Indonesia is now turning into a people centered economy
Despite a deteriorating global economy, Populous, diverse and largely agrarian archipelago, Indonesia is now a people- centered economy and helping to upgrade traditional crafts and skills so that local products can compete with imports from China and India.
- Indonesia’s gross domestic product grew 6.2 percent in the third quarter from a year ago and domestic consumption and investment remained strong.
- Being a consumer market of 240 million people, with more than 10% of this number in the middle to upper-income class, the self-reliant economy has a lot to offer for new investors.
- The government has made dramatic moves in recent years to assert more strategic control over some of its lucrative resource industries, most notably mining. The “resource nationalism” drive includes new limits on foreign ownership as well as taxes or quotas for exports of primary minerals. One aim of the latter is to promote more value-added processing at home.
- Indonesia’s economy has so far remained resilient in the face of a global slowdown thanks to robust investment and domestic consumption. Asean’s biggest economy has become investment hot spot.
“Indonesia is in a huge transition period from being an inwardly focused, lower-end economy to one that’s evolving very quickly with average growth of about 6.5% per year,” says Somsak Pipoppinyo, director of the Finance, Industry and Infrastructure Directorate of the Asean Secretariat.
“Being a consumer market of 240 million people, with more than 10% of this number in the middle to upper-income class, the self-reliant economy has a lot to offer for new investors.
“That is really good news for Thailand, as we now have a number of big business players and consumers at our doorstep.”
In 1970s, an Indonesian intellectual and diplomat, Soedjatmoko (Bung Koko) wrote presciently, “have to turn developmental thinking upside down… We will” — warned against the heedless technocracy that opened up massive disparities between the center and the periphery and rural and urban areas while destroying native self-confidence.
“Q3 GDP growth came in within market expectations and is generally supportive of the view that Indonesia’s growth prospects are modest going into 2013,” said Gundy Cahyadi, an economist from OCBC in Singapore.
“We may now see growth coming in at 6.3-6.4 percent year-on-year for the whole of 2012 and maintain our 6.5 percent growth forecast for 2013. The strong investment growth seen earlier this year is likely to mean that the positive trickle down impact on the economy will prevail into next year.
“The near-term risk for the economy lies with the growing dependence on its commodity sector … It remains to be seen how rapidly export growth will recover.
“Bank Indonesia is still unlikely to rush for any rate change for now.”