?Indonesia is your investment destination.
Abundant natural resources,
a young and technically trained work
force and a large and growing domestic market, combined with an
improving investment climate and a higher global profile, are just a few of
Indonesia’s salient strengths. With stability firmly planted after 16 years of
vibrant democratic rule, Indonesia’s vast economic potential is primed for
Invest in remarkable
Indonesia is an emerging global powerhouse in
Asia. With the GDP expected to reach US$ 1 trillion in 2012, Indonesia is the
largest economy in Southeast Asia. Much less affected by the global financial
crisis compared to its neighboring countries, Indonesia’s economy grew by 5.7% in
2013, making “The World’s Most Stable Economy in the Last Five Years” according
to The Economist Magazine.
Indonesia grew by 6.2% in 2012 and in 2014,
stronger economic growth is expected around the lower end of the 5.8-6.2%
range. 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 growing middle class and stable economic growth. Indonesia is in list
of MINT economies (Mexico, Indonesia, Nigeria and Turkey), namely those that
were the most attractive to long-term investors due to their favorable
Indonesia’s debt to GDP ratio has steadily
declined from 83% in 2001 to be less than 26% by the end of 2013, the lowest
among ASEAN countries, aside from Singapore, which has no government
As a result, the Republic continued to receive
good reviews. The rating reflects Indonesia’s resilience to the global
financial crisis, improving government and external credit-metrics, and an
ability to manage domestic political challenges to the reform agenda.
§ Fitch Ratings (November
15, 2013): affirmed Indonesia's sovereign credit rating at BBB- level with stable outlook.
and Investment Information, Inc (October 11, 2013): affirmed
Sovereign Credit Rating of the Republic of Indonesia at BBB-/stable outlook.
Credit Rating Agency, Ltd (July 22, 2013): affirmed
Indonesia’s foreign currency long-term senior debt at BBB- with stable outlook.
§ S&P (May 2, 2013): affirmed Indonesia’s sovereign credit rating, at BB+ level for long-term.
Investors Service (January 18, 2012): upgraded
Republic of Indonesia’s foreign and local-currency bond ratings to Baa3 with stable outlook.
“One of Asia Pacific’s most vibrant democracies that has maintained political stability…”
World Bank, 2013)
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.
For a third time in a row, Indonesia completed another round of peaceful and successful
legislative and presidential
elections. Indonesia is going to hold general elections this year
2014. President Susilo Bambang
Yudhoyono, now in his second term.
The government will work extra hard to maintain political stability ahead of the general elections, so
that the possible escalation of political tensions does not effect
Investment Law No. 25 year 2007
This updated investment law redefines “capital
investment” as all investments, whether by domestic or foreign investors, for
the first time offering equal treatment to all investors. There is no
longer a limit of 30 years on foreign investment permits, and gone is the
provision in Law 1/1967 for they’re to be divestment. Additionally, the
new law allows for the unimpeded reparation of capital.
No later than February
2014, all Indonesian citizens who want to do a business should enjoy the faster
and easier process. This is the main target of the Policy Package to Improve the Ease of Doing Business. The government sets a target of eight areas of
improvement to increase the ease of doing business, namely:
Starting a Business
Paying Taxes and
In these areas, the
Government sets a total of 17 actions. Each area covers one or more actions.
However, all action must be implemented by February 2014.
August 2013, the Government
of Indonesia announced economic policy
among others aimed at increasing investment.
Streamlining investment licensing
particularly licensing procedures.
Revising the “negative investment list”
To make the investment
law more and more investor-friendly.
The new updated list of
sectors open for FDI will be announced soon in within this year.
More tax incentives
Tax dispensation to labor-intensive industries: textile,
apparel, footwear, furniture, and toys industries.
deduction to firms with at least 30 percent export-oriented products.
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
The country is home to a biodiversity that is
only second to Brazil. Rich with natural reserves, Indonesia has become a
commodities powerhouse and a leading commodities exporter in a number of
Resources: The Key Indicators
Indonesia is one of the world’s major producer
of a broad range of commodities.
Coordinating Ministry For Economic Affairs RI, 2011
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. 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.
Demographic advantage of the 251 million people:
§ Over 50% of the population is under 29 years old
§ 60% of the population is under
the age of 39
§ Around 52% of the population
living in urban areas
§ Indonesia’s population
covers more than 39% of
total population of 10 Southeast
Asian countries (Source: ASEAN Community in Figures 2011)
Population by Country (million people)
Source: Central Intelligence Agency US,
Coupled with this demographic bonus is
Indonesia’s commitment to improve productivity and the education level of its
youth, with 20% 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%).
§ In the period of 2020-2030, the dependency index will reach its lowest point.
than 60% of the population is in the
working age, providing a dynamic
workforce which is one of the highest in the region.
Indonesia’s Demographic Dividend
Source: Coordinating Ministry For Economic
Affairs RI, 2011
Having the 4th largest
population in the world, Indonesia has a large domestic market to offer, over
53% of which lives in urban areas and adopts a modern lifestyle. A
growing and affluent middle class supports GDP growth with approximately 56.7%
of GDP accounting for private consumption in 2010. Number of Indonesia’s
Population in Middle Income per capita expenditure per day USD 2-20 (million
people). In 2010, 56.5% of the total population is in the middle-income class,
growing from 37.7% in 2003. This figure is projected to increase to be 70% in
Indonesia lies at the
intersection of the Pacific Ocean,
along the Malacca Straits
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 and an active
voice for developing world’s concerns. Standard Chartered sees
Indonesia’s inclusion in the G-7 by 2030, projecting that Indonesia’s economy
could be the 10th largest in 2020 and the 5th largest
Being the leading member of
ASEAN, Indonesia shapes integrative approaches in the region for security, trade and commerce, and
will be the integral part of the ASEAN Economic Community in 2015. The 2012
ASEAN-BAC Survey on
ASEAN Competitiveness collated
responses from businesses
across all ten ASEAN countries, comprising a mix of small, medium and large
firms. A majority of the businesses had been in operation for more than ten
years, had trade/investment
linkages within ASEAN and had at least general knowledge of ASEAN policy
Most Attractive Investment Destination in ASEAN
Finally, Indonesia is emerging as a key player
on cross-cutting international policy
issues as climate change and the global financial architecture, which will
have direct and indirect impacts on business and investment decisions.