Indonesia Needs Powerful Partners to Become a Manufacturing Hub for Medical Equipments and Pharmaceuticals
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By ekonomi.bisnis.com
News | January 17, 2024
Economists believe Indonesia requires strong partners in the healthcare and pharmaceutical industries in order to attract more investment and build the country as a manufacturing powerhouse. The government prioritizes the growth of the pharmaceutical industry for global competitiveness in the Making Indonesia 4.0 roadmap, RIPIN 2015-2035, the Omnibus Law on Job Creation, and the Domestic Product Utilization Improvement Program (P3DN). Furthermore, the Ministry of Industry stated that the pharmaceutical and medical device industry was valued at US$3.5 billion (Rp54.7 trillion) in 2021 and is projected to grow to US$6.5 billion (Rp101 trillion) by 2026. According to Bhima Yudhistira, Director of the Center of Economic and Law Studies (Celios), Indonesia needs strong partners in this business while also developing an appealing investment climate to boost investment flows.
"The prospects for this pharmaceutical sector are promising because Indonesia has drug raw materials." "Because Indonesia has a high biodiversity, raw materials can be obtained naturally," remarked Bhima. In this regard, he backs the government's efforts, led by the Ministry of Industry, to entice Japan to engage in the pharmaceutical sector, particularly drug raw materials (BBO).
According to Bhima, Japanese investment in the Indonesian pharmaceutical business climbed from approximately US$127 million in 2010-2015 to US$1.7 billion in 2022. "There is a significant increase, although compared to other investments in the automotive sector, it is still small from Japan," he added. However, given the availability of BBO and biodiversity or natural medication raw materials, he sees an enormous potential for the pharmaceutical business in Indonesia. Furthermore, the need for medications for the home market and export for developing ASEAN countries is highly enticing.
Indonesia has the potential to become a manufacturing hub for pharmaceuticals and health care items. "Then there is also guidance from the government to make this health sector one of the main sectors that will drive growth in the service sector," he said.
Bhima, on the other hand, believes that there are still issues in terms of human resources (HR) in the field of health technology. Meanwhile, HR in the healthcare sector has met the needs so far. Meanwhile, Indonesia continues to lack trained human resources for specialists working in pharmaceutical raw material processing factories. However, with increased investment in the pharmaceutical and medical device sectors, opportunities for technology transfer will arise. "Around the industrial areas or around the factories, many vocational high schools, vocational schools, will emerge to supply skilled labor in the health industry sector," he went on to say.
Other challenges include patent applications in Indonesia, which are still hampered in terms of application and licensing. He believes it would be easier if Japan brought patents from its native country to be manufactured in Indonesia. Furthermore, Bhima emphasized traditional issues such as logistics costs, supporting infrastructure to support industrial areas so that electricity supply stability, logistics, and logistics become more appropriate and competitive.