Indonesia at a Glance
Indonesia and its Investment Opportunities at a Glance
Large and robust economy
Indonesia is the largest economy in Southeast Asia representing about 35% of the region’s GDP. It is currently the world’s 16th largest economy in nominal GDP terms, and 7th largest by purchasing power parity. Indonesia is a member of G20 group of developed and developing nations. Indonesia is set to be the world’s 7th largest economy by 2030.
Indonesia has experienced robust growth of 5-6% in recent years. It is an investment grade country since 2017 and currently has a relatively low inflation and stable exchange rate.
Growing consumer market
Out of its 270 million inhabitants, 80 million people are now part of the consumer class. According to McKinsey & Company, this last number is expected to increase to 130 million people by 2030. By then, there will be US$ 1.8 trillion worth of market opportunities in consumer services, agriculture and fisheries, resources, education.
Blessed with abundant Natural Resources
Blessed with abundant natural resources, Indonesia is perfectly positioned to supply the raw materials and commodities needed by foreign industry.
- World’s largest producer of nickel & palm-oil
- World’s 2nd largest producer of tin.
- World’s 5th largest producer of coal.
- World’s 9th largest copper producer
- World’s 11th largest gold producer
- World’s 11th largest natural gas producer and 5th largest LNG exporter.
- World’s 14th largest producer of bauxite.
Indonesia still has a yawning infrastructure deficit in the power, transportation, public utilities and other key sectors. Since his election in 2014, Indonesia’s President Widodo has embarked on an ambitious infrastructure development program, which presents unrivalled opportunity for foreign investors / banks as well as foreign specialist construction and engineering companies, also in the maritime sector.
Favorable Investment Policies
Since President Widodo took office, the government has issued a series of far-reaching economic reform packages, and has promised to completely abolish in the near future the protectionist Negative Investment List (DNI), which continues to place investment restrictions on a small number of business activities.
But perhaps the Widodo administration’s most significant reform has been the launching, in June 2018, of Indonesia’s OSS (online single submission) system, which greatly simplifies and streamlines the business and operational licensing process.
Enhanced Ease of Doing Business
Indonesia’s ranking in the World Bank’s Ease of Doing Business Index has improved dramatically in recent years, with the country now positioned around the midway mark in the Index, reflecting the success of the economic reform programs introduced since President Widodo first became president in 2014.Indonesia’s ranking is expected to further improve in the years ahead as the OSS System is consolidated and the economic reform process continues.
Free trade within ASEAN
As a member of the Association of Southeast Asian Nations (ASEAN), Indonesia enjoys free trade with other ASEAN member states (Brunei, Malaysia, Philippines, Singapore, Thailand, Myanmar, Vietnam, Laos and Cambodia), which have a combined population of some 650 million.
Opportunities for Dutch Investors
The Netherlands is currently a top 10 investor in Indonesia, taking the 7th place in 2017, 9th place in 2018 and 5th place in 2019. Because of Indonesia’s growing consumer market and infrastructure development program, there are currently particularly opportunities for Dutch investor in the food, healthcare, aviation, education and (water) engineering sectors.
It is expected that soon, Indonesia and the EU will enter into a Comprehensive Economic Partnership Agreement (CEPA), which aims to facilitate and create new market access, increase trade between the EU and Indonesia, and expand direct investment. The CEPA should also benefit Dutch investors.