United Nations In Indonesia
Country Results Report 2021
Future Proofing, Industry 4.0, and the Circular Economy
Digitalization, big data, and machine learning are changing life so fundamentally in the 21st century that the world is commonly regarded as being in the midst of a fourth industrial revolution, advancing toward “Industry 4.0.” From videoconferencing to artificial intelligence, the tools of industry 4.0 allowed businesses to keep moving as the world stood still during COVID-19. But the pandemic also highlighted the vast inequalities in who gets to benefit from that technology, including in Indonesia where about half the adult population still lacks access to the internet.
Micro, Small and Medium-sized Enterprises (MSMEs) can play a key role in democratising Industry 4.0. However, some 78% of MSMEs in Indonesia have limited or no access to banking or fintech credit, according to data collected by the Indonesian Joint Funding Fintech Association. The UN is working to change that. For example, the UN’s PETRA and RESTORE projects assisted 204 MSMEs in disaster-affected areas to become more resilient in 2021, including by bringing financial services to 37 MSMEs. These two projects provided technical assistance to a further 29 community groups with 486 members, six SMEs, and 2560 households that own ultra-micro businesses.
COVID-19’s contracting effect on the economy has made MSMEs in Indonesia more vulnerable to bankruptcy, and it has become harder for startups to gain a foothold—particularly in less economically developed regions. In response, the UN’s Youth Co:Lab—the largest social entrepreneurship movement in the Asia Pacific region—fostered 74 youth-led businesses in Indonesia in 2021, with a near equal gender split among participants and more than one-fifth of the entrepreneurs hailing from eastern Indonesia. Mentorship and training over a five-month period helped accelerate start-ups in sustainable tourism, clean water, and education.
The UN is also working with the Ministry of Industry to implement the Swiss Government-funded Global Eco-Industrial Park Programme (GEIPP) and has implemented various capacity-building initiatives since Indonesia’s formal application in 2019. In 2021, those initiatives included stakeholder mapping, policy analysis, awareness-raising, and the launch of a dedicated website. Next steps include integrating Eco- Industrial Park approaches in relevant local regulations, which is expected to improve the competitiveness of industrial parks in Indonesia, reduce their environmental footprints, and cut operational and compliance costs.
The UN is also fostering Indonesia’s transition to Industry 4.0 through its Circular Economy (CE) initiative, which encourages an economic model of production and consumption that centers on sustainability. The draft of an UN-produced document entitled Circular Economy Strategy: A Road to a National Action Plan is currently awaiting approval from BAPPENAS. The year 2021, saw the completion of three comprehensive studies that identify opportunities for CE activities that advance Indonesia’s low carbon agenda across five sectors. Over 600 people attended an online seminar on sustainable business practices, designed to help the Ministry of National Planning raise awareness of the potential of CE interventions. Two out of three staffers at the Ministry’s Circular Economy Secretariat are female, and in line with the UN’s “no manels” pledge, more than half of the speakers at the online seminar were women.
Another UN supported circular economy initiative that wrapped up in 2021 focuses on reducing the release of toxic, persistent, and hazardous chemicals known as Polybromodiphenyl Ethers (PBDEs) and Unintentional Persistent Organic Pollutants (UPOPs) from plastic manufacturing and recycling industries in Indonesia. The UN supported the development of new technical guidelines that strengthen the regulatory framework around PBDEs; it also implemented a pilot recycling scheme for PBDEs at seven facilities now connected to the Internet of Things (IOT). A parallel UN project, supported by the World Bank, assists Indonesia in phasing out Ozone-depleting hydrochlorofluorocarbons, or HCFCs, from industries such as refrigeration, air conditioning and firefighting.
Several key circular economy interventions designed to stabilize Indonesia’s food systems are detailed under Output 2.3. One example is the development of a digital application that helped more than 1900 smallholder fish and seaweed farmers increase efficiencies and lower production costs. The app uses a unique calculator to help users determine the optimal mixture of food materials that will keep fish healthy while keeping costs down; it also enables the Ministry of Marine and Fisheries Affairs to communicate effectively with some 3,000 extension workers it employs across the sector