Friday, March 30, 2012

Potency of Indonesian Market


A.   Economy

Indonesia is a country located in Southeastern Asia between the Indian Ocean and Pacific Ocean. It has a strategic location astride major sea lanes and is an archipelago of more than 17,000 islands. Indonesia has a mixed economic system in which the economy includes a variety of private freedom, combined with centralized economic planning and government regulation. Indonesia is a member of the Asian Pacific Economic Cooperation (APEC) and Association of Southeast Asian Nations (ASEAN) as a leader and the headquarter office is in Jakarta.

Indonesia is the third fastest growing economy in Asia and the largest economy in Southeast Asia. Indonesia’s economy grew by 6.5% in 2011 and forecast to climb to 6.9 in 2012, marking the highest percentage in over a decade.  This GDP growth, however, is not unprecedented because in seven of the last eight years Indonesia’s GDP has grown by more than 5%.  In the last couple of years, corporations and investors have begun to compare Indonesia’s economic growth potential with the likes of India and China.  Strong growth and political stability are two of the main reasons why corporations and investors share this confidence. Indonesia's balance of payments for 2011 also registered a surplus of US$11.9 billion.

Another great sign for Indonesia’s economy is that foreign direct investment increased by 20% last year. And last year experienced higher economic growth than any of its neighbors in this region. In terms of fiscal and monetary conditions, Indonesia is much better than European countries as Indonesia fiscal burden lighter. In monetary policy for example, Indonesia needs to raise SBI (Interest rate) only once while China, Singapore and India need to raise central banks rates 7-9 times in the past 19 months.