Forbes Asia — December 2017

Indonesia 1

SPECIAL ADVERTISING SECTION

Strong economic growth, rising incomes and increased investment are expected

to make Indonesia’s business story even more compelling.

INDONESIA:

A BRIGHT OUTLOOK FOR PRIVATE ENTERPRISE

Despite the global economic and geopo-
litical volatility, Indonesia’s economy con-
tinues to expand, driven by consumption,
investments and a recovery in exports.
The country registered year-on-year gross
domestic product (GDP) growth of about
5% in the second quarter of 2017, and the
World Bank expects GDP to expand by
5.3% in 2018.
Supported by solid job growth, an
increase in real wages, low and stable infla-
tion at around 4%, and a stable exchange
rate, consumption is expected to remain
robust for the foreseeable future.
“We hope this conducive environment
will support purchasing power, and con-
sumption growth can be maintained at
around 5% going forward,” wrote Indone-
sian Finance Minister Sri Mulyani Indrawati
in a recent newspaper commentary.
The government is introducing key
reforms to attract more investments to
bolster growth. Domestic and foreign
direct investments in the first half of 2017
reached a total of 336.7 trillion rupiah
(US$22 billion), an increase of almost 13%

compared with the same period last year,

said Ms Indrawati.

All this bodes well for Indonesian com-

panies whose businesses are tied to the

country’s development. Large diversified

conglomerates such as Lippo Group, Astra

International, Bakrie Group and Sintesa

Group have businesses in almost all of the

economy’s key sectors, including mining,

infrastructure, financial services, health-

care and technology. These corporate

giants are also giving back to Indonesia

through their numerous corporate social

responsibility programs.

Exporters, too, are getting a lift from a

stronger global economy. Already the larg-

est garment manufacturer in Indonesia, Pan

Brothers has lofty ambitions to become the

largest apparel supplier in the world.

Meanwhile, specialized consumer com-

panies, such as leading bread producer

Indosari and luxury brands retailer Time

International, are relying on Indonesia’s

growing middle class and higher dis-

posable incomes to fuel the growth of

their businesses.

As more small and midsize enterprises

(SMEs) emerge and expand amid a more

buoyant economy, financial institutions

that focus on supporting SMEs, such as

Bank Rakyat Indonesia, will also prosper.

To attract more foreign investment,

Indonesia’s free trade zones are upgrading

their services and infrastructure. One

prime example is the Batam Free Trade

Zone, which is located 20 kilometers south

of Singapore. With its strategic location,

as well as modern infrastructure and

amenities, Batam has seen a rise in the

number of companies locating there in

recent years.

While challenges to economic growth

remain, the government has announced its

commitment to tackling the issues ahead,

clearing the way for private enterprises to

continue on their journey of expansion.

“We will further boost private sector

participation in infrastructure development

and create positive synergies with state-

owned enterprises,” says Ms Indrawati.

“These investments will make our economy

even more competitive going forward.”

Jakarta, the capital city of Indonesia.