The Indonesia Opportunity
The Indonesian Opportunity continues to grow into the world’s commercial consciousness across a broad swath of industries – but don’t expect it to stay in the background for long. Indonesia, SE Asia’s largest economy, has a GDP projected to reach US$ 1trillion by 2017.
Indonesia’s 250 million people are now comprised of more working-age people (15-64) than ever before – 157 million potential workers accounting for 56% of all Indonesians. Indonesian household spending already accounts for about 57% of GDP (US household spending hovers around 68%).
The proportion of the working-age people is expected to peak between 2025 and 2030 – a demographic dividend which has already attracted the tech sector that sees it as the next major growth market after China and India. Claiming the fourth most Facebook users in the world (65mm active users out of a population of 250 million) is only a small part of the story.
Indonesia’s overall economy comprises nearly half of ASEAN economic output and operates with significant autonomy in a working democracy. The Indonesian archipelago is located on one of the world’s major trade routes and has extensive natural resource wealth distributed over an area the size of the United States comprised of over 17,000 islands straddling the Indian and Pacific Oceans.
Imagine your business entering the post WWII American marketplace, armed with hindsight and today’s technology, and you begin to grasp the potential. Just like the US 60 years ago, infrastructure, transparency, and rule of law are works in progress. However, just like the US 60 years ago, the market is large, unwieldy, but young and ready for what’s coming next. We will take you there.
The ASEAN Economic Community (AEC)
On 8 August 1967, five Foreign Ministers from Indonesia, Malaysia, the Philippines, Singapore and Thailand – sat down together in the main hall of the Department of Foreign Affairs building in Bangkok, Thailand and signed a document.
The Association of South East Asian Nations (ASEAN) was born.
On 22 November 2015, ten ministers from Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam – sat down together in Kuala Lumpur, Malaysia and signed an agreement.
The ASEAN Economic Community (AEC) was launched 31 December 2015.
The AEC intends to create a single market of about 600 million people and a production base comprised of its 10 member states. Together, they account for the seventh largest economy in the world, gross national income of US$2.4 trillion, the fourth largest trading partner for the US and the largest destination for US foreign investment totaling $226 billion – greater than U.S. companies have invested in China, India and Japan combined.
In spite of its recent launch, many of the tenants of the agreement have been in place since 2002. Commercial activity has been further spurred by lower tariffs and awareness of the benefits available from this economic powerhouse.
Indonesia’s membership is key to AEC’s success. A solid Indonesian presence – manufacturing, finance, services or other – will be the key to unlocking the potential of the AEC for your business. We can take you there.