The concept of the ASEAN Blue Economy revolves around sustainable ocean-based economic activities. Therefore, with its extensive coastline and maritime resources, Indonesia aims to become a leading force in this transformative movement. With a strategic position within the ASEAN region, Indonesia offers a wealth of investment opportunities for businesses eager to tap into the vast potential of the Blue Economy.
This article delves into Indonesia's pivotal role in the ASEAN Blue Economy and explores its compelling prospects for forward-thinking investors and sustainable economic growth.
THE POTENTIAL OF ASEAN'S BLUE ECONOMY FOR SUSTAINABLE GROWTH
Suharto Manoarfa, the Minister of National Development Planning/Head of Bappenas, expressed his optimism that the blue economy could be a new driving force for ASEAN's economic growth. The optimism is backed by over 66% of the ASEAN region being covered by water. Therefore, the potential for the blue economy is enormous.
Bappenas reports that ASEAN waters contribute to 15% of global fisheries and support around 625 million jobs in related sectors. The potential of the blue economy lies in its capacity to generate annual revenues ranging from USD 3 trillion to 6 trillion and create approximately 260 million jobs globally.
As per the Organization for Economic Co-Operation and Development (OECD), the value-added output of the global ocean economy has the potential to increase twofold, from USD 1.5 trillion in 2010 to surpass USD 3 trillion by 2030. Moreover, transitioning to a blue economy presents opportunities to achieve sustainable development goals (SDGs) in ASEAN.
According to the Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), there are nine primary industries considered key for growing a blue economy, which are:
Good environmental management can support the long-term productivity of fisheries and generate new market opportunities for seafood products.
Improvement in environmental performance in this sector can present opportunities, such as cost savings from fuel efficiency and access to more customers from the reputation for meeting environmental requirements.
A growing number of tourists are aware of the potentially negative impacts of their activities and are demanding more sustainable eco-tourism options that support local communities.
While the oil and gas sector is expected to significant growth in East Asia, proper environmental management will be crucial to maintain its ability to operate effectively.
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Consumers are now more mindful of their purchases, urging companies to be transparent about their environmental and social practices in the manufacturing supply chain.
Utilizing the best available technology can minimize disturbance to surrounding ecosystems and cause less damage than terrestrial mining.
The ocean presents several renewable forms of energy, including waves, tides, currents, thermal gradients, wind, and biomass.
Marine species can be utilized as key ingredients for biofuel, cosmetic products, dietary supplements, painkillers, and even treatments for cancer, asthma, and arthritis.
Applying environmental services and technology is essential to addressing problems related to pollution and deteriorating water quality on the coasts.
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Indonesia successfully launched the Global Blended Finance Alliance (GBF) in 2022 as part of its G20 Presidency. The alliance plans to mobilize new sources of development financing from non-government actors. Minister Suharso emphasized that ASEAN member countries could benefit from the GBF Alliance to unlock the blue economy potential.
The GBF alliance can attract leading investors and experts in the blue economy sector to develop eco-tourism and ocean-coastal waste management. Therefore, the development will lead to sustainable marine manufacturing projects.
Indonesia has already developed a comprehensive blue economy roadmap to promote a competitive, innovative, sustainable, and inclusive blue economy. The roadmap also serves as a signal of Indonesia's readiness in this aspect to other ASEAN states.
With the contribution of Indonesia to ASEAN's blue economy, Indonesia holds immense potential to be the champion for the blue economy, ranging from its geographical aspects to its policy instruments.
Bappenas' Deputy for Economic Affairs, Amalia Adininggar Widyasanti, stated that Indonesia's Chairmanship in ASEAN 2023 could play a crucial role in spearheading the development and implementation of the blue economy in the region.
Therefore, Indonesia holds significant potential for a blue economy for several reasons:
Indonesia has more than 17,500 islands, 108,000 kilometres of coastline, and three-quarters of its territory at sea. Oceans are central to Indonesia's prosperity, supporting activities like capture fisheries, aquaculture, coastal tourism, marine construction, and transportation.
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Indonesia is the world's second-largest fishery sector, valued at approximately USD 27 billion, providing seven million jobs and fulfilling over 50 percent of the nation's animal-based protein needs. Indonesia's tourism industry heavily relies on its oceans, contributing around USD 21 billion to the GDP in 2019.
Indonesia's commitment to a blue economy is evident through clear political will, as seen in President Joko Widodo's blueprint known as Nawacita. The blueprint emphasizes the government's determination to prioritize sustainable practices, including responsible utilization of marine resources.
Indonesia has pledged to preserve natural capital, including marine resources, to mitigate climate change, as demonstrated by its participation in the Initiative Natural Capital Carbon Communities Super Power.
The World Bank estimates the value of Indonesia's blue economy at USD 1.338 billion, highlighting numerous opportunities for revenue, including coastal culture, capture fisheries, treasure-laden shipwrecks, marine tourism, coral reefs, seagrass, and mangroves. Currently, the blue economy contributes 6% to Indonesia's GDP, and this share is expected to grow to 12.5 to 15% by 2045.
Albeit the huge potential, Indonesia faces three major challenges in developing the blue economy:
Lack of literacy and understanding among the public and businesses regarding the development of the blue economy.
The blue economy's potential currently needs to be utilized, and it needs to be optimized.
The declining interest among the younger generation has become an issue in ensuring a long-term commitment to the blue economy's growth.
Considering the current situation, the development of the blue economy is imminent. Indonesia's leadership in ASEAN 2023 is also expected to trigger collaboration for the development of the blue economy in the region, which contributes to 15% of global fisheries.
Given the immense potential of Indonesia for a blue economy, businesses can consider exploring investment opportunities in this sector.
Investors who aim to capitalize on the opportunities of the blue economy and its related businesses can seek assistance from Ascentium Indonesia, particularly concerning company registration and obtaining business licenses.