Unleashing Indonesias

Potential:
Executive summary

Indonesia
16th largest economy in the world going to be 7th biggest by 2030
Inflation decrease from 2 digit into 1 digit
Governments debt per GDP is lower
Young population
Fast urbanizing
Growth income
90million additional consumers
Butttt
- Faces a productivity imperative need to boost productivity growth
by 60% to meet target 7% annual GDP growth
- Uneven distribution of growth inequality
- Poor infrastructure and limited resources
Action : consumer services, fishery and agriculture, resources

Decreased fr 20%
to 8%
comparable with
mature economies

Fallen by
70% over
past
decade

 Misperconception: growth focus on jakarta

medan, bandung, sby
Indonesia strategy: domestic consumption >>
export and services >> manufacturing/resources
Indonesias productivity come from productivity
improvements within sectors (wholesale & retail
trade, transport equipment & apparatus
manufacturing, transport & telecommunication)

Misperconception
1. Indonesian economy is relatively unstable
-. Least valatility in economic growth
-. 2000-2010 annual gdp range fr 4-6%
-. Ind macroeconomic management has improved

Misperconception
2. Economic growth centres almost exclusive
on jakarta
- Jakarta is major contributor to ind economic
output

Misperconception
3. Indonesia follows the asian tigers export
driven growth model
Manufacturin
g down
Cos poor
infrastructure
Labour
problem
underperfor
med

Misperconception
4. Resources are the economys main driver
- Even ind is the worlds largest producer and exporter of palm
oil, coal, cocoa, tin, nickel etc no longer drive the country
economic development

Fluctuation
in global
resource
prices
could result
in
instability
in
indonesias
currency
and risk
the
stability of
economy
as a whole

Misperconception
4. Growth has come largery from an expanding
workforce
- Majority of indonesias productivity gain has come from
productivity improvement within sectors (wholesale and
retail trade, transport, telecommunication)

1. Asias Renaissance Powered by Urbanization

3.15 billion people in

Asia as a global
consuming class in
2025

Urbanization,
main driver of rising
income in Asia

A surge of
demand for resources,
a

commodities, tourism &

export of manufactured
goods

1. Asias Renaissance Powered by Urbanization

Palm
Oil &
Coal

Asias renaissance is fueling growth in Indonesias exports, particularly to

China & India

Rising demand for food Indonesias food producing

trend change from domestic provider to international food hub

1. Asias Renaissance Powered by Urbanization

GDP
remain
stable at
GDP
20%
growing at
the fastest
pace

Outside Java
Island

Investment in infrastructure 4%
of GDP

1. Asias Renaissance Powered by Urbanization

Batam, Pekan baru,

Makassar

2. Indonesias Young Population Growth Trend:

Increasing

Young
population could
boost the
workforce > 40
Million in 2030

152 million people are in

working
age to GDP
add
2.4%
64% woman labor
force20 million skilled
add
worker

3. Global Technology Trend: Increasing

Internet become
mainstream
Growth rate annually

>20%

Changing buyer behavior from

offline buyer to online buyer
Changing company
behavior to e-

commerce
Indonesias broadband
penetration only 1%
WB: every 10%

Investing on
broadband coverage
$20 billion will
covered 20% of the
most densely populated
areas of Indonesia

increase in
broadband
penetration
accelerates
economic growth
by
1.4%
more than in change the countrys resource
Green
Technologies
high
income
countries as the largest geothermal
markets
Indonesia
resources in the world

4.The Expansion of a Consuming Class

Indonesia:
country with
the largest
additional
people in
consuming
class

Consuming class: consumers with enough income

to purchase not only basic necessities but also
discretionary goods & services

So, what is major challenges to increase

Indonesian GDP to 7% in 2030?
If there is increasing in demand, there will be a
change in supply! In this case, change will be

in Indonesias
resources

natural

and

capital

Indonesias Challenges and

Action
Challenges: boosting productivity, ensuring
inclusive growth, & meeting the challenge of
soaring demand from its expanding consumer
class
Need to tackle: excessive bureaucracy,
corruption, access to capital, infrastructure
bottlenecks
How?

1. Transform consumer servicesGovernment as a

vital player!

Financial
services
regulation is
often a
constraint
Poor
infrastructure

As households move up, the share of

income they spend on discretionary goods
and services increases and the share they
devoted to basic necessities shrinks

How to boost?
1. Access
channels
mobile
payment
systems
2. Credit
information
uptodate
and not
broadly
covered
datas

3. Trust & understanding educate consumers about investment

rather than doing business after retire
4. Regulatory overlap relaxed regulatory systems

 Baca kertas

2. Boost productivity in agriculture and fisheries

- Increasing numbers of affluent consumers raise demand
for food and agricultural products significantly
- But cities are expanding pressure on land resources
- To meet domestic demand productivity need to increase
>>60% (from 3 tons/crops/farmer to 5tons/crops/farmer)
- Intensive production rather than extensive production
deforestation, peat land degradation
- Need to pursued: boosting yields, shifting production into
high value crops, reducing post harvest, value chain waste
large exporter

3. Build a resource-smart economy

- Demand for energy, materials, water & other key
resources increase rapidly
- Maximazing energy supply from unconventional
sources: biofuels, biogas, geothermal power
- Game changing forms meet up 20%
indonesias energy needs

4. Invest in skill building

- Need new skill to support growth
- Human capital major obstacle
- Demand for semi skilled and skilled worker will
increase >>100% shortfall of worker educated
- How to fill the gap? need significant investment
(3% of GDP/year not enough)
1. Raise the standard of teaching significantly
2. Develop a more demand driven curriculum
3. Create new, flexible education pathways

Concerned action in these 4 areas

offer business a $1,8 T opportunity
For private sector!
Consumer services: $1,1 T business opportunity
the largest in financial services
Agricultural and fisheries: revenue $250 B,
downstream food and beverages industry $180B
opportunity, upstream activities $20B a year
west, east, central java and east nusa tenggara
Resources: geothermal and biofuels >>10% ayear
but the largest still come from oil, gas and coal
Human capital: private education opportunity
demand increase 4x

Rethink: 1. shift toward

middleweight cities and a
new one
2. Collaborate with local gov
3. Develop local talent