President Biden is looking to reset U.S. relationships in the Asia-Pacific region. And Indonesian President Joko Widodo — who seeks to attract greater foreign investment to the island nation — could serve as a vital new partner.

The countries already have a significant -- though static -- trade relationship. According to the Office of the U.S. Trade Representative, U.S. goods and services trade with Indonesia totaled an estimated $31.8 billion in 2019. Exports were $10.5 billion; imports were $21.3 billion.

There's potential to greatly expand this relationship. Over the last two decades, Indonesia's per-capita GDP has risen by 70%, while its poverty rate has fallen by half. Today, the country is the largest economy in Southeast Asia and the 10th largest economy by purchasing power parity on the planet. And this growth could accelerate as Indonesia implements reforms under a recently passed "omnibus bill," which will gradually refocus Indonesia's labor standards and remove foreign investment barriers. But, to grow this economic relationship, the United States and Indonesia must overcome several barriers to investment.

On the matter of digital trade, for instance, Indonesia continues to enforce local data requirements, which compel certain public institutions to store data on servers physically located within Indonesia. The nation has also put in place regulations that would enable the government to impose tariffs on American digital products such as software, movies, and music. Last year, Indonesian officials introduced a new 10% tax on foreign e-commerce. These barriers slow the speed at which Indonesians — including the nascent, but flourishing class of Indonesian digital entrepreneurs — can benefit from the free flow of digitally delivered goods and services.

Unfortunately, Indonesia imposes similarly restrictive barriers on intellectual property-intensive products in general, not just digital ones specifically. According to the 2021 edition of the U.S. Chamber's International IP Index, for instance, Indonesia's score on 50 IP-related indicators remained about the same, from 30.24%(15.12 out of 50) in the eighth edition to 30.16% (15.08 out of 50) in the ninth edition. In practice, nearly every IP-intensive sector has faced challenges. Creative content, as well as the jobs it supports in both countries, are threatened by widespread illicit camcording and online piracy. Unlicensed software use is also high.

The U.S. biopharmaceutical sector also faces ongoing legal and regulatory uncertainty when doing business in Indonesia. Since the mid-2000s, the government of Indonesia has issued nine compulsory licenses, which allow domestic companies to manufacture copycat versions of patented medicines without the patent-holder's consent. Similarly, Indonesia's national health system uses an opaque process to determine which new medicines to cover, and at what prices.

These barriers have been a drag on Indonesia's competitiveness, with 2019 research from the U.S. Chamber showing that the country's market access policies ranked dead last when compared to 20 other countries in the region. The country's 6.67% score in key access indicators for biopharmaceutical products, creative content, and digital goods (among others) was below that of many high-profile, closed economies like China and Russia.

These barriers also played a part in triggering a U.S. government investigation of Indonesia's eligibility for the Generalized System of Preferences program. Created in 1974, the GSP, which was created to spur growth and prosperity in low and middle-income countries, provides duty-free access to the American market for certain products from developing nations.

Nations that violate certain principles of free and fair trade can have their eligibility revoked, which is precisely the situation that Indonesia faced. Ultimately, though, the USTR closed the review -- without any loss of benefits to Indonesia -- based on positive developments towards providing the United States with "equitable and reasonable market access." As evidenced by this successful GSP review, Indonesia has clearly taken steps in the right direction on trade. Both nations can build on this progress by strengthening a bilateral IP working group created during the GSP review.

President Biden wants to "build back better" and accelerate America's economic recovery from the global pandemic. He can do so, in part, by addressing trade barriers and encouraging trade and investment opportunities between the U.S. and Indonesia.

John Goyer is Executive Director of the U.S. Chamber Southeast Asia Division. Patrick Kilbride is Senior Vice President of the Global Innovation Policy Center.