Indonesia Economy 2009 dot point

· Indonesia has been a very attractive market for the foreign investors since its time of independence. A number of foreign companies, most of them large multinationals, have invested in the Indonesian market in certain areas. These companies have contributed a lot in the development of the country’s resources, building infrastructure, establishing manufacturing facilities for export and/or provide products and services for the domestic market. The Indonesian market is a very hot perspective for investment and there are numerous opportunities available for setting up a company.

· Recently, the Investment Coordinating Board of Indonesia has proposed to the government to adopt more effective measures to encourage foreign investments in the country. Their proposal included the suggestion to open all business sectors to foreign investors. The global financial crisis has yet to derail flows of investment into Indonesia, as foreign investment in January jumped by 61 percent from a year earlier. Foreign direct investment (FDI) in the first month of the year reached US$710 million, far more than the $440 million recorded in the same period in 2007, as shown by data from the Investment Coordination Board (BKPM).

· The development of democracy in Indonesia has a pivotal moment following the collapse of Suharto’s regime in 1998. At the local level the influence of democracy spirit has also encouraged the development of local democracy, especially after policy of decentralization and regional autonomy became main issue in political change in Indonesia.

· Indonesia has made significant progress over the last 10 years. Democratic procedures have been introduced and have already proven their viability. Government has already been changed by these procedures twice. The transfer of power has been accepted by those having to surrender their prerogatives after losing the elections. This is a serious test for every young democracy and Indonesia, in passing, exhibits a reliable democratic potential. The least progress has most probably been made in regard to the influence of big money in politics, even though the establishment of the Corruption Eradication Commission (KPK) by the current administration of President Susilo Bambang Yudhoyono is a very positive sign in this regard

· The report on the fourth quarter of Indonesia’s economic performance was issued recently. With the performance in the fourth quarter, the economy grew by 6.1 percent in 2008. This could make Indonesia one of the few fast-growing countries in the world that so far seem to be insulated from the rest of the world. The economy was primarily driven by two big sources, one is the sheer size of its population, and the other is the abundance of its natural resources.

· In 2008 Indonesia attained self-sufficiency in rice production. The State Logistics Agency (Bulog) is forecasting that the country will export rice for the first time in more than 30 years in 2009. In December merchandise exports fell by 20.6% year on year, the sharpest rate of decline since November 2001. However, exports were up by 20% in 2008.

· Indonesia’s trading partners, including the EU, Japan and South Korea, have accused the government of protectionism by imposing non-tariff barriers on the import of certain goods.

· With rising income, we saw more and more people join the middle class. In 2008, the GDP per capita surged to US$ 2,217 (Rp 26,360,000) from US$ 1,942 a year before. The 14 percent increase in GDP per capita and the continued growth of the population made the GDP exceed half a trillion dollars for the first time in history. This figure is far ahead of the prediction by Goldman Sachs, which indicated that in 2010, GDP may reach US$ 419 billion (“N-11: Not just an acronym”). Apparently, Indonesia was able to manage a GDP that is 25 percent higher in 2008 than the 2010 forecast. With such income, 23 million people, or 10 percent of the population, earned around US$ 7,000 per capita. This is almost the same size as the entire Malaysian population with roughly the same income per capita. Along these lines, 69 million Indonesians, or 30 percent of the population, earned around US$ 4,000 per capita. (Jakarta Post)

· Ice-cream consumption in Sumatra increased by almost 100 percent in 2008 alone. The list of such products continues to grow from year to year. With the strength of its demographic, the economy may continue to grow in 2009 through the rise of its consumption expenditure. In 2008, the growth of the consumption expenditure of the GDP was 5.3 percent, while the share of this expenditure was 61 percent of the economy. Early indications show that the first two months of 2009 continue to post positive consumption growth.