IBC's Papers

Indonesia’s cities and regencies face a waste management emergency due to persistent institutional weaknesses, ineffective household waste service delivery models, and weak policy implementation. As a result, Indonesia risks forgoing up to IDR 638 trillion in economic value from the transition to a circular economy.

This white paper by the Indonesian Business Council (IBC) presents ten policy recommendations to strengthen Indonesia’s waste management system through improved institutional arrangements, more effective service delivery models tailored to different city and regency contexts, and stronger regulatory coherence and policy implementation. Among the recommendations are separating the roles of regulator and operator through dedicated waste institutions such as BLUDs, BUMDs, or private partnerships; redesigning household waste collection models and integrating waste fees with existing utility billing systems; strengthening regulatory coherence through performance-based fiscal incentives, technical support, and capacity building for local governments; and rebuilding public trust through transparent service standards and effective communication. Together, these recommendations aim to create a waste management system where waste flows and financial flows reinforce one another, enabling greater private sector participation, stronger local government capacity, and a more sustainable circular economy.

Indonesia’s digital economy is projected to reach $130 billion by 2025, signalling strong growth but also exposing gaps in data security and fragmented governance. To sustain progress and attract investment, Indonesia must align its data regulations with global standards, such as pursuing EU adequacy. Achieving this would ease cross-border data flows, enhance investor confidence, and strengthen Indonesia’s role in the global digital economy. Without such alignment, the nation risks regulatory fragmentation, reduced competitiveness, and missed opportunities.

Indonesia enters 2025 in the middle of a cross-fire, facing an increasingly complex economic landscape shaped by both global disruptions and domestic challenges. The nation’s ability to navigate shifting geopolitical dynamics, trade realignments, and technological advancements while addressing structural inefficiencies at home will determine its economic trajectory. The IBC Business Outlook 2025 provides an analysis of these key forces, offering insights to equip businesses and policymakers with the foresight needed to adapt, innovate, and drive sustainable growth.

Indonesia’s ambition to achieve 8% economic growth hinges on improving its investment climate, particularly through enhancing the competitiveness of special economic zones (SEZs) like Batam and Bintan. Inspired by the successful transformation of Shenzhen, China’s first SEZ, these regions could serve as pilot zones for transformative economic reforms. However, challenges such as fragmented strategies, dual authority in Batam, ineffective legal frameworks, outdated arbitration laws, and unclear land regulations have hindered FDI. For instance, the missed opportunity of a USD 2 billion data center project that went to Johor, Malaysia. To enhance their appeal as SEZs and drive national economic growth, Batam and Bintan must focus on refining their development objectives, aligning legal standards with global norms, streamlining governance, strengthening infrastructure, and fostering regional collaboration. This policy brief attempts to lay the groundwork for transforming Batam and Bintan into competitive SEZs that can drive Indonesia’s economic future.

This study utilizes the World Governance Indicators (WGI) framework, developed by the World Bank, to provide a comprehensive analysis of Indonesia’s governance landscape. It highlights effective practices and offers practical recommendations to address the challenges faced by Indonesia. IBC believes the pressing need for governance reform is not only a matter of improving administrative efficiency but also a strategic imperative for Indonesia’s long-term development objectives. Without comprehensive reforms, the nation risks overcoming persistent issues like corruption, inefficiency, and inadequate public services.

The document emphasizes the importance of systematic and thorough governance reform as a high-priority agenda, crucial for achieving ambitious economic growth targets and enhancing the well-being of the Indonesian people.