.

This is no longer about responding to temporary volatility. This is structural. We are entering a long-term phase of strategic realignment in trade. For Indonesia, the risks are real—but so are the opportunities.

Indonesia: At the Crossroads of Risk and Renewal

Indonesia’s export base—built on commodities, raw materials, and energy transition inputs like nickel—is exposed to new trade barriers and geopolitical uncertainty. Yet our position as a G20 economy, a maritime hub, and a growing digital society gives us a chance to turn disruption into directional momentum.

And there are three sectors where Indonesia can—and must—lead:

1. Tourism: Investor Confidence Remains Strong

Despite global uncertainty, investor appetite in Indonesia’s tourism sector remains resilient. We see continued interest in sustainable resorts, wellness destinations, cultural heritage sites, and eco-tourism infrastructure. With the right policy clarity, licensing efficiency, and local community involvement, tourism can become a pillar of resilient growth.

In my work with the Indonesian Tourism Investor Club and KADIN, I meet international and domestic investors every month. Their message is consistent: Indonesia has unmatched potential—but it must stay the course on reform, connectivity, and digital readiness. Tourism is not just about visitors; it’s about value creation, community upliftment, and long-term national branding.

2. Food Resiliency Is National Security

As trade disruptions threaten food imports and global agricultural flows, Indonesia must urgently strengthen its domestic food systems. From upstream farming to downstream logistics and cold chains, we must treat food resiliency as an economic and humanitarian priority.

This means:

• Supporting agri-MSMEs with technology and access to capital

• Investing in climate-smart agriculture

• Empowering farmer cooperatives and local supply hubs

• Reducing dependency on volatile imports for key staples

A secure, self-sustaining food system is not just good economics—it is strategic sovereignty.

3. Digital, AI, and Talent Must Be Central

As the McKinsey report shows, companies are now prioritizing AI investment and workforce upskilling more than even supply chain issues. This is a wake-up call. Indonesia must invest not only in ports and roads—but in people and platforms.

This is how we:

• Make our tourism sector smarter and more personalized

• Enable small farmers to join global value chains

• Equip our youth for jobs that haven’t yet been invented

A National Call to Action

If Indonesia wants to lead—not just survive—in the new trade era, we must act fast and in concert. I propose four immediate priorities:

1. Fast-track digitalization for MSMEs and tourism operators

2. Establish Indonesia as a trusted, green supply chain partner

3. Integrate trade diplomacy with national development goals

4. Double down on human capital, food security, and AI readiness

Conclusion: Trade Is Not a Threat—It’s a Test

The age of trade friction is not temporary. It’s structural. But for Indonesia, it is not a threat—it is a test of our resolve and vision. A test we can pass if we move boldly.

By investing in resilient tourism, robust food systems, empowered MSMEs, and future-ready talent, Indonesia can redefine its role in the global economy—not as a bystander, but as a builder of inclusive, sustainable, and strategic growth.

We have the land. We have the people. We have the momentum. Now we must have the policy and the purpose.