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Indonesia at a Glance

by Shervin Shahidi Hamedani

Overview

Indonesia is located in South-East Asia between the Indian and Pacific Oceans and is bordered by Malaysia, Singapore, East Timor and PNG. A large percentage of world trade transits the strategically important straits of Malacca that link the Indonesian ocean littoral to the South China Sea and the larger Pacific Ocean basin. Indonesia is rich in natural resources, minerals, oil, and fertile land to support agricultural products. It is these resources, together with the islands’ central location between India and the Orient, that have made Indonesia so attractive to foreign traders, rulers and investors both historically and as of today.

Indonesia is the largest economy in South East Asia. It has the economic growth and investment potential with a large domestic consumption base; its middle class has grown substantially, from approximately 38% of the population in 2003 to 57% in 2010 or well over 100 million people, with 7 million being added each year. Wage growth and an improving employment outlook are expected to support the Indonesian consumer story. The country’s abundance of natural resources and strong demand for these from China, India and other rapidly expanding economies should benefit Indonesia over the longer term.

The GDP value of Indonesia represents 1.40 percent of the world economy. The industry accounts for the largest share of GDP (46.5 percent of total GDP). The long-term vision of national industry development is Indonesia to become “a strong industrial nation in the world”, with a linking vision: “In the year 2020 Indonesia shall become a New Industrial Developed Country”. It means in that year the National industry capability is recognized by the international community as the structural basis for the future’s strong modern economy as well as a vehicle for a people-oriented economy.”