Over the past decade, Indonesia’s economic ties with the Arab world and Turkey have largely depended on fossil energy and labor exports. However, a shift is occurring as the country aims to integrate into high-tech industrial supply chains and the green economy by 2025-2026. This new approach is encapsulated in the “Indonesia Incorporated” strategy, which unifies various economic entities to enhance trade policy. Indonesia’s unique position as the world’s largest Muslim-majority democracy provides a strategic advantage in economic diplomacy, but it must overcome significant barriers to achieve tangible trade results. Notably, Indonesia has begun exporting premium rice for Hajj pilgrims and is developing strategic properties in Mecca, while expanding economic relations with the UAE, Saudi Arabia, Egypt, and Turkey, including a target trade partnership with Turkey worth USD 10 billion by 2028.
Why It Matters
Indonesia’s evolving economic strategy highlights its effort to transition from traditional reliance on fossil fuels to a diversified economy, particularly in high-tech and green industries. The country’s strategic trade agreements, such as the IUAE-CEPA, have already yielded significant bilateral trade growth, reaching USD 5.1 billion in 2024 with the UAE. Moreover, Indonesia’s historical investments in the region, including acquiring strategic properties in Mecca, demonstrate its commitment to enhancing its economic footprint in the Gulf. As Indonesia seeks to establish stronger economic ties with both established and emerging partners, the success of these initiatives is crucial for its long-term economic resilience and growth.
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