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Chapter | Agriculture from The Report: Indonesia 2020

With millions of hectares of arable land across over 17,000 islands, Indonesia’s agriculture sector has long been an integral part of the economy. While its contribution to GDP may have declined in recent years – a result of economic diversification – it remains hugely important, employing roughly one-third of the workforce. Although major companies dominate the industry from a revenue standpoint, small-scale farmers who often operating in hard-to-reach rural areas comprise the backbone of the sector. Infrastructure issues are a hindrance to agricultural growth, but the re-election of President Joko Widodo in 2019 is expected to lead to continued focus on overcoming the issue and contribute to improved nationwide connectivity. In the meantime, technological advancements, often driven by entrepreneurs looking to fill market gaps, are presenting solutions to challenges that Indonesia’s farmers have faced for decades, which include a lack of access to the advanced technologies that could make operations more financially viable. This chapter contains an interview with Kiwi Aliwarga, Founder and Executive Chairman, UMG Idealab.

Chapter | Tourism from The Report: Indonesia 2020

Indonesia encompasses more than 17,000 islands, spread out over thousands of kilometres between the Indian and Pacific oceans. With the world’s largest tropical coastline, Indonesia has become a leading tourism destination in South-east Asia; the country’s cultural and natural diversity also offer significant untapped potential. Although the country has seen expansion in tourism in recent years, the Covid-19 pandemic that broke out in early 2020 has dampened prospects in the short run. Even so, President Joko Widodo, better known as President Jokowi, has identified tourism as a strategic sector through which to boost foreign exchange reserves. The sector is also set to provide a training and employment platform for a youthful workforce – a factor that could drive growth in both the sector and broader economy in the medium term. This chapter contains an interview with Abdulbar Mansoer, President Director, Indonesia Tourism Development Corporation.

Chapter | ICT from The Report: Indonesia 2020

The vibrancy of Indonesia’s digital economy is evident in the ubiquity of the green-uniformed Go-jek and Grab delivery drivers navigating via mobile device through its streets. Indonesia has the largest and fastest-growing ICT market in South-east Asia, and presents an enticing opportunity for investors thanks to demographic and macroeconomic factors, particularly as the government presses on with omnibus laws to reform a host of financial, investment, labour and tax regulations. Challenges include an uncertain macroeconomic environment weighed down by the Covid-19 pandemic, and an undefined regulatory and legal framework under which cybercrime threatens to undermine confidence and trust. However, these issues are not insurmountable, and longstanding government plans to improve internet and mobile data service provision across the country are coming to fruition, in tandem with the evolution of a dynamic digital services ecosystem steered by homegrown unicorns and supported by a thriving market for ancillary services. This chapter contains interviews with Johnny Plate, Minister of Communication and Information Technology; and Ming Maa, President, Grab.

Chapter | Emerging Cities from The Report: Indonesia 2020

Indonesia is characterised by substantial cultural diversity, comprising more than 17,000 islands and 267m people. Until the turn of the new millennium, economic development policies were strongly skewed towards Indonesia’s main island of Java and the capital Jakarta; a series of decentralisation policies have since aimed to spread out authority and investment across the country’s diverse regions. August 2019 saw the government announce that a new capital city would be built in the province of East Kalimantan on the island of Borneo. The new location will provide a more accessible economic and commercial centre for Indonesia’s eastern inhabitants, and is expected to attract major investment – transforming a region known for its agricultural and mining activities into the country’s administrative centre. This, alongside the emergence of a number of cities as increasingly key economic players, is opening up a wealth of business opportunities beyond Java. This chapter contains an interview with Isran Noor, Governor of East Kalimantan.

Chapter | Construction & Real Estate from The Report: Indonesia 2020

Indonesia’s economy averaged 6% annual GDP growth in the years following the 1997-98 Asian financial crisis. However, by 2013 approximately one-third of the budget was being channelled into unprofitable fuel subsidies at the expense of infrastructure development. This meant that industry and transportation did not develop in line with economic gains, stunting growth of the construction sector in turn. Moreover, a deceleration in economic growth in 2014-15, coupled with rising property prices, ignited fears of a property bubble. This prompted the central bank to impose higher interest rates and larger minimum down payments for mortgages, while also curtailing lending for second-home mortgages to prevent an accumulation of housing debt. However, a commodity price rebound in early 2019 saw several incentives introduced to reinvigorate the property market. These included lower interest rates, a relaxed loan-to-value ratio and smaller minimum down payments, while mortgage lenders also implemented schemes to entice the growing young middle class. This chapter contains interviews with Wong Heang Fine, Group CEO, Surbana Jurong; and Niko Safavi, President Director, Mowilex Indonesia.

Chapter | Retail & E-commerce from The Report: Indonesia 2020

Indonesia’s large and relatively young population, coupled with a fast-growing middle class and high levels of consumer confidence, has been a key driver of expansion in retail and e-commerce. Physical retail spaces remain prevalent, with new malls opening across the country in 2019. Despite the sector’s positive performance in recent years, it will face headwinds in the short term amid the Covid-19 pandemic. Other challenges include infrastructure issues and slow technology adoption among some demographic groups, especially in rural areas. However, the medium- to long-term outlook of the retail sector looks bright. The burgeoning e-commerce market should help weather the impact of the Covid-19 pandemic, with companies adapting their services and interactions to accommodate customers who are relying on online and mobile offerings as they practise social distancing. Given the popularity of e-commerce and ride-hailing apps, it is expected that tech-based services will continue to expand to meet shifting consumer expectations. This chapter contains interviews with Kevin Aluwi, Co-CEO, Gojek; and Muhamad Fajrin Rasyid, Co-Founder, Bukalapak.

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