Indonesia, an emerging middle-income country, is already the world’s 16th largest economy by gross domestic product and the 10th strongest in terms of purchasing power parity, and a member of the G-20.
A number of global consultancy firms and banks have reported that the world’s fourth most populous nation, which has charted impressive economic growth since overcoming the Asian financial crisis in 1997-1998, has yet to unleash its true economic potentials, given the country has a large young population, is rich in natural resources and is currently seeing a middle class boom – which has boosted the number of its affluent consumers.
Bloomberg reported in January, citing a report from Standard Chartered, that Indonesia could shake up the world’s gross domestic product rankings by breaking into the top five in 2030.
This is a much more optimistic prediction than the one made in a report by McKinsey in 2012, which said Indonesia may climb to become the world’s seventh largest economy in 11 years but only if the country could boost productivity and attract international investment.
President Joko “Jokowi” Widodo said earlier this month, as reported by Reuters, that his administration will go all out in boosting economic reforms in order to achieve the ambitious target of making Indonesia the world’s fifth biggest economy with a GDP of $7.3 trillion by 2045 – the 100th anniversary of its independence.
Jokowi had just won his re-election last week according to an official count by the General Elections Commission (KPU), although rival Prabowo Subianto is still disputing the election result.
Indonesia’s business community has said that after the presidential election is over, it is imperative that Indonesia’s leaders maintain political stability to boost investors’ confidence and get them to accelerate their investment plan in the country.
Indonesia is currently showing stable macroeconomic indicators, which should encourage investors. Last year, despite heightened global uncertainty, Indonesia managed to post a growth of 5.17 percent.
Sumit Dutta, the president director of Bank HSBC Indonesia, the local subsidiary of the London-based lender, praised Indonesia’s stable macroeconomic indicators, saying they are “conducive for business [growth].” He said Indonesia will become a more strategic market for HSBC in the future.
Although the growth rate was only a tick above 2017’s 5.1 percent, the Coordinating Minister for Economic Affairs Darmin Nasution said many other countries in Asia were not able to post comparable growth amid global economic uncertainty.
Darmin was speaking in “The Golden Moment of Indonesia’s Economy” forum held by HSBC and Indonesian news site Katadata.co.id last month.
The event was attended by high-level government officials. Aside from Darmin, there were the Coordinating Minister for Maritime Affairs Luhut Pandjaitan and the chairman of the Financial Services Authority (OJK) Wimboh Santoso.
Others in attendance included Deputy Finance Minister Mardiasmo, former finance minister Muhammad Chatib Basri, chairman of the Chamber of Commerce and Industry (Kadin) Rosan P. Roeslani, chief executive and co-founder of Tokopedia William Tanudijaja and top executives from HSBC, including group manager Mukhtar Hussain and chief ASEAN economist Joseph Incalcaterra.
Darmin, a former central bank governor, said Indonesia had to bear the brunt of the global economic slowdown last year, but still managed to post excellent macroeconomics indicators.
These include cutting poverty rate by more than half compared to 1999 level, lower open unemployment rate, lower Gini ratio and a relatively low inflation rate.