Repositioning Indonesia in the Post-COVID-19 Global Value Chains

At the end of 2019, a pandemic caught the world unprepared. The SARS-CoV-2 virus began spreading in Wuhan, China, before exploiting the interconnectedness that lies at the heart of the globalized economy. To halt the spread of COVID-19, many countries began closing their borders and restricting movements within. The integrity of global value chains (GVCs), which was already strained by the US-China trade war, took further blows when countries went into isolation. Multinational enterprises are beginning to rethink their dependence on China and governments are calling their corporations to return home (reshore) or move nearby (nearshore). With Southeast Asia potentially receiving the bulk of nearshoring in Asia, Indonesia is pushing for the biggest regulatory reform since the 1998 Asian financial crisis in order to benefit from this trend.