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INVESTING IN INDONESIA
Indonesia, the overlooked giant located in Asia, ranked 4th in terms of population globally behind the United States and ahead of Pakistan, ranked 15th in terms of landmass globally behind Mexico and ahead of Sudan. Indonesia is a diverse country comprising of nearly 1,300 different ethnic groups with over 700 spoken languages. Indonesia is a member of several multilateral organisations including the G20 (Group of 20) holding its 2022 presidency and ASEAN (Association of Southeast Asian Nations) holding its 2023 chairmanship.
Indonesia is growing into an economic powerhouse due to rapid expansions in infrastructure, industries, education and other aspects; being one of the world’s largest economies currently ranked 16th behind Mexico and ahead of the Netherlands. Indonesia gained independence in 1945; is the driving force behind ASEAN, actively resolving regional disputes whilst also being a strong military power ranked 13th globally behind Brazil and ahead of Egypt.
Indonesia has a vibrant start-up ecosystem, ranked 5th in terms of number start-ups globally behind Australia and ahead of Germany whilst being the 9th largest ecommerce market and having the 5th largest utilization of digital payments globally. Besides growing economically Indonesia is progressing in social protection policy and education policy reforms in order to improve human capital, equity and resilience nationwide.
Considering all this, Indonesia is an attractive investment destination from a global and regional perspective.
About Indonesia
13TH LARGEST EXPORTER OF PETROLEUM GAS
10TH LARGEST MANUFACTURING COUNTRY
LARGEST EXPORTER OF FERROALLOYS
19TH LARGEST MINING COUNTRY
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Key Metrics
GDP in USD Billions, 2021 and 2022 Respectively & Cumulatively
Indonesia leads ASEAN countries in terms of GDP, comprising 36.47% of the GDP of all ASEAN countries in 2022. Indonesia is an economic powerhouse in the ASEAN region, a strategic gateway to Southeast Asia with vast natural resources, focus on sustainable industries and growing the digital economy.
Source: Focus Economics
Economic Growth (Gross Domestic Product - Annual Variation in %) 2021 and 2022 Respectively
Indonesia ranks third and fourth respectively for the years 2021 and 2022 in terms of economic growth in the ASEAN region, showing consistent growth through the Covid-19 pandemic years. Indonesia has a resilient economy due to its focus on growing local industry capabilities such as higher value-added manufacturing e.g. electrical vehicles’ battery production.
Source: Focus Economics
Population in Millions in 2022
Indonesia leads ASEAN countries in terms of population, comprising 40.88% of the population of all ASEAN countries in 2022, resulting in access to a large labour force and domestic demand for goods.
Source: Focus Economics
GDP Per Capita (USD’000), 2021 and 2022 Respectively
Indonesia ranks fifth in terms of GDP per capita as of 2022 behind Thailand and ahead of Vietnam. The overall productivity of Indonesian companies and their labour forces has much room for growth via training, technological implementations and business model refinements in additional to progressive government policies.
Source: Focus Economics
Source: Focus Economics
Inflation - Annual Average Variation of Consumer Prices in %, 2022 vs 2021
Indonesia ranks second and third respectively for the years 2021 and 2022 in terms of managing to keep inflation low in the ASEAN region. Indonesia’s inflation was well managed due to Bank Indonesia monetary policy and government measures to strengthen the interregional supply and distribution of necessity goods.
Source: Focus Economics
Gross Value Added by Sector in Indonesia: 2021
Indonesia has a well-diversified economy and is not just reliant on natural resource sectors. Indonesia has been focusing on growing its manufacturing, agriculture and financial services sectors.
MINING AND QUARRYING; MANUFACTURING; ELECTRICITY; GAS AND WATER SUPPLY
30.9%
WHOLESALE & RETAIL TRADE; REPAIR OF MOTOR VEHICLES; PERSONAL & HOUSEHOLD GOODS; HOTELS & RESTAURANTS; TRANSPORT, STORAGE & COMMUNICATIONS
22.4%
14.9%
AGRICULTURE, HUNTING, FORESTRY AND FISHING
CONSTRUCTION
11.0%
FINANCIAL INTERMEDIATION, REAL ESTATE, RENTING & BUSINESS ACTIVITIES
8.80%
12.0%
PUBLIC ADMINISTRATION & DEFENCE; EDUCATION, HEALTH, COMMUNITY, SOCIAL & PERSONAL SERVICE ACTIVITIES; OTHER ACTIVITIES
Source: Euromonitor International from national statistics
Exports by Commodity in Indonesia: 2021
Indonesia the 27th largest exporting country in the world, having exported USD248 billion worth of goods in 2021. Indonesia’s largest export destinations are China, the United States, Japan, India, Singapore, Malaysia, South Korea, Philippines and Thailand comprising 67.36% of exported goods.
VEGETABLE PRODUCTS
16.9%
MINING PRODUCTS
17.1%
Source: Euromonitor International from national statistics
OTHER
13.1%
METALS
11.2%
8.7%
MACHINERY & ELECTRICAL
WOOD & WOOD PRODUCTS
6.7%
TEXTILES
6.1%
FOOD
STUFFS
5.2%
CHEMICALS
4.5%
PLASTICS & RUBBERS
5.0%
STONE & GLASS
5.5%
Bibliography
Learn more about Indonesia from the experts...
The Economist Newspaper Limited. (November 17, 2022) “Why Indonesia matters” The Economist. Retrieved on July 8, 2023
Worldometer. (2023) “Countries in the world by population (2023)” Worldometer. Retrieved on July 8, 2023
Worldometer. (2023) “Largest Countries in the World (by area)” Worldometer. Retrieved on July 8, 2023
Joanna Tatomir. (July 14, 2022) “Indonesian People: Population, Demographics, and Ethnic Groups” Study.com.
UNESCO. (2023) “Culture in the G20 under the Presidency of Indonesia” UNESCO.
ASEAN Secretariat. (January 1, 2023) “ASEAN Chairmanship 2023 – Indonesia” ASEAN Secretariat.
Hanifatul Khurriah & Nurul Istifadah. (January 2019) “The Role of Infrastructure in Indonesia’s Economic Growth” ResearchGate GmbH.
Stephen Elias & Clare Noone. (December 2011) “The Growth and Development of the Indonesian Economy” Reserve Bank of Australia.
Shotaro Tani. (February 25, 2021) “Indonesia to offer investment incentives for 'priority' sectors” Nikkei Inc.
Rifa’atul Mahmudah. (April 2019) “The Effect of Education to Indonesian Economic Growth” ResearchGate GmbH.
Hendri Dwi Saptioratri Budiono & Rahmat Nurcahyo & Muhammad Habiburrahman. (June 5, 2021) “Relationship between manufacturing complexity, strategy, and performance of manufacturing industries in Indonesia” ScienceDirect.
Asian Development Bank. (October 2019) “The Evolution of Indonesia’s Participation in Global Value Chains” Asian Development Bank.
WorldData. (2023) “Indicators of economy in Indonesia” WorldData.info.
United States Census Bureau. (August 17, 2022) “Indonesia Independence Day (1945): August 17, 2022” United States Census Bureau.
Shada Islam. (December 1, 2011) “Indonesia's Rise: Implications for Asia and Europe” SAGE Publications.
Dion Maulana Prasetya & Peggy Puspa Haffsari & Heavy Nala Estriani. (November 13, 2020) “Identity Matters: Indonesia’s approach towards territorial disputes in South-east Asia” Maritime Affairs.
GlobalFirepower. (2023) “2023 Indonesia Military Strength” GlobalFirepower.com.
Safeguard Global. (December 20, 2022) “Top 10 manufacturing countries in the world” Safeguard Global.
Usman Kabir. (June 12, 2023) “Top 20 Mining Countries in the World” Koala Guide.
Observatory of Economic Complexity. (2023) “Petroleum Gas in Indonesia” Observatory of Economic Complexity.
Observatory of Economic Complexity. (2023) “Ferroalloys in Indonesia” Observatory of Economic Complexity.
Startup Ranking. (2023) “Startups per Country” Startup Ranking.
Marcia Kaplan. (March 6, 2022) “Indonesia, an Overlooked Ecommerce Market” Practical Ecommerce.
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NationMaster. (2023) “Top Countries in Number of E-money Payments” NationMaster. LEARN MORE
World Bank Group. (May 20, 2020) “Investing in People: Social Protection for Indonesia’s 2045 Vision” World Bank Group.
World Bank Group. (November 18, 2020) “The Promise of Education in Indonesia” World Bank Group.
United States Department of State. (2023) “2022 Investment Climate Statements: Indonesia” United States Department of State.
StudySmarter GmbH. (July 8, 2023) “Population and Economic Growth” StudySmarter GmbH.
True Tamplin. (June 08, 2023) “GDP Per Capita” Finance Strategists.
HSBC Group. (May 19, 2023) “Indonesia: a rising global economy that’s open for business” HSBC Group.
Siwage Dharma Negara. (January 16, 2023) “Indonesia’s resilient economy still has room to grow after G20” East Asia Forum.
ASEAN+3 Macroeconomic Research Office (AMRO). (April 20, 2023) “Indonesia: Containing Inflation and Supporting Growth amid External Headwinds” ASEAN+3 Macroeconomic Research Office (AMRO).
Asian Development Bank (ADB). (March 2016) “Analysis of Trends and Challenges in the Indonesian Labor Market” Asian Development Bank (ADB).
Organisation for Economic Co-operation and Development (OECD). (March 18, 2021) “Indonesia: improve skills, strengthen institutions and lower barriers to competition to strengthen recovery from COVID-19” Organisation for Economic Co-operation and Development (OECD).
Addisu A Lashitew & Michael L Ross & Eric Werker. (March 29, 2020) “What Drives Successful Economic Diversification in Resource-Rich Countries?” The World Bank Research Observer.
Observatory of Economic Complexity. (2023) “Indonesia” Observatory of Economic Complexity.
Unemployment (% of active population), from 2021 and 2022 Respectively
Indonesia ranks seventh in terms of managing to keep unemployment low in the ASEAN region as of 2022. The unemployment rate has much room for improvement having been a challenge even before the COVID-19 pandemic due to youth unemployment, skills shortages, and skills mismatches. The Indonesian government launched an unemployment benefit programme to help laid-off workers during the COVID-19 pandemic. The unemployment rate challenge would improve via vocational education and adult training program provided by the government and private sectors e.g. the Joint Work Programme for 2022-2024 by the Organisation for Economic Co-operation and Development (OECD) and the Indonesian government.