Official name: Republic of Indonesia
Official language: Bahasa Indonesia (“Indonesian Language”)
First coined as the language of one people and one nation in the Youth Congress in Jakarta on 28 October 1928, 17 years before the Independence Declaration in 1945
Flag : Sang Saka Merah Putih (“The Sacred Red and White”), Sang Dwiwarna (The Bi-Color”)
Originated from the royal banner of Majapahit Empire that once ruled half Southeast Asia region from its base in Java Island in 1292-1500; red for courage and white for purity
National emblem : Garuda Pancasila
Anthem: Indonesia Raya (“Great Indonesia”)
Originally composed by Mr. Wage Rudolf Supratman as opening performance of the Youth Congress in Jakarta on 28 October 1928, 17 years before the Independence Declaration in 1945
Capital : Jakarta (about 664,01 km2), in Jawa Island
Total area : about 1.9 million km2 land, 3.2 million km2 sea
Archipelago : 17,508 islands, 6,000 of which are inhabited; 81,000 km-long beach line
Main islands : Kalimantan (544.150 km2), Sumatra (473.600 km2), Papua (418.707,7 km2), Sulawesi (174.600 km2), and Jawa (128.297 km2)
Population : 269,6 million (2020 estimate)
Ethnic profile : 330 ethnic groups; 580 local languages and dialects
Major religions : Islam, Protestant, Roman Catholic, Hindu, Buddhist, and Confucian
GDP per capita : USD 4,788 (2022, Word Bank)
Economic growth : 5.0 % (2023, as projected by ADB)
Major export : Coal, Palm Oil, Petroleum and natural gas, plywood, metal ores, textiles, mining, cement, food products, crude rubber, chemicals (material, compound and products), glass (material and products)
Major import : Heavy machinery, transportation and electrical equipment, chemicals
Indonesian Economy: Current and Outlook
Throughout 2022, Indonesia’s economic growth was above 5% in each quarter. Public consumption continues to strengthen and fiscal support in dampening price pressures was effective in maintaining purchasing power stability. The downstream of natural resources was one of the main sources driving export performance in 2022. Meanwhile, investment is relatively stable and will continue to be encouraged by the creation of a better investment climate and strengthening the downstream.
Indonesia’s economy recovers prevalent in all sectors (broad based). The manufacturing and trade sectors have regained, in line with the increasing demand for manufactured products such as steel, machinery, and electronic devices from the global market. The accommodation and food and drink and transportation sectors grew high, in line with the relaxation of movement restriction policies and the return of foreign tourists to Indonesia.
Robust national economic recovery becomes a solid footing amid increased global risks in 2023. Domestic household consumption will remain stable while state spending is expected to stimulate and maintain economic stability. The rate of investment is expected to improve, while export performance will normalize.
Some international credit rating agencies have positive outlooks on Indonesia. S&P upgraded Indonesia’s outlook from negative to stable in line with rating affirmations by Moody’s, Fitch, R&I and JCRA. They confirm the condition of strong economic fundamentals and positive prospects. Such conclusion is based upon some points of assessments, such as:
· The ability to absorb shocks from the pandemic without any negative impact on the medium-term economic trajectory;
· The impact of the pandemic on Indonesia’s fiscal is better than that of its peers, with a promising fiscal condition scenario;
· Significant progress in returning to a moderate fiscal deficit and improving Indonesia’s external economic position.
Investment Outlook: Why Indonesia?
The Largest Economy in Southeast Asia with Stable Economic Growth
Indonesia is currently the world’s 16th largest economy with more than US$1 trillion of GDP. It is estimated to be the 7th largest economy in the world in 2030 by McKinsey & Company. The only member of G20 from Southeast Asia, Indonesia’s economy had been growing relatively stable at >5% p.a. in the last two decades. Amidst the Covid-19 pandemic in 2020, the economy contracted at -2.07%, the first time since the Asia’s financial crisis in 1998, grew at +5.3% in 2022.
Large Domestic Market
On the consumer side, Indonesia has 275.8 million of population (2022) and is a home for 64 million of middle affluent class. It is also the gateway to 650 million of population in Southeast Asia, the world’s 3rd largest market. The country is also a production base for export with FTAs with 22 countries, including the largest trading bloc, RCEP.
The other reason why investors should invest in Indonesia is the significantly increased demographic bonuses. The demographic bonus is a condition where the productive age is more than the non-productive population in Indonesia.
Based on the Statistic Indonesia (BPS) estimation, Indonesia will get the impact of the demographic bonus in 2020 – 2035. The productive population is predicted to be at the highest chart history during this period, which reaches up to 64 percent of the total number of Indonesian populations. Two of three population are in working age with the average age of 28 y.o. In 2022, there are 204.7 million and +1.0% growth of internet users with 73.7% of internet penetration. 191.4 million Indonesians are also active social media users. With improving education and skill, Indonesia offers ample workforces with one of the most competitive and predictable wages in the region.
Political and Economic Stability
Having maintained political stability, Indonesia is one of East Asia Pacific’s most vibrant democracies. As the third largest democracy in the world, Indonesia continues to uphold the values of democracy and Pancasila. To maintain it, the Government of Indonesia measures the Indonesian Democracy Index (IDI). Indonesia scored 78.12 points out of 100 in the 2021 democracy index, categorized as “medium” category.
The Indonesian government continues to strive to create economic stability and an attractive investment climate for investors. This effort has received international recognition. Based on the ranking results of three international rating agencies, Indonesia is categorized as an investment-worthy country.
The Economic Zone as a Strategic Investment Location
The Government of Indonesia has set up a regulation specifically addressing the companies within an industrial zone. Within industrial zones, various facilities are available for companies, such as tax incentives, infrastructure and logistics, proximity to resources, lower labor costs and higher skill levels. Currently, there are:
How To Invest?
Indonesia Towards 2045
Vision of Indonesia 2045 was launched in 2015, as Indonesia celebrated its 70th year of independence. The target of economic development in 2045 is the realization of an innovative, modern and prosperous Indonesian economy as a basis for Indonesia to become a barometer and driving force of the world economy as well as to become an influential country in the Asia-Pacific region and the world.
Indonesia is predicted to enter the high-income country group around 2036. In 2036, Indonesia will emerge from the middle-income trap and become a high-income country. Windows of opportunity in which the number of productive age is relatively higher compared to the young and elderly population is utilized as well as possible.
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