Tag Archive | "GDP"

The Only Way of Indonesia is Up!

While the telecom services “growth market” focus has been on the BRIC (Brazil, Russia, India, and China) nations in recent years, a new Pyramid Research report suggests the industry should be paying closer attention to Indonesia too.

The report, “Indonesia: Rising Competition to Spur Telecom Revenue Growth,” reveals that there’s a marked under-penetration of most telecom services in this vast, fragmented country of more than 240 million people.

But rapid service uptake, driven by increased competition and rising disposable income, is expected, with the Pyramid team predicting that, while China and India are still set for significant expansion, Indonesia will become the fastest-growing telecom market in Asia/Pacific during the 2009-2014 period, with overall revenues from communications services growing by a staggering 80 percent.

In the mobile sector, subscription penetration stood at 63.7 percent in 2009 — below the global average of 68 percent — and actual user penetration at 38.6 percent. There has already been some growth -– in 2006 subscription penetration was just 28 percent –- but the report’s authors believe there will be much more in the coming years, with penetration set to exceed 93 percent by the end of 2014. In revenue terms, the report predicts that this will translate to a compound annual growth rate (CAGR) of 11.4 percent for the mobile sector to 2014.

Broadband of any kind has yet to reach 1 percent of the population, but mobile broadband is on the march, claiming 2.4 million connections in 2009, compared with only 1.6 million on fixed broadband. This is partly explained by the archipelago nature of the country: The population is spread across more than 6,000 of Indonesia’s 17,000 islands, which makes wireless technology more suitable for broadband rollout. And in a country where only 5 percent of the population owns a PC, mobile phones look set to be the standard platform for Internet access.

PT Telekomunikasi Selular (Telkomsel) , the mobile arm of fixed incumbent PT Telekomunikasi Indonesia Tbk. (Telkom) , will probably be the main beneficiary of this growth, and will likely still dominate the market with a market share of more than 50 percent in 2014. (See Telkomsel Plans Capex Hike.)

But it’s not just a mobile story. The report predicts that fixed-line revenue growth will outstrip that of the mobile sector during the coming five years. Indeed, Pyramid projects that total fixed-line revenue will increase at a CAGR of 13.6 percent to the end of 2014. The main driver of this will be the continued popularity of limited mobility services — or fixed-wireless access (FWA) — throughout the archipelago. FWA already accounts for three quarters of all fixed connections in the country. (See Indonesian Operator Soars With FWA.)

The popularity of FWA, says the report, will mean that the fixed space will predominantly serve the need for voice services, while broadband data needs are met by 3G platforms. This, it adds, is “in stark contrast to other markets.” Perhaps surprisingly, WiMax looks set to remain a niche technology in Indonesia.

The simple fact is that while Indonesia is the fourth most populous country in the world, it ranks only seventh in Asia/Pacific in terms of telecom revenue. And in terms of telecom revenue as a percentage of GDP, Indonesia stands at 1.7 percent, compared with Vietnam on 5.3 percent and Thailand at 3.3 percent.

For Indonesia, the only way, it seems, is up.


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It’s Time For RI To Shine: Sri Mulyani

Aditya Suharmoko, The Jakarta Post, Jakarta|Fri, 05/29/2009 11:50 AM|Headlines

The economy will expand 4.3 percent this year, higher than what multilateral agencies estimated, giving the country a chance to gain world recognition for its cushioning of the crisis impact, a minister says.

“It is highly likely the country will record an economic growth of above 4 percent this year,” Finance Minister Sri Mulyani Indrawati said in an interview Thursday.

“This beats many parties’ predictions that have been pessimistic about Indonesia.”

The International Monetary Fund (IMF) forecast Indonesia’s economy would grow 2.5 percent this year, while the Asian Development Bank (ADB) predicted a 3.6 percent growth. The government, meanwhile, insists the economy can expand between 4 percent and 4.5 percent in 2009.

“This momentum puts Indonesia in a respectable position as China may score a 6.5 percent growth, followed by a 5 percent growth in India and a 4.3 percent growth in Indonesia. So it is very close, and *the growth* looks very high compared to that in many other countries.”

Indonesia’s economic resilience has made global investment firm Morgan Stanley revise its forecast of Indonesia’s economic growth upward, from 1.9 percent to 3.7 percent, the firm’s economist Deyi Tan said in a report Wednesday, as reported by Bloomberg.

The economy grew 4.4 percent in the first quarter of 2009 from a year earlier, according to the Central Statistics Agency (BPS), as private consumption remained buoyant, offsetting weak exports and investment performance.

Government spending also helped as officials procured goods for the preparation of the legislative elections, which took place in April, said Mulyani.

She is optimistic Indonesia can maintain this momentum throughout the remaining three quarters due to the recent global economic situation – and certain indicators, particularly exports – suggesting the worst of the crisis may have passed.

Mulyani is certain exports, which plunged by around 30 percent in the first three-month period this year from a year earlier, would improve in line with a gradual recovery of the world’s economy.

“Private consumption accounts for 60 percent of our gross domestic product *GDP*; if it goes down even a little bit, it will be reflected in the *economic* growth. What will compensate this is exports,” she said.

“Japan, where exports have dropped by 60 percent, and other countries, where economies have also experienced dramatic drops, have seen signs of bottoming out. This creates hope that the idea of boosting private consumption helps improve the economy,” she added.

Government spending will also continue as some ministries – particularly those with big budget allocations like the Public Works Ministry, the Education Ministry, the Transportations Ministry, the Religious Affairs Ministry and the Agriculture Ministry – have started their procurement process for development projects.

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Simple Economy Part II: Can Indonesia Achieve A Double Digit GDP Growth?

Indonesia’s presidential candidates have delivered a strong message to all voters, that once they’re elected, they’ll strive for higher GDP growth in times ahead.  The incumbent Yudhoyono said Indonesia will achieve a strong and sustainable 7% growth starting 2014,  Kalla and his pair were sure that Indonesia can start enjoying 8% in 2011, while Mega and Prabowo tried to convince us that Indonesia can even be buoyed with 10% growth.

The question is simple ! Can Indonesia?
I am not going to discuss the possibility level of those figures, but let me share with you my limited knowledge about how to achieve GDP growth.
First, these are the variables of GDP :
  • Consumption: means private/individual consumption in the economy, how much your family spend.
  • Investment: investing in business or household capital. Please acknowledge, capital here is not SAVING. Saving is the opponent of Investment. Money saved in banks may halt the growth.
  • Government Spending: salaries for public servants, stimulus package, purchase of military equipments, government investment, etc.
  • Export vs Import: make sure, keep the money earned from export is higher than money spent for import.

So, how to achieve a double digit growth? Easy ! Double-digit the percentage of all those 4 variables, especially the investment (including Foreign Direct Investment), and export (you may include Foreign Tourism Expenditures here).

Only by that can we run fast and fly high!

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Indonesia’s Debt Performance

Written by Febri Ardianto, an aviation student, GNFI contributor in Surabaya

Lately we’ve been disturbed by the news of how big Indonesia’s debt is. The numbers actually are really shocking. It is 1,667 trillion Rupiahs (around 163 billion US Dollars with the latest currency exchange rate). Many people put the blame on our government. Let’s try to think outside the box. In order to do so, you have to know what is GDP (Gross Domestic Product). According to Wikipedia, GDP is a basic measure of an economy’s economic performance, is the  market value of all final goods and services produced within the borders of a nation in a  year. In the other hand, GDP is a nation’s income.

As a developing country, definitely, Indonesia has debt. So, which country in this  world do you think doesn’t have debt at all? In your mind, those must be USA or Japan, the first and second largest economic power in the world. So lets go through USA first.

If you made an easy search on Wikipedia, you will find the fact that even USA has debt! As of 2007, the debt of the United States ranked as the 22nd-largest in the world as a percentage of GDP. In 2007, USA came with a total debt of 65.5% of GDP. As per May 7, 2009, the total USA federal debt was 11 trillion US dollars. It is 80.1% of GDP based on current GDP. In an easy way, it’s like you have an income of 1,000,000 US dollars a year, but you have a debt 801,000 US dollars. What a shocking figures! Moreover the US government estimates that the total debt relative to GDP will rise to 97% by 2010 and stabilize at approximately 100% thereafter.

Now, let’s take a look at Japan. This time, lets make it more simple. According to  OECD (Organization for Economic Cooperation and Development) data, during the year of 2007, Japan has debt with a ratio of 180% of GDP. Within 2008, aggregate debt was 259% of GDP. Wow! It’s like you have an income of 1,000,000 US dollars, but the sad part is, you have a debt of 2,590,000 US dollars!

For me personally, this is a really shocking fact. That no one of us knew that before. It’s a gloom behind a bright.

Prepare yourself to know the fact about Indonesia. As we all know, Indonesia has paid all the debt from IMF in 2006, despite the fact that Indonesia could have paid in installments up until 2010. This is 4 years earlier, that made Indonesia can save 500,000 dollars. Since the reformation, Indonesia’s debt ratio to GDP keeps on decreasing. During 2000, the debt was 80% of GDP; in 2004 it was 54.6%. For 2005 it was 46.8%. In the year of 2006 it was 37,5%. And finally it was 34,7% of GDP in 2008. It’s like if you have income of 1,000,000 US dollars a year, you only have debt in amount of 347,000 US dollars. Such an interesting thing, isn’t it?

So in your opinion, which one of those country has the biggest chance to pay all of  its debt?

The economic ministry of Indonesia estimated that nowadays debt is around 32% of GDP.  And also, they said that the nation’s foreign exchange reserves is 51.06 billion US dollars.  That means if Indonesia were to go bankrupt today, this country could still pay for all the imported product and pay off all the foreign installment debt up to 4.7 months to come.

Picture taken from here.

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