Large Domestic Market
The Largest Economy in Southeast Asia with Stable Economic Growth
Indonesia is currently the world’s 16th largest economy with more than US$1 trillion of GDP. It is estimated to be the 7th largest economy in the world in 2030 by McKinsey & Company. The only member of G20 from Southeast Asia, Indonesia’s economy had been growing relatively stable at >5% p.a. in the last two decades. Amidst the Covid-19 pandemic in 2020, the economy contracted at -2.07%, the first time since the Asia’s financial crisis in 1998, grew at +5.72% in the third quarter of 2022.
Large Domestic Market
On the consumer side, Indonesia has 273 million of population (2021) and is a home for 64 million of middle affluent class, 1.7x total population of Canada (2018). It is also the gateway to 650 million of population in Southeast Asia, the world’s 3rd largest market. The country is also a production base for export with FTAs with 22 countries, including the largest trading bloc, RCEP.
The other reason why investors should invest in Indonesia is the significantly increased demographic bonuses. The demographic bonus is a condition where the productive age is more than the non-productive population in Indonesia.
Based on the Statistic Indonesia (BPS) estimation, Indonesia will get the impact of the demographic bonus in 2020 – 2035. The productive population is predicted to be at the highest chart history during this period, which reaches up to 64 percent of the total number of Indonesian populations. Two of three population are in working age with the average age of 28 y.o. In 2022, there are 204.7 million and +1.0% growth of internet users with 73.7% of internet penetration. 191.4 million Indonesians are also active social media users. With improving education and skill, Indonesia offers ample workforces with one of the most competitive and predictable wages in the region.
Political and Economic Stability
The politics of Indonesia take place in the framework of a presidential representative democratic republic whereby the President of Indonesia is both head of state and head of government and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the bicameral People’s Consultative Assembly. The judiciary is independent of the executive and the legislature.
Having maintained political stability, Indonesia is one of East Asia Pacific’s most vibrant democracies. As the third largest democracy in the world, Indonesia continues to uphold the values of democracy and Pancasila. To maintain it, the Government of Indonesia measures the Indonesian Democracy Index (IDI). Indonesia scored 78.12 points out of 100 in the 2021 democracy index, categorized as “medium” category.
The Indonesian government continues to strive to create economic stability and an attractive investment climate for investors. This effort has received international recognition. Based on the ranking results of three international rating agencies, Indonesia is categorized as an investment-worthy country.