Calling Indonesia ‘the Saudi Arabia of nickel’, one of the metals underpinning global steel production and ambitions to decarbonise energy and transport systems, would be an insult to Indonesia’s market dominance.

Indonesia’s mines accounted for nearly half of global nickel production in 2022. It has banned raw nickel exports since 2020 as the country pushes to move up global value chains for renewable energy. Indonesia is a G20 member, a developing democracy and has an enormous potential home market for both steel and electric vehicles (EV).

But despite the seeming centrality of nickel to net-zero ambitions, Indonesia may find itself in a situation eerily similar to that of Saudi Arabia and its oil reserves — sitting atop plentiful resources whose value is set to wane as the EV sector booms. The challenge lies in navigating two landscapes, one geopolitical and one chemical.

In a shifting geopolitical environment, Indonesia is attempting to secure a more prominent place in the EV battery supply chain. This involves moving beyond mining ore and benefaction to battery assembly at a time when major EV battery importers like the United States and the European Union (EU) are onshoring battery assembly.

In the United States, these attempts include enticing tax credits in the Inflation Reduction Act (IRA). In Europe, they include government loans via the InvestEU program, independent member-state initiatives and an anti-subsidy investigation into Chinese automakers. The investigation aimed to prevent Chinese EV makers who source nickel from Indonesia from flooding the European market with cheap imports. In both instances, Indonesia’s reliance on Chinese manufacturers and finance in the nickel sector creates vulnerabilities for its EV ambitions.

The second challenge is more fundamental. Indonesia’s nickel reserves and industrial ambitions are at risk of being rendered less valuable by changes in battery chemistry, or the combination of materials and technologies used in the batteries themselves. Nickel is a key component in nickel-manganese-cobalt (NMC) batteries, which currently dominate the market due to advantages in range and power-to-weight. But this dominance may be fleeting.

As with most things EV-related, Tesla is the bellwether. In 2021, Tesla adopted lithium iron phosphate (LFP) batteries, with nearly half of its production models using them by the first quarter of 2022. In August of this year, Tesla CEO Elon Musk announced that the company would be transitioning most of its entry-level vehicles — Model 3 and Model Y — and its shorter-range semi-trucks to using LFP batteries. For a regional hub, Tesla chose to set up shop in neighbouring Malaysia rather than in the nickel giant.

Tesla did not invent or even bring to market the first EVs, but it popularised and democratised them. Its move toward LFP batteries is one major reason that S&P Global forecasts that after 2030 the dominance of NMC batteries will wane in favour of LFP batteries. LFP batteries offer less range and high-end performance. But they are also less prone to catching fire and are made of much more globally abundant and cheaper raw materials. For most EV users, LFP batteries provide more than enough range and power.

This forecast does not include the effects of potentially market-disrupting frontier technologies like sodium-ion and solid-state batteries, upon which Toyota has placed a heavy bet. These technologies would further depress the relative demand for nickel. There will still be a market for NMC batteries in performance-oriented EVs offering pavement-wrinkling torque and acceleration. But the global market in the future may be smaller than the current one – and with technology, disruption is rarely linear. The market may change even more quickly than S&P anticipates

For Indonesia to sustain nickel as an engine for growth and development within these landscapes, its priority should be to cultivate closer relationships with the United States and the EU. These markets and their comparatively affluent consumer bases will drive an appetite for higher-performance, NMC-based EVs. Indonesia’s relationship with the EU is seemingly on track to expand, with shared ambitions to conclude negotiations on a comprehensive Indonesia–EU free trade agreement (FTA) before Indonesia’s 2024 election.

The outlook regarding the United States is less straightforward. In September, Indonesian President Joko Widodo proposed a critical minerals trade agreement with the United States during talks with Vice President Kamala Harris. A limited, critical minerals-specific FTA would allow Indonesian materials to qualify for the IRA’s domestic and FTA partner tax incentives. The FTA would seemingly be consistent with the US Biden administration’s desire to avoid creating more comprehensive, multi-sector and multi-issue FTAs.

Cultivating tighter US and EU relationships should not come at the expense of partnerships with Asian firms, including those in China and Korea. And EU and US partnerships will not be cost-free. Both the EU and the United States are concerned about Indonesia’s use of export bans as a tool of economic policy. The EU has already challenged Indonesia’s ban and won at the World Trade Organization.

The text of the IRA also specifically requires any minerals-specific FTA to commit parties to ‘reduce or eliminate restrictions on exports’ while allowing less extreme policies, like export taxes. And agreements with the EU and US will bring heightened scrutiny on the environmental impacts of open-pit mining and new business rules that some in Indonesia’s opposition view as too capital-friendly, allowing provincial governors to set minimum wages without input from trade unions and experts from civil society.

For Indonesia, the price of stronger EU-US partnerships may be substantial. But it would be preferable to seeing its nickel and related industrial ambitions become a casualty of changing chemistry and a shifting geopolitical landscape.

Source : East Asia Forum

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The International Partners Group (IPG), co-led by the United States of America and Japan and comprised of Canada, Denmark, the European Union, the Federal Republic of Germany, the French Republic, Norway, the Republic of Italy, and the United Kingdom of Great Britain and Northern Ireland, jointly welcome the launch of Indonesia’s Just Energy Transition Partnership (JETP) Comprehensive Investment and Policy Plan (CIPP).

Launched in Jakarta today, the CIPP is a roadmap for the government of Indonesia and the IPG to achieve the objectives laid out in the JETP Joint Statement, announced at the G20 Leaders’ Summit last year in Bali.  Under the Joint Statement, Indonesia committed to limit emissions, accelerate renewable energy development, and set a goal to achieve net zero emissions in the power sector by 2050.  To support these ambitious targets, the IPG committed to mobilize $10 billion in financing and the Glasgow Financial Alliance for Net Zero (GFANZ), a global coalition of leading financial institutions committed to accelerating the net-zero transition, committed to mobilizing and facilitating another $10 billion in financing.

The culmination of a year’s worth of work, the CIPP maps out a technical pathway for Indonesia’s power sector, recommends policy changes needed to successfully transition the power sector, and outlines a just transition plan.  It also serves as the basis to drive the $20 billion in JETP financing toward specific projects and priorities for Indonesia’s energy transition.

The CIPP technical pathway focuses initially on Indonesia’s on-grid power sector.  Under the CIPP technical pathway for the on-grid system, Indonesia’s on-grid system will emit no more than 250 MT CO2, down from a baseline of 305 MT, and will achieve 44% renewable energy generation share by 2030.  The partnership will work together to complete an analysis of Indonesia’s off-grid power sector in the coming months.  This analysis will serve as the basis for implementing the necessary measures to achieve a comprehensive energy transition.

The $20 billion funding package will be disbursed through various mechanisms, including via grants, concessional and non-concessional loans, and investments, and guarantees.  The IPG’s funding will direct support toward the priorities and projects identified in the CIPP, including renewable energy deployment; transmission and grid build out; managed phaseout and reduction in emissions from coal plants; and just transition initiatives.

As next steps, the Indonesian government and the IPG, supported by the JETP Secretariat, will continue to work together to implement the CIPP.  The IPG and GFANZ investors are actively working to direct financing towards potential JETP projects, and Indonesia’s implementation of the CIPP’s policy recommendations will enable the business environment for renewable investments.  These combined efforts are designed to help catalyze additional investments in Indonesia’s energy transition and spark a boom in Indonesia’s renewable energy sector.

Kanasugi Kenji, Ambassador of Japan to Indonesia said “Japan welcomes the release of the Comprehensive Investment and Policy Plan, which shows an ambitious pathway towards the net zero. The Just Energy Transition Partnership will promote Indonesia’s clean energy and economic development, which will also contribute to more sustainable, more prosperous and inclusive global economies and societies. Japan will continue to co-lead this JETP with the U.S., in coordination with the other partner countries, to support Indonesia’s realistic but ambitious decarbonization transition, while respecting Indonesia’s country ownership. Japan will continue to contribute to global decarbonization efforts through various initiatives including JETP.”

Michael F. Kleine, Chargé d’Affaires, Embassy of the United States to Indonesia said “Indonesia’s roadmap to reducing carbon emissions – the Indonesia JETP Comprehensive Investment and Policy Plan – is an important milestone demonstrating Indonesia’s leadership towards reaching net zero in the power sector by 2050 and promoting economic growth powered by renewable energy.”

Richard Le Bars, Chargé d’Affaires, Embassy of Canada to Indonesia and Timor-Leste said “The launch of the Indonesia Just Energy Transition Partnership Comprehensive Investment and Policy Plan demonstrates continued multilateral collaboration in support of Indonesia’s ambitious move towards clean energy systems and a sustainable future. Canada is committed to pursuing this collaboration with Indonesia and other partners, recognizing our shared interest in ensuring an inclusive, clean energy future in Indonesia and the wider Indo-Pacific region.”

Per Brixen, Deputy Head of Mission, Embassy of Denmark to Indonesia, Malaysia, Timor-Leste, Papua New Guinea and ASEAN said “Today’s launch of the Comprehensive Investment and Policy Plan (CIPP) marks another big step in Indonesia’s green transition. The CIPP demonstrates both a pathway and important steps to achieve a transition for Indonesia’s on-grid power sector that is not only green but also just. Denmark will continue supporting Indonesia building on our more than seven years of close technical collaboration on renewable Energy development, with the Indonesian Government.”

Denis Chaibi, Ambassador of the European Union to Indonesia and Brunei Darussalam said “The Indonesian Just Energy Transition Partnership (JETP) Comprehensive Investment and Policy Plan (CIPP) is the beginning of a transformative path that will allow Indonesia and the European Union to jointly contribute to the global fight against climate change. Through a mix of grants and concessional loans, the EU, the European Investment Bank and EU Member States have pledged over S3.7 billion for the transition away from fossil fuels. Moving forward, we have a unique opportunity to work together on the implementation of the CIPP, including on off-grid decarbonisation pathways.”

Fabien Penone, Ambassador of France to Indonesia, Timor Leste and ASEAN said “The release of the Comprehensive Investment and Policy Plan (CIPP) marks an important milestone in our collective effort to support and accelerate Indonesia’s energy transition in a just way that leaves no-one behind and brings about benefits for the Indonesian economy, the Indonesian people and the climate. France will keep engaging closely with the Indonesian government and international partners to deliver results in line with the high level of ambition of JETP.”

Ina Lepel, Ambassador of Germany to Indonesia said “Today’s launch of the Comprehensive Investment and Policy Plan is a great success towards a green energy transition in Indonesia. The Government of the Federal Republic of Germany highly appreciates the dedication and ambitions of the Government of Indonesia and is committed to provide substantial financing for implementing our Just Energy Transition Partnership. Together, we will shape a future where clean and affordable energy drives progress and preserves our planet for generations to come.”

Benedetto Latteri, Ambassador of Italy to Indonesia said “The CIPP will set the route for the achievement of JETP’s objectives. We acknowledge the effort made by the Indonesian Government. Italy is proud to be on the side of Indonesia in this ambitious path and to put the Italian state of the art technology and skills to the benefit of Indonesia for sustaining its energy transition efforts.”

Rut Krüger Giverin, Ambassador of Norway to Indonesia said “Norway is delighted to take part in this partnership and to support Indonesia’s efforts to develop clean energy and speed up the energy transition. We believe the Comprehensive Investment and Policy Plan will provide a good framework for mobilizing capital to accelerate the deployment of renewable energy in Indonesia. Norway will continue to support Indonesia’s commitment to reduce emissions and fight climate change.”

Dominic Jermey, His Majesty’s Ambassador to Indonesia and Timor-Leste, said “I congratulate the Government of Indonesia for today’s successful CIPP launch. The plan lays out important steps for the on-grid power sector and sets the stage for future strategies for the off-grid power sector. The United Kingdom remains a steadfast partner in Indonesia’s ambitions for energy transition. Partners across the domestic spectrum, the international community and the private sector will be vital to help Indonesia achieve its renewables targets and infrastructure investments.”

Source : US Embassy & Consulates in Indonesia

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The rise of security-driven economic policy in industrial countries gives licence to atavistic inward-looking policy thinking, infecting the framing of development strategies at a critical time in countries on the cusp of major developmental breakthroughs like India and Indonesia.

Geopolitics is changing the global economic policy landscape. Today’s backdrop of strategic competition and conflict has seen the return of industrial policy in advanced countries, driven by a security-based logic mixed with a second-best approach to the energy transition without a price on carbon. There has been an explosion of trade interventions, industrial policies and subsidies, exacerbating the threat to the world economy posed by the widespread derogation from the global trade rules.

How should developing economies like India and Indonesia navigate this policy environment, where self-sufficiency and import-substituting strategies are finding potent new favour?

East Asian economies have effected the only significant transformation from economic backwardness to advanced economy status in modern times. It’s thus wise to understand the lessons from the East Asian growth miracle, which still hold true today. And developing economies, constrained by their fiscal capacity, should recall the waste and futility of past industrial policies that picked industry champions rather than creating public goods to lay the base for broad-based industrial growth.

Successful East Asian development, based on the historical experience of Japan, South Korea, Taiwan, Singapore, Southeast Asia and China, was founded on trade-oriented growth (anchored in the disciplines of participation in international markets) and deeper integration into the international economy, not retreat from it or reliance on import-substitution. The rapid trade growth enjoyed by these economies was supply-driven, built on the expansion of market share in old, established industries, not expansion of trade in new, high-growth sectors of the global economy. Government investments were directed towards social and economic infrastructure in public goods such as roads and schools, with withdrawal from state involvement in enterprise.

Today, policymakers seem to live in a different age. Domestic events and geopolitical circumstances are visiting the prospect of stagnating growth upon established industrial economies, globalisation appears to have peaked, the international economy is becoming fragmented, and a policy pathology that favours self-sufficiency and import-substituting industrial policy is sweeping around the world.

The trope that a less optimistic outlook for global market growth now recommends that emerging economies turn to inward-looking import-substitution does not square with the experience of successful industrial growth in Asia.

In an international economic context, development is about drawing abundant labour into more and more productive employment, lifting productivity and national incomes.

Pro-development strategies are thus those that favour export-specialisation in labour-intensive products, drawing large amounts of labour into internationally competitive production and higher productivity employment. With the accumulation of capital, dynamic comparative advantage drives a more technology intensive export trade structure over time. The beneficent corollary of export-oriented development strategies has been a distribution of income that commonly favours labour.

The recent trend towards self-reliance and security has seen countries emphasise the production of high-tech capital-intensive goods from the start. Focusing on these sectors requires skilled labour, in short supply relative to abundant unskilled labour, and expensive government outlays, which come at the cost of providing essential government infrastructure. Failing to create jobs risks an entrenchment of inequality and an unsustainable stretching of public resources if a country grows old before it gets rich.

Successful trade-oriented growth comes from absorbing labour into industries that can capitalise on its abundance and establish international competitiveness. Doing this allows countries to take over others’ market shares as comparative advantages evolve, a process underwritten by a policy regime based on the principles of non-discrimination and open markets.

Even in a period of slow growth, the logic of comparative advantage still holds. Import-substituting policies undermine this transition by restricting access to low-cost and high-quality capital and technological inputs, preventing firms from achieving international competitiveness.

The East Asian economic miracle was certainly a messier and more complex story than has sometimes been portrayed in the narrative that describes its main features. In Japan, Northeast Asia, Singapore, China and Southeast Asia, the policy strategies that drove success were fashioned in different institutional and political settings and each had their own distinctive national character. Policy idiosyncrasies, technological context, geographic size and location have all shaped particular national paths and patterns of development across the region.

But some factors were ubiquitous throughout the East Asian experience. Opening up to competition from foreign markets and embracing international investment were central to rapid growth by enabling access to inputs that facilitated the absorption of abundant domestic labour into productive manufacturing employment. In addition to domestic reforms to support openness, increased mobilisation of state investment in education, health, transportation, communications networks and supportive industrial infrastructure, and reduced state shares in economic enterprise and the allocation of capital, typified successful industrial policy across the region.

China was no exception to these principles or to this experience. It has been a central element of it, at scale.

India and Indonesia, two of Asia’s most promising candidates for transformative industrialisation over the coming few decades, stand at a critical juncture in their development trajectories. Their youthful populations and recent strong economic performance put them in a demographic sweet spot.

Yet both countries are in danger of being caught in the undertow of industrial policy 2.0. The attunement of their development strategies to the principles derived from the East Asian experience would position them better both to fulfil their economic potential and avoid the danger that both now face of jobless growth.

Source : East Asia Forum

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Indonesia has dealt a critical blow to TikTok’s bold plan to turn millions of users into shoppers.

On Wednesday, TikTok, which is owned by the Chinese technology firm ByteDance, suspended its shopping platform in the Southeast Asian country to comply with new government regulations. TikTok Indonesia said in a statement on Tuesday that its “priority is to remain compliant with local laws and regulation” and as such will “no longer facilitate e-commerce transactions in TikTok Shop Indonesia”, starting 5:00 pm local time on Oct. 4.

Last week, Jakarta announced that it would require tech companies to separate their e-commerce offerings from their social media apps, thus banning users from buying and selling goods on platforms like TikTok and Facebook.

Indonesia, Southeast Asia’s largest economy, is home to some 125 million TikTok users, making it the platform’s second largest market after the U.S. ByteDance bet big on the country, choosing it as the first non-Chinese market for its social e-commerce service in April 2021. As late as June, TikTok CEO Shou Zi Chew said the company would invest billions of dollars in Indonesia and other countries to further expand its footprint in the region.

Yet last month, Indonesian president Joko Widodo complained that social media-based e-commerce threatened the country’s micro-, small- and medium-sized enterprises. Officials have previously accused TikTok of allowing predatory pricing on its platform and said it harmed local businesses. To give an idea of the business landscape, Indonesia has more than 64 million micro-, small-, and medium-sized enterprises that contribute over 60% of the country’s GDP.

How important is e-commerce to TikTok?

E-commerce is big business for ByteDance. In China, consumer spending on Douyin—the Chinese version of TikTok—increased by 76% year-on-year in 2022 to hit $195 billion, The Information reported.

Yet Bytedance could struggle to replicate its Chinese success globally. In addition to Indonesia, TikTok Shop is also available in other Southeast Asian countries like Singapore and Vietnam, but it faces competition from other players such as Shopee and Lazada, the latter of which is majority owned by another Chinese tech giant, Alibaba.

TikTok is also trying to generate e-commerce revenue from the U.S. TikTok Shop officially launched in the U.S. in mid-September. Yet low-quality offerings and the company’s policies on sharing consumer data are turning off some of TikTok’s prospective partners, Fortune reported during the week of the service’s launch.

The app is also in the crosshairs of U.S. lawmakers who see TikTok as a national security risk. The U.S. already bars the app from government devices, and some officials and legislators are considering an outright ban of the social media app.

Source : Yahoo

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Nadiem Makarim has led the Indonesian Ministry of Education, Culture, Research and Technology since 2019. Nadiem, a young startup entrepreneur, is one of the architects of the influential app Gojek.

Appointing a non-academic minister to oversee education was an unconventional choice — historically, all education ministers have hailed from academia. This decision elicited speculation but also optimism regarding potential transformative shifts in the education sector’s trajectory.

In his final year in office, Nadiem focused on his leading initiative — introducing a new curriculum and concept of Merdeka Belajar (Freedom to Learn), officially launched on 11 February 2022. This curriculum reform is underpinned by the aim of tackling chronic problems of learning loss among Indonesian students, which can be primarily attributed to subpar educational quality.

Curriculum revision extends beyond Nadiem’s administration — this pattern of change has been apparent in appointed ministers’ policies over the past 15 years. But Nadiem’s recent curriculum overhaul distinguishes itself by instilling optimism about integrating components that resonate with policy coherence and a systems thinking framework.

Policy coherence fosters policy integration and holistic alignment towards shared objectives. Systems thinking requires an understanding of the interactions and feedback loops among diverse system elements, acknowledging that modifications in one part of the system will have reverberating impacts. In practice, the systems thinking framework involves critical concepts like transparency, collective action and stakeholder engagement. This framework is imperative in addressing Indonesia’s chronic educational problems, which primarily stem from impractical past policies and grow in complexity as they intertwine with emerging external challenges.

Nadiem’s curriculum demonstrates transparency in its formulation, implementation and potential outcomes by providing readily available information to the public through dedicated online platforms. The curriculum also exhibits more explicit goals for enhancing quality education by emphasising fundamental skills of literacy, numeracy and logical thinking, narrowing the curriculum’s scope. This is coupled with complementary policies, including a new instrument of national assessment and adjustments to the university entrance exam, offering cohesion between Nadiem’s policies.

But the curriculum and its supporting policies also have several shortcomings. Notably, the mechanism for ensuring public accountability raises significant concerns, particularly regarding stakeholder engagement, public discourse and adaptive responsiveness.

For instance, the discourse surrounding the new curriculum appears to overlook the significant role of Initial Teacher Education (ITE) institutions, in education. Indonesia hosts more than 314 ITE institutions, with considerable quality and program disparities. But current policies lack a strategy to address and narrow this gap.

The policies also do not clarify how these institutions should align with and adapt to the concept of Merdeka Belajar at the school level. While Nadiem introduced the Kampus Merdeka (independent campus) policy as an extension of its primary emphasis is student mobility and university accreditation. The question of how these prevailing policies might contribute to bridging the quality divide among newly graduated teachers from diverse ITE institutions remains unanswered.

Another concern surrounds the one-sided nature of the government narrative, which leaves minimal space for critical perspectives and suggestions. Public discourse involves diverse stakeholder engagement to uphold policy coherence and foster systems thinking. This discourse has the capacity to illuminate overlooked domains, such as the strategic response to emerging critical issues like AI advancement or aligning education with the 2030 sustainability framework, while identifying discrepancies or contradictions between policies and societal expectations.

It then becomes the government’s responsibility to capture the narrative emerging from public discourse and stakeholder engagements through adaptive policy measures and feedback mechanisms. But this responsibility is difficult to shoulder.

The government’s inadequacy in adapting policy feedback is evident in the ongoing predicament surrounding school enrolment under the zonation policy. Introduced in 2017, this policy aligns with Merdeka Belajar to facilitate impartial access to quality education while mitigating biases and favouritism towards particular schools.

Nadiem’s decision to maintain the zonation policy stems from an analysis of its perceived benefits. Still, school distribution across Indonesia diverges across educational tiers, forming a pyramid structure where elementary schools predominate, followed by junior and senior high schools. This uneven distribution, compounded by regional disparities, has led to persistent annual enrolment challenges since the policy’s inception.

Upon requests for clarification, Nadiem has attributed the policy’s inception to the former minister, Muhadjir Effendy. Yet Nadiem refrained from outlining the strategy to optimise the policy’s benefits. Conversely, Muhadjir held local governments accountable for their failure to elevate the overall quality of schools within their respective regions, which led to intricate implementation challenges.

These examples indicate missing policy coherence and systems thinking elements in Nadiem’s policies. Assuming Nadiem will not continue in office after the 2024 election, a comprehensive policy impact assessment will only be feasible after his tenure. Still, he has an opportunity to effect change and leave behind a legacy as a reformer of the education sector.

Source : East Asia Forum

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Speaking in Japanese and bowing, 24-year-old Siti Maesaroh offers a tray with a mug and two bowls to a fellow student pretending to be an elderly person, before asking him if he wanted chopsticks and a spoon to eat with.

The role play is an example of the type of training being offered by vocational institutions across Indonesia catering to students seeking to fill job vacancies in Japan.

“I think the reason Japan chooses us is because Indonesian youths are very capable of caring for the elderly,” said Siti, who is attending the Onodera User Run school in Jakarta.

The school, established in 2022, also offers Japanese language training for its students seeking to enrol in a Japanese government programme to employ foreigners with special skills to work in sectors like care giving. 

Japan is one of the world’s most rapidly ageing societies, with people who are 65 or older now accounting for 28 percent of the population, according to UN data.

Births in Japan fell to fewer than 800,000 for the first time last year, according to official data, as Japan’s working-age population shrinks.

Hiroki Sasaki, labour attache at the Japanese embassy in Jakarta, estimates only about 130,000 of the 340,000 special skilled job vacancies in Japan have been filled.

A foreign workforce, therefore, is becoming increasingly necessary, he said.

As of December 2022, there were more than 16,000 Indonesians working under Japan’s special skilled worker scheme, the second-highest number behind Vietnam.

Indonesia is the world’s fourth most populous country with some 280 million people and Kamila Mansjur, the principal of the school, said sending workers to Japan to care for the elderly benefited both countries.

“In Indonesia every year we have an increase in the population of about three million. Yet here we have our own challenge which is a lack of jobs,” she said.

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There should be much harsher penalties, including homicide charges, for those who intentionally falsify medicine and include harmful ingredients, according to Kawaldip Sehmi, CEO of the International Alliance of Patients’ Organisations (IAPO).

Sehmi was speaking at an event hosted by Fight the Fakes Alliance in Geneva on Wednesday to highlight the global proliferation of fake medicine and the threat it poses to patients.

In October, 99 children died in Indonesia from cough syrup contaminated with anti-freeze chemicals.

The previous month, 66 children died in The Gambia – also from contaminated cough syrup. These tragedies echo the deaths of 12 Indian children in 2020 – from cough syrup that had been rendered poisonous after one of the ingredients was replaced by a toxic one.

Yet, said Sehmi, most countries treated falsified medicines as a commercial crime such as “product liability or negligence” when they should be treating it “in the same way as narcotics”.

“Trust is at the heart of everything. Patients have to trust that the product they’re getting is of the appropriate quality and safety,” said Pernette Esteve, who heads the World Health Organization’s (WHO) team on substandard and falsified medical products.

“Gaining the confidence of the public once you’ve lost it is very difficult. Think back to the COVID pandemic. Making sure that people trusted the vaccines, vaccine acceptability, was a key point.”

For 10 years, the WHO has been building a database of substandard (unintentionally defective) and falsified (deliberately altered) medicine to understand the scope, scale and harm.

From this database, the WHO has identified the three driving forces: lack of access to medicine, poor governance including corruption, and weak technical capacity, said Esteve.

The WHO’s response was based on “prevention, detection and response”, she added.

The extent of the problem

Stanislav Barro, Novartis’s global head of anti-falsified medicines, says that his company has confronted fake medicine in every region of the world.

The timely authentication of medicines was both the biggest challenge and the biggest opportunity to stamp out fakes, he said – but warned that it is “a very complicated process”. 

All the suspect samples have to be brought to a place where they can be actually properly authenticated using forensic means,” said Barro.

However, almost 50 pharmaceutical companies were now sharing data via the Pharmaceutical Security Institute, and there had been a 38% increase in the incidence of falsified medicines between 2016 and 2020 in 142 countries, and incidence had surged in 2021 during the early days of the COVID pandemic.

“Basically, this is whatever the criminal organisations can make money with. It doesn’t really matter whether it’s falsified, tampered, stolen, illegally diverted. It’s a bit of everything, quite frankly,” added Barro, noting that it usually meant “terrible news for patients”.

“We need to find solutions to leverage digital technologies to localise authentication, identify falsified medicines and make that timely. Cut down these timelines from weeks to basically days, hours if possible, and accelerate the reporting to local authorities and to the WHO.”

Policing raw materials 

Sireesha Yadlapalli, vice president for international government and regulatory affairs for United States Pharmacopeia (USP), called for more policing of raw materials.

Medicines are made of two components, the active pharmaceutical ingredients (API) and the inactive ingredients or excipients, including reagents, solvents and items related to the taste or look of the product.

There was less stringent policing of the excipients, and these were often where problems arose, Yadlapalli said.

“There might be an issue with an ingredient but the manufacturer may not know about that particular issue because he just took the supplier’s word and certificate of analysis at face value, and that’s because raw materials are not being tested when they’re accepted from suppliers,” she added.

“Manufacturers need to test the raw materials. Regulations should be put in place requiring testing of these raw materials.”

Improving regulatory systems

Members of the International Generic and Biosimilar Medicines Association made up to 80% of quality-assured medicines around the world, according to its general secretary, Suzette Kox.

“We think that the biggest challenge is weak healthcare systems which includes, of course, the insufficiently resourced regulatory system and quality control. Most countries around the world do not have proper regulatory systems in place, and also no proper competition policies.”

Oksana Pyzik, who lectures at the UCL School Pharmacy, said that one of the biggest challenges is a lack of public awareness. 

Pointing to the proliferation of online medical supply outlets during COVID-19, Pyzik said that many patients didn’t know how to verify legal online pharmacies.

“Pharmacists are the last line of defence before patients received those medications and take them home with them. And there’s a real opportunity there for patient education as part of wider public awareness,” she said, adding that this was why educating pharmacists about falsified medicines was essential.

Source: Health Policy-Watch.News

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