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Analysis

An active role: The authorities have taken a range of measures aimed at securing the country’s long-term economic future
OBG
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Pressures on Indonesia’s current account came to a head in May 2013 as portfolio investments reversed their flow and began leaving the country. Authorities have reacted to curb further growth in the deficit. With Bank Indonesia (BI) responsible for monetary tightening, the government has followed with a series of measures to balance the trade position. Although the impact of fiscal measures will…

Analysis

Consumer strength: A rise in spending power should promote ASEAN-wide growth
OBG
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Growing prosperity, improved wealth distribution and a burgeoning middle class are set to fuel a rapid rise in private consumption within the ASEAN bloc countries in the coming years, a trend that will be given further impetus by the greater regional integration that will follow the launch of the ASEAN Economic Community (AEC) in 2015. According to a report by ratings agency Moody’s from late 2013,…

Analysis

Diversifying sources: Attracting investors to a wider range of industries is a priority
OBG
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While foreign direct investment (FDI) has sustained 22% average annual growth over the past six years, according to statistics from HSBC, the composition of investment has broadened beyond the traditionally dominant extractive industries. As part of a regional rebalancing of FDI, the focus of investment into Indonesia is shifting from purely resource extraction to services and manufacturing, in both…

Analysis

Balancing growth: The central bank is taking action to ward off macroeconomic challenges
OBG
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With economic growth slowing, inflation rising and the currency weakening, Indonesia has some tough macroeconomic challenges ahead. However, the government has responded to the situation with a variety of monetary and fiscal policy tools, including raising interest rates while at the same time rolling out fiscal stimulus measures. Slowing Growth In August 2013 the central statistics agency issued…

Analysis

Easing access: The government helps to reduce bottlenecks in finance
OBG
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As part of its strategy of boosting non-oil exports to new markets, the government is seeking to expand the availability of trade finance for its exporters, particularly small and medium-sized enterprises (SMEs). “If we want to prevent the ongoing volatility from disrupting our export growth, then we should not focus on exporting goods only to the US and China; we must diversify our exports,” the…

Analysis

Eastern promise: Working to attract further investment into East Java
OBG
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With the province’s GDP growth hitting 6.49% in the third quarter of 2013, outpacing the national rate of 5.62%, it is clear that East Java’s commitment to boosting foreign and domestic investment is paying off. To support investors, the East Java branch of the Indonesia Investment Coordinating Board (BKPM) offers a one-stop service, which allows business licences to be issued within just 14 days…

Analysis

Impetus for reform: Changes are set to open new sectors to greater foreign investment
OBG
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Slower growth in Indonesia may provide an impetus to realise a range of reforms that the government is planning, changes that could open several important and attractive sectors to greater foreign investment. On November 6, 2013 the Indonesia Investment Coordinating Board (BKPM) announced plans to allow foreign investment in airports and ports, and to ease restrictions in the telecommunications and…

Analysis

Just the job: The government is enacting measures to sustain employment gains
OBG
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Despite having a large labour force of 121m people by February 2013, Indonesia has achieved a consistent fall in official unemployment over the past decade. Growing investment in manufacturing and services has driven job creation, although the most labour-intensive sectors tend to be the lowest value-added. With roughly half the 247m-population below the age of 30 and 63% of working age, the labour…

Analysis

Striking deals: Leveraging bilateral and multilateral agreements to boost trade
OBG
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Indonesian authorities are making moves to liberalise commerce by leveraging existing bilateral and multilateral trade agreements and moving ahead with closer integration with traditional partners. While its trade policy has not always been consistent in its liberalisation in recent years, eliciting complaints through the World Trade Organisation (WTO), the authorities seek to balance the priorities…

Analysis

Linking up: Connectivity plans are coming to fruition in East Java
OBG
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East Java is the principal gateway to eastern Indonesia, and its transport and logistics network is crucial to the development of the province. With the Surabaya port of Tanjung Perak currently the country’s second-busiest seaport, the completion of the new multipurpose terminal, Teluk Lamong, is highly anticipated and should help to reduce dwell times. Increasing Capacity The existing port of…