Doing Business in Indonesia - Asia New Zealand Foundation

Report
• Population: 241 million
• Land area: 1.9 million square
kilometers (the size of Mexico,
almost 2/3 of India)
• 17,500 islands
• 300 ethnic groups
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 Population: 140 million, thereof approx. 90 million ethnic Javanese (largest ethnic group in
Southeast Asia).
 Size: 126.700 km2 (almost 1/2 the size of New Zealand).
 1000-km northern route (great post road/groote postweg) constructed by Governor General
Herman Daendels in 1808 – 1810 in the service of France the island’s main artery to date.
 Center of power and economy since colonial times.
 Javanese culture dominant, and pre-eminently dominant during President Soeharto’s 32-year
reign.
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“Ask anyone in Indonesia about the
country’s future and most likely you will
get an optimistic answer. This is no
surprise. The third largest democracy
and fourth most populous country in the
world has transformed itself from a lowincome country in the 1960s into a fastgrowing emerging market.”
“Doing Business in Indonesia 2010” – The World Bank and IMF
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POLITICAL
WILL
Governments
Political Attitude
GOAL:
GOOD OF
COMMUNITY
(“Negotiating Mining Agreements: Past, Present and Future Trends,” Danièle Barberis, 1998)
Policies and
Strategies
7
Year
Era
Economy
1945-1950
Revolution (War
against the Dutch)
Non-existent
1950-1957
Proto-democracy
In shambles
1957-1966
Guided Democracy
(Revolution Ch. 2)
1966-1998
New Order
In ruins –
inflation 650%
Excellent: 7- 8%
growth
1998-2005
Reformation – seeds
In
the
Doldrums
of democracy
2005- now
Nascent Democracy
Respectable: 6%
+ growth
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1. The economy shall be
organized as a common
endeavor based upon the
principles of the family
system
2. Sectors of production
that are important for the
country and affect the life
of the People shall be
controlled by the State
3. The land, the waters and
the natural riches
contained therein shall be
controlled by the State and
exploited to the greatest
benefit of the people
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BANKING
INSURANCE
FMCG
ANZ, HSBC, CIMB,
Commonwealth
CIGNA, Prudential,
Manulife, Allianz
Unilever, Arnott’s,
Phillip Morris, BAT
LOGISTICS
TECHNOLOGY
TRAVEL
Schenker, DHL,
Maersk
Axiata, RIM,
Siemens, GE
Air Asia, Accor
Group
AUTOMOTIVE
Toyota (market share
> 50%), Honda,
Mercedes
It definitely is, but you can
do (good) business in
Indonesia without
promoting and resorting to
bribery or being otherwise
involved in corruption.
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Middle class group: 50 million +
27th biggest exporter in 2010
Inflation 5.4% (2011)
Economic growth in 2011 6.5% - 2012 revised downward
to 6.3%
Size of economy : US$ 846 billion in 2011, projected to
be a trillion dollar economy in 2014
16th largest economy in the world
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National flag
carrier Garuda
flew 4.6 million
passengers in
Q1/2012 (up
25% YOY)
Growth of air
travel in 2011
22%
1200 air
traffic
controllers
needed
New car sales
in 2012
projected at 1
million units
800 new
pilots
needed
annually
US$ 2 billion
commuter line
from airport –
Jakarta
operational
2014
Mobile
telephone
subscriptions in
Q1/2012 255
million numbers
Jakarta Airport
served 52.4
million
passengers in
2011
Accor to double
number of
hotels to 100 by
end 2015
Aston Hotels to
add 73 new
hotels (20
thereof this
year) to
existing 45
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Indonesians don’t know much
about New Zealand
Kiwis don’t know much about
Indonesia
Ergo – stereotypes prevail
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Cooperation exists in all sectors and
areas: economy, security, education,
counter-terrorism
Negotiations on Indonesia – Australia
Comprehensive Economic Partnership
Agreement (IA-CEPA) commenced in September
2012
May be turned into an advantage if linked to
Australia – New Zealand Closer Economic
Relations (CER)
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• 16th-largest economy in the
world
• 45 million members of the
consuming class
• 53% of the population in cities
producing 74% of GDP
• 55 million skilled workers in
the Indonesian Economy
• $0.5 trillion market opportunity
in consumer services,
agriculture and fisheries,
resources, and education
• 7th-largest economy in the
world
• 135 million members of the
consuming class
• 71% of the population in cities
producing 86% of GDP
• 113 million skilled workers
needed
• $1.8 trillion market opportunity
in consumer services,
agriculture and fisheries,
resources, and education
(“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012)
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The Indonesian
economy has
performed
strongly over
the past decade
and is more
diverse and
stable than
many realize.
Indonesia had
the lowest
volatility in
economic
growth compared to OECD and
BRIC countries.
Another misperception is
that Indonesia’s
economic
growth centers
on Jakarta. The
fastest growing
urban centers
are large and
mid-sized cities
with more than 2
million people,
incl. Medan,
Bandung, Bogor
and Surabaya.
Indonesia is not
an Asian
manufacturing
exporter driven
by its growing
workforce or a
commodity
exporter driven
by its natural
resources. The
main drivers of
growth are
domestic
consumption
and services.
The majority of
Indonesia’s
productivity
gain has come
not from a shift
of workers from
lowerproductivity
agriculture into
more productive
sectors, but
from productivity improvement within
sectors and not
at the expense
of employment.
(“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012)
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Menara Karya, 10th Floor Suite H
Jl. HR Rasuna Said Blok X-5 Kav. 1-2
Jakarta 12950 – INDONESIA
T: +6221 5794 4694
F: +6221 5794 4696
[email protected]
www.kiroyan-partners.com

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