Economic growth

Indonesia has the largest economy in south east Asia with nearly half of the region’s Gross Domestic Product (GDP). It is the only G20 member from south east Asia. It’s predicted to be in the top 7 largest economies in the world by 2030.

Indonesia’s economy has grown at a steady 5.8% for over the last 10 years. This is a more stable rate than any of the Brazil, Russia, India and China (BRIC) countries or Organisation for Economic Co-operation and Development (OECD) countries.

Domestic consumption makes up 55.8% of Indonesia’s GDP. This helped to protect Indonesia from the global economic crisis.

Indonesia is the:

• world’s largest producer and exporter of crude palm oil
• second largest exporter of coal
• second largest producer of cocoa and tin
• fourth largest exporter of natural gas

Indonesia also has abundant resources such as nickel, gold, coffee and other forest and marine resources.

Free Trade Agreements (FTAs)

Indonesia is a member of the Association of Southeast Asian Nations (ASEAN).

The ASEAN Free Trade Area (FTA) is part of the Asian Economic Community (AEC) agreement among 10 ASEAN countries which allows free movement of goods and services with 0% tax. The country of origin must be one of the ASEAN countries

The AEC will benefit British companies operating in the region. The AEC agenda helps promote reform and raise economic growth in the region.

Improved trade facilitation, regulatory reform and financial development will benefit all domestic and foreign firms. British firms producing and shipping goods within the region can also benefit from intra-ASEAN tariff reduction. There will be some areas where the AEC gives other ASEAN countries better market access than UK firms have, but these are likely to be fairly limited.

Through ASEAN Indonesia has trade agreements with a number of countries.

Growing middle class

Indonesia’s economic growth is driven by a middle class of 74 million – more than the entire population of Canada. This has been projected to double by 2020.

Indonesian consumers are:

• young, with 60% under 30 years of age
• IT savvy
• interested in new international brands

International surveys show that Indonesians are trusting consumers, highly receptive to advertising and keen to try new things. Indonesia has 72 million internet users, forecasted to be 102 million by 2016. It is the world’s third largest Facebook market and fifth largest Twitter market.

Demand from the new middle class is increasing for:

• modern retail and consumer goods
• healthcare
• education and professional qualifications
• Information and Communications Technology (ICT)
• transport
• construction
• manufacturing

Strategic location

60% of global growth is expected to come from Asia by 2025. Indonesia is part of ASEAN which has a free trade zone. It is also strategically placed to do business with Indonesia, China, Japan and Australia.