6 Reason Invest In Indonesia

1. Geographic Indonesia

Republic Indonesia is an archipelago (islands state) located at equatorial in the South East Asia Region. Consist of more than 13.000 islands with 5 big islands (Sumatera, Java, Kalimantan, Sulawesi, and Papua), It makes Indonesia becoming maritime nation. The total land area of Indonesia is 1.811.570 km2 (699,451 sq. miles).

2. High Economy Growth

Based on statistical data released by the Central Bureau of Statistics (BPS), Indonesia’s economic growth tends to be stable at around 5% in the last 3 years, and has a rising trend even though it is thin. For the opposition, the achievement was a soft target to weaken the position of the current ruling government, especially in the economic field. But if we studied more deeply, the structure of Indonesia’s economic growth has experienced significant improvements in recent years. What is very prominent is the growth of investment and exports, which grew 6.15 and 9.09% in 2017 compared to the growth of these two components in 2016 which only amounted to 4.47% and 1.57%.

Beginning in 2018, Indonesia’s economic growth in the First Quarter 2018 still shows its stability at 5.06% and the most surprising is that economic growth based on the province shows Papua as the province with the highest economic growth at 28.93%. The majority of provinces in Indonesia experience economic growth above the national average, meanwhile only a few provinces experience economic growth below the national average. Meanwhile, in the Asian perspective Indonesia’s average economic growth in the last 3 years is still better than Thailand, Hong Kong, South Korea and Singapore.

Economic growth in Indonesia in the last 3 years has led to quality economic growth. Therefore, it is very open for investors who want to do business in Indonesia both in the construction, mining, electricity, telecommunications, oil and gas, and trading sectors. Even this passion for investment must be supported by the fulfillment of accurate and up-to-date business legality.

3. Big Population Big Economy

The current population of Indonesia is 267 million, the fact that Indonesia population is equivalent to 3.5% of the total world. This population ranks number 4 in the world. And 55% of the population is urban young people (median age 28), makes it growth so fast and dynamic.

4. Macro Economy

Indonesia currency is Rupiah (Rp). The government macro economy target for 2019 are :

  1. Economy growth 5,8%
  2. Inflation 3,5%
  3. Tax ratio 12% of PDB
  4. Unemployment 5,2%
  5. Poverty 9,5%

5. Natural Resource

Based on the data, there are 255 blocks of oil ad gas working areas in Indonesia. With details of the areas are 134 onshore, 83 offshore blocks and there are 34 blocks that are partially onshore and offshore. The 2018 spendig for expenditure of oil and gas activities is US $ 9.3 billion.

It was much lower than US$ 20 billion at its peak in 2014. But the better price of oil is expected to return the desire for investing more. The daily oil production is 778,800 barrels per day, while gas production is 7,78 million mscfd (metrk square cublic feet daily).

Mining in Indonesia is a big business of searching, investigating, mining, processing, selling minerals and rocks, that have economic significant. We have coal, gold, nickel, and TIN.

Geothermal energy resource in Indonesia are estimated at around 28.5 Giga Watt electrical (GWe). Indonesia one known as of the largest geothermal resources in the world. This potential is spread in 331 points.
Currently the geothermal resources utilized have reached 1,948.5 MW consisting of 13 geothermal Power Plants (PLTP) in 11 geothermal work areas. In 2018 there is additional capacity added with the operation of a 30 megawatt unit I Geothermal Power Plant (PLTP) Karaha Unit I and a Sarulla III PLTP of 110 Megawatt.
Then it followed at the end of 2018, Sorik Marapi Modullar I PLTP with a capacity of 20 Megawatts and unit II with a capacity of 30 Megawatt. Also the Balai Unit PLTP has a capacity of 55 Megawatt.

Electricity in Indonesia is provided by PLN as a State-Owned Enterprise (BUMN). As for private investors, they can participate in the power plan side. This is where the electricity is then sold to PLN through a PPA (Power Purchase Agreement). This private power plant is known as the IPP Independent Power Producer. Electricity, whether produce by PLN’s own power plants or IPP’s, is then fully transmitted through the PLN transmission and substations to customers. The Indonesian government in 2014 launched a 35.000 MW program for the five years 2014-2019. The plan is to build a mix of electricity power with a total capacity of 35.000 MW, a transmission network of 46.000 kilometers of circuits and a substation with a total capacity of 109.000 MVA. The progress of this project in early 2018, the capacity of power plant which fully operational is 2.800 MW.

Indonesia government nowdays very pursuit its will to accelerate building the infrastructure. Many projects that delayed or even worse, stopped at previous government, now push to accomplish. Many road, highway, bridge, dams, peple housing and public waste and sanitary facilities are built. The project now is Road, Highway, Bridge and DAMS.

There is massive investment in the Indonesia telecommunications sector. Due to the Indonesian people are so hungry for bandwidth and also challenging georaphic condistions for telecommunication infrastructure as the island state.

  • Palapa Ring
    Palapa Ring is a national fiber is a national fiber optic network development project that will reach 34 provinces throughout Indonesia with a total length of sea cables reaching 36.000 kilometers while cable in land is 22.000 kilometers. The government’s plan, the Palapa Ring is a ring-shapped broadband fiber-optic network that encircles seven islands namely Sumatera, Java, Kalimantan, Nusa Tenggara, Sulawesi, Maluku dan Papua.

Indonesia has so many beautiful places to visit, even recognized by most tourist as heaven on earth. The charming of its culture and and also the hospitality of the people already well known abroad. Nowdays tourism is huge business. Statically show now tourism roles for 15% of Indonesia GDP. Generate Rp 275 trillion turn arround in business. Also tourism sector hire 19 million worker and in 2019 expected will be 20 million overseas tourist visit and 275 million time domestic travelling tourist.

The investment needed for develop these destination becoming world class, will be arround Rp 300 trillion. It will come for government expenditure for supporting the infrastructure, but mostly outside the infrastructure will come from the private sector such build the hotels, resorts, amusement park, marine tourism, etc. And also will push the small medium entreprise grow arround those areas. Now four new destinations already granted the status as Special Economic one. By having this status will be easily accelerating the bureaucracy & regulation breakthrough. These four destination namely Mandalika Lombok, Tanjung Kelayang Belitung, Tanjung Lesung Banten and Morotai North Maluku.

  • Airport
    One of the transportation infrastructure that is being speeded up is the airport. Given that Indonesia has a population of more than 260 million people with a geographical more than 13.000 islands. Then air transportation is an absolute necessity and this means the need of development and expansion for more airports.
    Indonesia is targeting the construction and development of new airports in 15 locations spread throughout Indonesia. In addition to the construction of a new airport, the government will also extend the runway in 27 locations and rehabilitate airport passenger terminals in 13 locations.

Lack of upstream production for chemicals, making Indonesia highly dependent on imports. Chemical material needs for its domestic 5,6 million tons per year almost half of which had to be imported.
Based on data from the Indonesian Iron and Steel Association (IISIA) investment is currently grow in Indonesia;s steel industry. The prospect of the metal industry subsector is very promising, because of the still low national steel consumption per capita. So that the groth is still very large. In 2018, domestic steel demand is predicted to increase 3.5% to 14.5 million tons, this is driven by so many infrastructure projects. While the capability of the national capacity steel industry is only 8 million ons per year.
So investment in the petrochemical and steel plant sector is urgently needed to meet this domestic market demand.

6. National Politic Stabil

The political and economic stability of regional countries, especially Indonesia, is the key to the sustainability and success of the Association of Southeast Asian Nations (ASEAN).

Indonesia, as a country with a population representing 40 percent of all ASEAN, has this important key to promoting economic and political stability in the eyes of the international community.

“Indonesia’s population and its economic capacity represent 40 percent of all ASEAN. Therefore, Indonesia’s domestic stability will affect the region, and our political and economic stability is very strong,” the Vice President said in a speech at the 24th International Conference on the Future of Asia in Hotel Imperial Tokyo (June 2018).

The political conditions in Indonesia continue to show democracy, especially with the holding of general elections, both president and vice president and regional head elections which take place in 2,400 regions.