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Analysis

Room to grow: Demand for industrial land looks set to continue expanding
OBG
plus

While Indonesia’s GDP continues its steady climb and the middle class rapidly expands, many firms are looking at the country as a consumer market rather than strictly as an export hub. Domestic sales are rising, prompting suppliers to seek industrial land for expansion. Costs are increasing and capacity is maxing out, while food and beverage, building materials, chemicals, palm oil and metals producers…

Analysis

Pharmaceutical boom: The introduction of universal health care looks set to generate new opportunities for foreign drug makers in the long term
OBG
plus

With the introduction of universal health care in Indonesia on January 1, 2014, the pharmaceutical sector in the country is set for a boost. While the roll-out of the programme will be slow, a much expanded proportion of the population will be able to receive increasingly advanced and innovative drugs for their ailments. The Big Project The World Bank has estimated that the universal health care…

Analysis

Revving up a sector: On track to capture greater market share
OBG
plus

The automotive sector in Indonesia saw surprising growth in 2013. Although industry players and analysts had largely anticipated a flat year, 1.23m units were sold, an increase of 10.2% from 2012. But despite the healthy rise in sales, concerns remain. The somewhat strong performance comes after a run of exceptional growth – 25%, 17% and 57% in 2012, 2011 and 2010, respectively – and was achieved…

Analysis

Steady development: New outlets are transforming the retail make-up
OBG
plus

Indonesia has a fast developing retail sector, and all signs point toward it evolving quickly from highly fragmented and basic in terms of quality, service and efficiency to one similar to advanced ASEAN countries, with modern trade outlets and large groups leading the way. Indonesian consumers are active and increasingly prosperous. Firms are investing and quickly upgrading, and are under considerable…

Analysis

Tempering retail: A moratorium on the construction of malls in Jakarta has split opinion
OBG
plus

Alongside Indonesia’s emphasis on the importance of economic development, the country is at the same time working to protect itself from some of the unintended consequences of that development, especially in the retail sector. The emerging middle class will continue to help drive the economy forward, but the retail sector that serves it has the potential to damage the physical environment as it builds…

Analysis

The e-commerce question: Paving the way for global firms to sell online
OBG
plus

E-commerce in Indonesia is booming, but it is not clear whether foreign investors can legally participate in the expanding field. In 2013 the government announced that online retailers would be treated like all others: any company without a shop larger than 2000 sq metres must be Indonesian-owned. By implication, that would mean all internet retailers would have to be locally controlled. The rule was…

Analysis

Prioritising ports: The modernisation of ports is a prerequisite for economic expansion
OBG
plus

Sea transport is vitally important to Indonesia. The archipelago nation’s maritime zone covers 7.9m sq km, almost four times its land area. While coastal shipping accounts for about 7% of total national freight and passenger movements, 90% of Indonesia’s external trade is conducted through seaports. Between 2005 and 2010 container throughput increased by 11%. Despite this double-digit growth, Indonesia’s…

Analysis

Filling the gap: Improving institutional capacity and inter-ministry coordination
OBG
plus

In a series of bold steps to improve the infrastructure sector in the past few years, Indonesia has introduced regulatory reforms, expanded the space for private sector participation, extended investment risk guarantees, raised tariffs, passed the Land Acquisition Act and simplified registration processes. However, bureaucratic red tape, lack of coordination between government agencies and weak institutional…

Analysis

Horse before the cart: The arrival of modern handsets is paving the way for data
OBG
plus

The mobile market in Indonesia is largely dependent on increased use of the right kind of handsets. Operators may be able to supply the bandwidth, but if users do not have devices to take advantage of it the demand will not be there. The country also needs to nurture a stronger data culture if growth is to be achieved. For the operators, without the phones it does not make sense to invest in base transceiver…

Analysis

Network news: Improving international connectivity is among the items on the agenda
OBG
plus

As Indonesia develops connectivity domestically, it has to begin thinking about international links. The emphasis to date has been on unifying the nation via the internet, and considerable progress has been made. The building of the internet backbone has been important in getting more of the remote corners of the archipelago online, while wireless broadband has helped expand high-speed access. Yet…