Indonesia: One Trillion Dollar Economy

Posted on July 28th, 2010 at 3:08 pm by Akhyari


By Akhyari Hananto

I was really amazed by the article in The Economist magazine titled “Brazil Takes Off”. My uncle went to Sao Paulo sometimes in the 90’s and he said that apart from its carnivals, women in bikinis, and football, Brazil was all about poverty, political instabilities, prey to any economic crisis, and corruption.

Now… Brazil is the superpower of Latin America, and 8th world’s largest economy in the world with GDP balloons to $1.6 trillion in 2009 (one trillion milestone was reached in 2006). It possesses some of world’s biggest and most respected companies such as Petrobras, Embraer, Vale, etc, and contributes 10 of its largest companies in world’s 1000 largest companies.

In addition to that, to attach to its current national pride, Brazil will host World Cup 2014, and Olympic Games 2016. Brazil really really really takes off.

Let’s turn to the next page, it’s about Indonesia now.

Indonesian economy is in a good shape now, indicated by growing amount of foreign direct investment (FDI), exports, cash-in flow, and government expenditure. It is expected that in 2010, Indonesia attracts 30% more FDI than last year. I was informed that in the 1st half of 2010, it already attracted 49% bigger Y-on-Y.

To furnish its aging infrastructure, government plans to spend $200 billion in the next 5 years to build roads, ports, airports, and other facilities to make it more competitive to investors eyes.

Indonesia’s stock market index, the Jakarta Composite Index, broke its record high earlier this week as it reached 3013.40 points bringing its total gains this year to 19 %, the most among Asia’s 10 largest markets. The Indonesian rupiah has risen 3.6 percent this year, the second-best-performing currency in Asia, according to data compiled by Bloomberg. A strong rupiah and low inflation have helped the central bank keep its key interest rate at a record low of 6.5 percent to support Southeast Asia’s biggest economy.

Indonesia has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors.

Giant companies such as Telkom Indonesia, Pertamina, BCA, BRI, are 4 companies in World’s 1000 largest companies, while many others are merging or acquiring other companies and ready to join the club.

Indonesia’s current GDP is $670 billion, and most analysts said that its economy will grow at the pace of 6-6.5% this year, which means that Indonesia will reach the one-trillion-economy club in 2014, making it the 13th country joining the elite club. In 2015, Indonesia’s GDP percapita will be $ 5,000.

Well, it’s only a few years to go. Assuming that political stability can be safely maintained, growth can be accelerated into a faster pace of 8% a year, Indonesia will take over Brazil somewhere before 2020, as Brazil economic growth is now declining.

I can’t wait, Indonesia.

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