About Indonesia



Indonesia has one of the largest economies in Southeast Asia and is one of the emerging market economies of the world. The country is the sixteenth largest economy in the world by nominal GDP and is the eighth largest in terms of GDP (PPP). Indonesia still depends on domestic market, and government budget spending and its ownership of state-owned enterprises (the central government owns 141 enterprises) and the administration of prices of a range of basic goods including, rice, and electricity plays a significant role in Indonesia market economy, but since the 1990s, 80 percent of the economy has been controlled by private Indonesians and foreign companies.

In the aftermath of the financial and economic crisis that began in mid-1997 the government took custody of a significant portion of private sector assets through acquisition of nonperforming bank loans and corporate assets through the debt restructuring process and the companies in custody has been sold out by privatization several years later. Since 1999 the economy has recovered and growth has accelerated to over 4–6% in recent years.

In 2012 Indonesia replaced India as the second-fastest-growing G-20 economy, behind China.

The Indonesian government under the leadership of Joko Widodo (who was inaugurated as Indonesia’s seventh president in October 2014) has implemented several structural reforms that aim at long-term growth but cause some short-term pain. For example, the majority of fuel subsidies have been scrapped successfully, a remarkable accomplishment (as fuel subsidy cuts have always caused outrage among the population) aided by the globe’s low crude oil prices. Moreover, the government places high priority on infrastructure development (evidenced by the sharply rising government infrastructure budget) and on investment (evidenced by deregulation and fiscal incentives that are offered to private investors).


The Indonesian Government’s $500b National Infrastructure Program over the next five years opens opportunities for European providers of services and technologies along the value chain for the development of ports, airports, roads, water and energy projects.

Food & agribusiness
Opportunities around the development of Indonesia’s beef herd and associated expertise in veterinary services, pasture and horticulture development, genetics and meat processing consultancies.

Retail Sector
Despite relatively low retail sales per capita (at USD $1,270) as well as ongoing currency volatility, Indonesia’s large population (roughly 255 million), growing Internet penetration and bustling cities make it an attractive market for foreign retailers. The rising middle class segment – rising on growing per capita GDP – fuels a 10 percent annual growth in the retail sector. Indonesia’s retail sector is currently estimated to be worth USD $324 billion.

Digital sector
Indonesia sets the pace in the digital world in innovation, adoption, engagement and more:
Digital economy is fast evolving creating new opportunities: on-demand transportation (Go-Jek, Grab-Bike, Uber), Growing market for Mobile Financial Services. E-Commerce market is estimated at $12 billion in 2014, with Government growth target of US$130 billion by 2020. Indonesia loves technology and is 10 years ahead of the USA in mobile-first trends.

Défense and security sector
The Indonesian defense market, estimated to value US$9.5 billion in 2015, is expected to grow at a CAGR of 16.44% during the forecast period to value US$20.4 billion in 2020.The country’s increasing military expenditure is reflected in the ongoing modernization drive to replace its aging military hardware along with building its indigenous defense industrial base.
Continuous territorial disputes and the country’s vulnerability to natural disasters have led to the upgrade of military equipment such as military transport aircraft, rescue helicopters, and naval vessels. Over the forecast period, the country is expected to invest in infrastructure construction, multi-role aircraft, submarines, cyber security, border security, unmanned aerial vehicles, radar systems and computer network defense capabilities, which will drive the growth in its capital expenditure.

Homeland security is an area that has gained prominence in Indonesia over the last decade, with expenditure expected to increase from US$5.2 billion in 2016 to US$6.3 billion in 2020 at a CAGR of 4.91%.