Indonesia has abundant natural resources. It has the largest economy in Southeast Asia. It has the largest population. 4 of the world, approximately over 275 million people, approximately 60% of whom are of working age, and is the 10th largest economy in the world in terms of purchasing power parity.
Indonesia’s general election was held on February 14, 2024. Unofficial results show that Prabowo Subianto, 72, a former Indonesian general and defense minister, won the vote. The highest number is more than 50% to become the new president. This is the first change in the country’s leadership for 10 years.
Meanwhile, it is expected that investors will wait to see until the official results of the election are announced by the Electoral Commission, if Mr. Prabowo Subianto is still firmly the new leader. The country’s administration will follow the guidelines that aim for economic growth of around 8% and raise the level of energy self-sufficiency by using biodiesel from palm oil. Analysts predict that Indonesia’s economy could grow by 4.5-5% in 2024 as commodity prices fall and global demand weakens.
Prabowo Subianto’s party has also promised to continue the reforms and policies of Joko Widodo or Jokowi, including the development of downstream commodity groups. modernize infrastructure Take advantage of abundant natural resources and move forward with careful macroeconomic policy. In addition, there is a plan to move the capital worth 35 billion US dollars. It will remain unchanged.
7 outstanding industries worth watching
Indonesia is a country that foreign investors are interested in. Because it has an abundance of natural resources It has the largest economy in Southeast Asia. Today, Indonesia has the 4th largest population in the world, approximately 275 million people, 60% of whom are of working age, and is the 10th largest economy in the world in terms of purchasing power parity.
Moreover, Indonesia has continued to show high growth compared to other low operating cost countries. Meanwhile, in terms of labour, wages are still cheap. It is also a gateway to the ASEAN market and a boon for businesses operating in China that face challenges such as rising wages or trade disruptions, for example.
In terms of outstanding industries to watch in 2024, there are 7 groups:
1.Downstream Mining During the conflict between Russia and Ukraine Make Indonesia’s exports grow a lot. This is because the price of goods has increased. Therefore, the export of various commodities will continue to be the backbone of Indonesia’s economy. In 2014, Indonesia introduced a ban on crude ore exports to encourage foreign investment in the downstream mining industry and develop local smelters, in addition to promoting the export of precious commodities. highly processed.
2. Nickel Indonesia announced a ban on nickel ore exports in 2019 and announced a requirement that nickel be processed or refined in Indonesia before being exported. This policy has had a huge positive impact on the economy, such as increased foreign investment and a 10-fold increase in exports of refined products over the last 10 years.
Indonesia has the world’s largest nickel ore reserves of 21 million tonnes, 22% of global reserves, and the ban has disrupted the supply chains of electric car makers and stainless steel producers. Nickel exports will have ‘to process Indonesia increasing from US$1 billion in 2015 to US$30 billion in 2022.
3. electric vehicle battery supply chain Indonesia’s huge nickel reserves are vital to the global EV industry. Indonesia aims to become a global EV hub and is one of the top three EV battery producers in the world by 2027.
Also in 2024, Chinese EV manufacturer BYD plans to build a factory in Indonesia. and BYD investment is expected to reach 1.5 billion US dollars. With a production capacity of 150,000 vehicles per year, the Indonesian government plans to import 60,000 tons of lithium ore from Australia in 2024 to complete its electric vehicle battery industry.
4. Coal Indonesia is the world’s third largest coal exporter, behind only China and India. and is the world’s largest exporter of thermal coal. Indonesia will produce 687 million tons of coal in 2022, of which 494 million tons will be exported and the rest for domestic use. Coal exports generate an income of about US$3 billion per month for Indonesia. of which exports to China, India, South Korea, Japan account for about 70%, and the growing export markets for Indonesian coal are Vietnam and the Philippines.
5. Infrastructure Infrastructure development has been a key part of President Jokowi’s government over the past 10 years. Between 2019 and 2024, Indonesia will need around US$400 billion in funding. for investment in infrastructure
Therefore, Indonesia is pushing for private sector participation in infrastructure development through Public-Private Partnership (PPP) initiatives and opportunities. also for small and large energy and infrastructure projects in eastern Indonesia.
6.Health and medicine With a large market the healthcare industry is expected to provide good returns to foreign investors. Annual health expenditure increased significantly after the implementation of universal health coverage (BPJS) in 2014.
Meanwhile, complex medical equipment is mainly imported, such as ICU equipment and CT PET scan machines. and exports low-tech equipment such as gloves and syringes. In terms of the pharmaceutical industry, approximately 70% are generic drugs, with the rest being over-the-counter drugs The BPJS program has driven domestic generic drug sales of more than $700 million.
7. Tourism The Indonesian Ministry of Tourism provides opportunities for foreign investment to develop sustainable tourism projects, creating 5 new tourism attractions and 8 special economic zones that provide tourism opportunities. These are worth around US$1.5 billion. and will create up to 1.5 million jobs. Indonesia aims to welcome around 14 million foreign tourists in 2024, compared to the previous year in January-November. Indonesia welcomes 10.4 million foreign tourists
However, although Indonesia is a country with trade and investment potential, There are many opportunities to grow your business. But there are still many challenging factors that investors should be careful about, such as frequent protests in the country that could cause businesses to stop temporarily. Infrastructure that still needs further development The currency is quite volatile. and natural disasters such as Earthquakes and floods, etc.
In addition, another challenge is There are concerns that the new president will continue reforms. right now or not If the new president can inherit the spirit of Mr. Jokowi in reforming various areas, which can boost the economy in the long term It is likely to push Indonesia to become the world’s fifth largest economy by 2050, or about 26 years.
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