The year 2017 is coming to an end soon. During this year, prospective investors have observed numerous positive economic sentiments, which could convince them to choose Indonesia as their investment destination.
One of the reasons has been Standard & Poor’s (an international credit rating agency) recent upgrade of the country into an investment grade with a stable outlook, demonstrating the company’s trust in Indonesia’s economic climate.
President Joko ‘Jokowi’ Widodo has also affirmed that Indonesia’s economic growth is on the right track despite the global economic slowdown. Therefore, the President has requested businesspeople and investors to take a careful look at the ever-changing trends of consumer behavior, especially during this era of digital revolution. It is equally important for all relevant stakeholders to maintain momentum for economic growth taking into account the various economic advancements that Indonesia has attained within the last three years.
Positive economic indicators
The trends in 2017 have demonstrated positive economic indicators.
For instance, in the third quarter of 2017, the communication and information services sector has grown year-on-year by 9.80 percent, while other types of services have risen by 8.71 percent. Meanwhile, the transportation and logistics business has increased by 8.25 percent, while the business-supporting services sector has grown by 8.07 percent. Value-added tax (VAT) revenue has grown by 12.1 percent; while VAT Refund for Tourists has grown by 10.46 percent, with the arrival of foreign tourists having increased by 25 percent.
Indonesia’s export value from January to September 2017 has shown a year-on-year increase to US$123.36 billion, growing by 17.36 percent. Keeping the figures in mind, we should be optimistic in welcoming the year 2018.
Indonesia’s Investment Coordinating Board (BPKM) chairman Thomas Lembong said that with Standard & Poor’s upgrading Indonesia into investment grade, all relevant stakeholders must work in accelerating economic growth to increase investment volume, seizing the opportunity offered by Indonesia’s current stable macroeconomic conditions with inflation being adequately controlled and political conditions properly managed. Therefore, 2018 will be the perfect moment for investors to invest in Indonesia.
According to BKPM, from all of Indonesia’s business sectors, the tourism and digital economy sectors remain the most promising. The government has been proactive in supporting both sectors through a number of policies, such as: increasing visa-free travel to Indonesia to 170 countries, the national campaign to promote various new travel destinations as ‘the new Bali of Indonesia’, while implementing numerous infrastructure development projects. The advancement of digital economy, supported by the thriving emerging middle-class socioeconomic bracket, will spur Indonesia’s economic growth further.
According to data provided by GSMA Mobile Connectivity Index, in 2016 there were 132.7 million internet users in Indonesia. From aggregate number, 106 million are active social media platform users and 92 million are active smartphone users. This has laid an excellent foundation for Indonesia to enjoy a sustainable digital economy growth.
Referring to data provided by the Indonesian E-commerce Association, around 9 percent of the country’s population, comprising 24.74 million people, was making online transactions in 2016, with a total transaction worth of US$5.6 billion.
Going back to tourism sectors, Indonesia offers many other investment opportunities worth considering. The government is currently grooming 10 new travel destinations to match the popularity of Bali among foreign tourists. The new travel destinations are: the Toba Lake in North Sumatra, Tanjung Kelayang in Bangka Belitung, Borobudur temple in Yogyakarta, Wakatobi in Southeast Sulawesi, Morotai in North Maluku, Tanjung Lesung in Banten, Pulau Seribu in Jakarta, Bromo in East Java, Mandalika in West Nusa Tenggara and Labuan Bajo in East Nusa Tenggara.
Investment opportunities are also wide open in various special economic zones such as: Lhokseumawe in Aceh, Sei Mangkei in North Sumatra, Tanjung Api-Api in South Sumatra, Tanjung Lesung in Banten, Morotai in North Maluku and Sorong in West Papua.
Investment in infrastructure development projects is also highly lucrative. Currently, the government is accelerating 245 priority infrastructure development projects across Indonesia, which needs an investment amounting to more than 4 thousand trillion rupiah covering five main sectors: energy, electricity, toll roads, railways and special economic zones.
The fundamental strength of Indonesia’s economy is supported by consumption made by private companies, investment expenditures as well as a continuing increase of export volume. The recovery of the global economy as well as commodity prices, along with numerous domestic infrastructure development projects, will support next year’s growth momentum, making it the perfect time to invest in Indonesia.
Positive outlook for 2018
Next year, Indonesia’s economic growth would still mainly be driven by domestic consumption and investments. Until the third quarter of 2017, investment in Indonesia has amounted to Rp 513.2 trillion, constituting 75.6 percent of the government’s target of attracting Rp 678.8 trillion of investment. Since 2012, the investment realization value has also continued to increase, signifying BKPM’s success in spurring investments.
In terms of regulations and bureaucracy, Indonesia is now becoming friendlier than ever toward investors. The World Bank has upgraded Indonesia’s standing in its 2018 ease of doing business report by 19 points compared to last year, which ranks the country at the 72nd position. Furthermore, the Gallup World Poll has also ranked Indonesia first for its trust and confidence in national government report. Trust level to the Indonesian government has amounted to 80 percent, increasing by 28 percent compared to 2007, when the trust level amounted to 52 percent.
Meanwhile, according to the World Economic Forum’s Global Competitiveness Index 2017-2018, in 2017 Indonesia has ranked 36 from 137 surveyed countries in terms of global competitiveness. The Edelman Trust Barometer 2017 has also stated that Indonesia is a country with a high trust level for both its government and the press.
A report issued by the United Nations Conference on Trade and Development (UNCTAD) called the Global Investment Prospects Assessment 2016-2018, has ranked Indonesia in the ninth position in its list of the most attractive global foreign direct investment locations.
All the macroeconomic indicators, along with the international recognition, send an important and positive message that Indonesia’s economy will continue to soar; thereby, there is no reason for you to postpone investing in Indonesia.