The Report: Indonesia 2020

Indonesia is the world’s 16th-largest economy and presents an enticing opportunity for investors, with ongoing reform efforts and attractive demographics. Meanwhile, a booming start-up ecosystem signals the country’s rising consumer power and regional influence. While headwinds are expected to follow Covid-19, Indonesia’s strong foundations will help maintain momentum in the medium to long term.

Although the first quarter of 2020 was dominated by disruptions stemming from the global Covid-19 pandemic, 2019 proved a strong year for Indonesia’s economy, which maintained a steady growth rate on the back of robust domestic consumption and continuing efforts to reform policy and simplify investment procedures. This was despite the general election and uncertainty surrounding trade relations between the US and China. The country’s emphasis on digitalisation and infrastructure development are laying the foundations for future economic growth, and the re-election of President Joko Widodo, better known as President Jokowi, is seen as a positive step for foreign investment.

Moreover, the archipelago’s growing middle-class population, geographic position and human capital development agenda, alongside progress in free trade agreements, make it a strong contender on the global economic stage. The country holds considerable potential for developing entrepreneurial and creative industries prowess, already being home to four ‘unicorn’ start-ups, plus one ‘decacorn’.

With construction and infrastructure development outside of Jakarta on the horizon, including relocating the capital city to East Kalimantan, investors are increasingly looking beyond Java for promising opportunities. The Covid-19 pandemic will temporarily slow economic growth and delay some projects and policy initiatives – with the government diverting capital from infrastructure developments to aid the crisis response – but the administration’s commitment to ongoing reform looks set to further enhance the appeal of South-east Asia’s largest economy for investment.