Hot growth markets in the spotlight: Indonesia

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Indonesia has already come a long way, and between its growing middle class and extensive natural resources, it is clearly a country to watch.

Indonesia has stood in the shadow of the massive rise of India, China and South Korea in the past decade. However, if Indonesia were located in any other region of the world, it would be known as an important fast-growth economy.

Rapid advances seem likely to continue as Indonesia offers:

  • Steady GDP growth of around 6% a year
  • Consumers with US$1.03t GDP in purchasing power
  • A growing middle class — from 81 million to 131 million people in the past decade
  • Investment-grade bond status on the horizon
  • More than 30% of its GDP being invested
  • G20 country status
  • Membership in 2014 of the ASEAN-5 common trade market

Massive challenges lie ahead. As in any democracy, it’s easy for important development measures to stall in Parliament. Environmental degradation could also lead to problems, particularly for agriculture, forestry and tourism. Regulatory barriers are still high for entrepreneurs.

While the business climate in Indonesia is generally favorable to foreign investors, “companies that want to invest here face several impediments,” says Ben Koesmoeljana, the Tax Service Line Leader for EY in Indonesia.

"These include infrastructure that needs to be upgraded and expanded, a convoluted licensing regime that involves many authorities from the central to the regional government and an assortment of "quango" (quasiautonomous non-governmental) agencies. There are also a number of protected industries in which the level of foreign ownership is restricted."

Indonesia has already come a long way, and between its growing middle class and extensive natural resources, it is clearly a country to watch. Read on for more information:



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