Why Indonesia??
 
Sound Economy
Having a GDP size of nearly US$ 550 billion in 2009, Indonesia is the third fastest growing economy in Asia and the largest economy in Southeast Asia.  Much less affected by the global financial crisis than its neighboring countries, Indonesia’s economy grew by 4.5% last year and is forecast to climb to 5.6% in 2010 and further still to 6% in 2011, providing a case for Indonesia’s inclusion in the so-called BRIC economies.  Future economic expansion is expected to include more inclusive growth as nominal per-capita GDP is expected to quadruple by 2020, according to a Standard Chartered report.
 
A large part of our economic success is a result of prudent fiscal stewardship that focused on reducing the debt burden.  Indonesia’s debt to GDP ratio has steadily declined from 83% in 2001 to 29% by the end of 2009; the lowest among ASEAN countries, aside from Singapore which has no government debt.  The country is ranked 1st among Asia-Pacific sovereigns by Standard & Poor’s for best fiscal balance.
 
In January 2010, Fitch ratings upgraded Indonesia’s credit rating to BB+ with a stable outlook.  The rating upgrade is in line with Indonesia’s strong and sustained growth, and improving fiscal position.  It is especially an enormous vote of confidence for investments in Indonesia - putting us only 1 notch below investment grade.   Indonesia is on the right path towards attracting larger pools of fixed income and capital flows, as well as drawing in those funds which have so far been precluded from investing in non-investment grade countries. 
 
These achievements have increased the frequency with which Indonesia is being compared to middle-income developing nations like Brazil, India and Mexico.  Economically strong, politically stable, reform minded, Indonesia is an emerging global powerhouse in Asia.
 
Real GDP Growth                                                                                   Total Debt / GDP
 


Realized Foreign Direct Investment (FDI)
 
Political Stability
Underlying Indonesia’s vibrant economy is political stability.  A decade ago, many analysts envisaged that certain break-away provinces would bring about Indonesia’s “balkanization”.  In 2001, Indonesia embarked on an ambitious and challenging decentralization effort.  While it has been challenging journey, today Indonesia is one of the most decentralized countries in the world with substantial funds and authorities devolved to the regions.
 
Significantly, Indonesia is the only country in Southeast Asia that has bucked the trend of a democracy in trouble. Democracy is blossoming in a country that was once ruled with an iron hand for 30 years. Indonesia has gracefully transformed from an authoritarian state to a regional role model.
 
Recently, and for a third time in a row, Indonesia completed another round of a peaceful and successful legislative and presidential election. The election confirmed the people’s confidence in President Susilo Bambang Yudhoyono’s leadership, who won more than 60% votes from 176 million registered voters. President Yudhoyono’s party, Partai Demokrat, controls over 25% of plenary votes, providing him with a stronger mandate to lead Indonesia in the next five years.
 
National Resources
Indonesia is a renowned market for resource extraction, seen as even more attractive than for instance, South Africa, Australia and Canada in terms of mineral prospectivity, as per Pricewaterhouse Coopers.  The country is home to a biodiversity that is only second to Brazil, just to mention a few. These resources provide tremendous investment opportunities.  Moreover, development potential is far from saturated, particularly in renewable energy.
 
 
Crude Oil
Natural Gas
Thermal Coal
Geothermal
Palm Oil
Cocoa
Tin
Key Metrics
Over 3.5 bn barrels of proven reserves
About 112 tn cubic feet of reserves
World’s second largest exporter
Home to 40% of world’s resources
World’s largest exporter, producing about 19 mn tons per year
At 770 thousand tons per year, world’s second largest producer
At 65 thousand tons per year, world’s second largest producer
                                                                                                                 Source: Ministry of Energy and Mineral
                                                                                                                                         Resources and Ministry of Agriculture
 
Demographics
Dynamic Demographic Base
Indonesia is the 4th most populous nation in the world.  Apart from its remarkable fiscal and political transformations during the last decade, Indonesia is also undergoing a major structural shift in terms of demographics.   Of the 240 million people, over 50% of the population is under 29 years old, with the same percentage living in urban areas.  This provides for dynamic labor market participation, growing at 2.3 million per year.  A rapidly urbanizing population also provides for strategic pools of labor force in centers of investment.
 

Indonesia’s Demographic Dividend
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Coupled with this demographic bonus is
Indonesia’s commitment to improve productivity and the education level of its youth, with 16% of total government expenditure on education.  This expenditure is higher than any other sector.  Currently, the majority of university graduates are trained in technical fields such as finance and economics (28%) or engineering and sciences (27.5%). Labor cost is still relatively low in urban centers, even as compared to urban centers of investment magnets China and India.
 
Labor Cost in 2009
 
Global Influence
Strategic Location and Expanding Global Influence
Indonesia lies at the intersection of the Pacific Ocean, along the MalaccaStraits and the Indian Ocean. Over half of all international shipping goes through Indonesian waters. Increasingly, Indonesia is playing a more dominant role in global affairs. It is Southeast Asia’s only member of the G-20, the latest global grouping for transnational economic policy.  Standard Chartered sees Indonesia’s inclusion in the G-7 by 2040, provided that growth achieves its potential by 2012, moving the economy ahead of South Korea by 2016 and Japan by 2024. 
Indonesia is also a leading member of ASEAN, shaping integrative approaches in the region for security, trade and commerce, and will be the integral part of the ASEAN Economic Community in 2015. 
Finally, Indonesia is emerging as a key player on cross-cutting international policy issues as climate change, which will have direct and indirect impacts on business and investment decisions.
 
 

 

 

Indonesia has remained consistent in its stance to uphold the rule of law to combat crime, mirrored by its dedication to realizing the Sustainable Development Goals (SDGs).
Vice President Jusuf Kalla discussed Indonesia′s efforts to handle refugees, during a meeting with United Nations High Commissioner for Refugees (UNHCR) Filippo Grandi.
Director General of Disease Prevention and Control at the Ministry of Health Anung Sugihantono gave confirmation that no case of monkeypox had yet been detected in Indonesia.
Foreign Affairs Minister Retno L. P. Marsudi highlighted Indonesia′s unwavering stand to consistently promote the role of women in maintaining international peace.
The 2019 Muslim Fashion Festival (Muffest) is being held at the Assembly Hall of the Jakarta Convention Center (JCC) from May 1 to 4.
Indonesia′s state-owned enterprise producing military and commercial products, PT Pindad, has planned to develop Anoa 3 panzer to be known as Anoa desert, which would then be exported to Middle East countries.
Indonesia′s delegation and other Council of Palm Oil Producing Countries (CPOPC) members have steadfastly and vehemently expressed their objection to the European Union (EU) over discrimination against palm oil.
At the Alliance for Multilateralism forum held in New York, USA, on April 2, Indonesian Foreign Affairs Minister Retno Marsudi called on international cooperation for the United Nation Security Council.
Indonesian Vice Minister of Foreign Affairs A.M. Fachir voiced the Indonesian government′s steadfast commitment to boosting the nation′s food security and guaranteeing the welfare of farmers.
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E-mail: embassy@indonesianembassy.hu