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The emerging market of Indonesia - an archipelago with approx. 17,000 islands and about 250 million inhabitants is the economic focus of the ASEAN countries.
The most economically important of the 6000 inhabited islands of Indonesia is Java. Here around 60 percent of Indonesia's population resides on just under 7 percent of the country’s land area and generate approximately 57.5 percent of the gross domestic product (GDP). Key economic regions are the Greater Jakarta, Bogor, Tangerang and Bekasi in West Java and Surabaya in East Java, Medan in North Sumatra (Sumatra’s GDP approx. 24 percent), Bali (percentage of GDP 2.5 percent), Kalimantan (percentage GDP 9 percent) and Makassar in South Sulawesi (Sulawesi’s share of GDP approx. 5 percent). Although numbering only 9 million, the Chinese-born minority is the most economically successful ethnic group of the country.
The rise of the Indonesian economy is mostly due to the strong domestic consumption, amounting to 55 percent of the GDP, and high revenues for its exported commodities. Due to the economy’s diverse nature it managed to bear the global financial crisis quite well.
Indonesia is rich in mineral resources and among the world's main exporters of coal, tin, nickel, copper, bauxite and gold. In terms of its gas and coal resources Indonesia is a net energy exporter. In addition, Indonesia has large forest resources and has been successful in exporting agricultural products such as palm oil, rubber, cocoa, tea, coffee and tobacco.
The percentage shares of individual sectors in the Indonesian GDP of 2013 is as follows: Industrial manufacturing: 25 percent, trade, hotels and restaurants: 18 percent, agriculture, forestry and fisheries: 12 percent, transport and communication: 11 percent, financial, real estate and business services: 10 percent, other services 9 percent, and mining, quarry and construction sector: 7 percent. (Bank Indonesia)
In core areas of the economy, the state still holds significant monopolies or competes with the private sector with currently more than 100 owned enterprises. The concentration of these companies exists in the transport sector, telecommunications, energy supply, construction sector and the financial industry.
With regard to the labour market Indonesia is a distinct services and agriculture employer (65 percent combined) with a relatively small proportion (15 percent) of labour going to industries. The official unemployment rate in 2014 was around 6 percent. According to the national statistical agency about 11.5 percent of the population lives below the national poverty line of an average 25 USD per month.
The Indonesian economy is very robust and maintains a healthy growth average. The GDP in 2014 was $900 billion, making it the 16th biggest economy worldwide, with GDP per capita standing at around 3,500 USD. However, after growth rates of over 6 percent in recent times, 2014 brought a slowdown to the ASEAN giant at 5 percent GDP growth. This was mainly due to lower commodity prices, an export ban on mineral resources, the strengthening of the US dollar against the Rupiah, a trade deficit of 1.8 billion US dollars and a current account deficit of 3 percent of GDP.
Inflation stood at 8 percent for 2014. With the resurgent USD being the main problem for the local economy.
Why invest in Indonesia?
- Indonesia is strategically located at the intersection of the Indian and Pacific Oceans, along the Malacca Straits. This imparts global influence to the country as its maritime borders house some of the busiest shipping routes in the world.
- Indonesia has the 4th largest population in the world and 50 percent of this population is below the age of 30 years. Furthermore 53 percent of the country’s population adopts an urban lifestyle. This gives the country one of the largest domestic markets in the region.
- Indonesia is politically very stable and has a through democratic system in place.
- Indonesia is the largest economy in South East Asia. It is predicted that it will continue to be so, owing to its massive size.