“Indonesia's people have lifted themselves from poverty to become one of the fastest-growing nations of the G20",
– Donald Trump, US President in his remarks during APEC CEO Summit 2017
“The Indonesian government has done a lot to enhance the quality of the business environment for the private sector, particularly in the last three years,"
– Rodrigo Chaves, World Bank Country Director for Indonesia in 2016
- The largest economy in Southeast Asia, Indonesia – a diverse archipelago nation of more than 300 ethnic groups -- has charted impressive economic growth since overcoming the Asian financial crisis of the late 1990s. Today, Indonesia is the world's fourth most populous nation, the world's 10th largest economy in terms of purchasing power parity, and a member of the G-20.
Indonesia's economy began 2017 on a strong footing, helped by a more supportive global environment and improved domestic fundamentals. According to the the World Bank's October 2017 Indonesia Economic Quarterly, real GDP growth of Indonesia is expected to reach 5.1 percent in 2017, climbing to 5.3 percent in 2018, on a supportive global economy and stronger domestic demand as reforms continue and gradually start paying dividends. According to the said report, Indonesia's macroeconomic fundamentals are sound and have been strengthening, as the Government continues to implement critical structural reforms.
Real GDP growth of Indonesia strengthened to 5.0 percent (year-on-year) in the first quarter of 2017, compared to 4.9 percent in the previous quarter, driven by a rebound in government consumption and surging exports. While inflation has risen due to hikes in electricity tariffs, it remains relatively low. Monetary policy continues to be accommodative. To strengthen the country's investment climate and economic growth, the government continues to announce policy reforms intended to cut red-tape. Investors welcome the policy reforms, which include opening sectors for investment and reducing high logistics costs.
Standard & Poor's (S&P) raised Sovereign Credit Rating Indonesia to BBB. Rodrigo A. Chaves, World Bank Country Director for Indonesia said “the S&P upgrade is a significant acknowledgement of the progress made by the Government in improving fiscal management and credibility. Commodity prices are providing some support. However, Indonesia must continue to make progress on structural reforms. Persistent efforts remain vital to expanding the economy's potential and making it less reliant on commodity exports."
According to the World Bank Group's latest Doing Business 2018: Reforming to Create Jobs report, Indonesia continued a strong pace of reforms to improve its investment climate. Indonesia has made significant progress in several areas measured by Doing Business, and the country is amongst the world's top 10 reformers, with 39 reforms related to the indicators included in Doing Business adopted in 15 years. More than half of these reforms have been implemented in the last four years. For a second consecutive year, Indonesia carried out seven reforms, the highest single-year count for the country. In this year's ease of doing business global rankings, the country moved up to 72nd place.
- “Indonesia has accelerated the pace of reforms in recent years and its efforts are paying back. We commend the government's continued determination to improve the business environment in the country. Continuation of the reform momentum, and a widening of the reform effort to include openness and competition reforms, is key to further stimulate the country's private sector," said Rodrigo A. Chaves, Country Director for Indonesia.
- Indonesia's trade balance recorded a wider surplus in September 2017, with surplus amounted to USD 1.76 billion. The increase in surplus mainly came from export of primary non-oil and gas products such as coal, palm oil, rubber, nickel, and tin. In addition, export increases are also supported by manufacturing products such as chemical and paper products.
- Total trade of Indonesia in January-September 2017 amounted to USD 235.84 billion. In this period, Indonesia's export reached USD 123.36 billion, increased 17.36% from export in the same period one year earler. Meanwhile Indonesia's import reached to USD 112.48 billion or up 13.97% from import in the same period of 2016. In Indonesia's trade balance in January-September 2017, Indonesia was surplus USD 10.88 billion (http://www.kemendag.go.id/).
Indonesian Export and Import
Jan- Sept 2017
(in billion USD)
Year to Year
Total of export
Total of Import
Source: Badan Pusat Statistik/BPS (Processed by Ministry of Trade of Indonesia)
- Indonesia's main export products includes: textiles, electronic, rubber and rubber products, palm oil, forest products, footwear, automotives, shrimps, cacao and coffee.
- On Indonesia-France trade relation, total trade value between the two countries in January-August 2017 amounted to USD 1.77 billion, up 19.02% from the total trade value in the same period n 2016. In this regard, Indonesia's export value to France reached 634 million, and its import amounted to USD 921 million. On balance of trade between the two countries, Indonesia was defisit USD 287 million.
- Indonesia's main export products to France are: footwear; electronic home appliance; furniture; essential oils; electrical machinery and equipment and part; garments etc. Meanwhile, Indonesia's import from France among others are: aircraft, spacecraft and parts there of; paper pulp, pharmacy products, essential oils, machines for textile industry etc.
- Cumulatively, total direct investment in Indonesia reached USD $38.3 billion in January-September 2017, up 13.2 percent from total investment in the same period one year ago. Roughly 57 percent of investment realization went to the island of Java (Indonesia's Investment Coordinating Board/(BKPM, http://www3.bkpm.go.id).
As usual, foreign direct investment (FDI) contributed most to total investment in Indonesia. FDI realization in January-September 2017 amounted to US $ 23.9 billion (18.471 projects). In Quarter 3-2017, FDI reached USD $8.4 billion, up 12.0 percent on a year-on-year basis and accelerating from a 10.6 percent (y/y) growth pace set in the preceding quarter.
Most of FDI realization as a whole in Q3-2017 went to the metal, machinery and electronics industry as well as mining (FDI excludes investment in the following sectors: oil & gas, banking, non-bank financial institutions, insurance, leasing, and home industry). Singapore was the biggest source of investment in Indonesia in Q3-2017, followed by Japan, China, the US and South Korea.
Sectors of FDI in Indonesia are as follows: mining; metal machinery, and electronic industry; electricity, gas, and water supply; chemical and pharmaceutical industry; real estate, industrial estate and office building; food industry; other service; food crops and plantation; trade and reparation; hotel and restaurant; transportation, warehouse, and telecommunication; rubber and plastic industry; non-metalic mineral industry; paper and printing industry, wood industry; textile industry; livestock; construction; fishery; forestry; medical instrument precision, optic, and watch industry.
The current key investment sectoral opportunities in Indonesia are:
- Infrastructure: prospective and potential projects in transport, energy, sanitation and urban development.
- Agriculture: especially focusing on palm oil, rubber and cacao.
- Energy: regrouping opportunities in oil and gas, electricity, coal and renewables.
- Industry: presenting the 4 petrochemical industrial clusters
- France investment in Indonesia in January-September 2017 reached USD 228.2 million with 322 investment projects, meanwhile in quarter-3 2017, France investment in Indonesia amounted to US$ 96.3 million with 89 investment projects.