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page 1
Indonesia Economic Outlook
Key Drivers of Economic Growth
Indonesian government projects robust growth and improving economic indicators during 2010-2014
page 2
Nominal GDP per capita (2010-2014) – US$
Inflation to remain moderate, 4–6 %
Source: Ministry of Finance
Projected Unemployment Rate (2010-2014)
Projected Poverty Rate (2010-2014)
CAGR: 11%
Positive view of Indonesia is increasingly shared by global players
page 3
IMF Projected Nominal GDP Growth (2009 – 2015)
Russia
Source : International Monetary Fund, World Economic Outlook Database, April 2010
Indonesia
China
India
South Korea
Brazil
Turkey
USA
Japan
ASEAN (excl. Indonesia)
Among the 18 largest economies, Indonesia is projected to experience 2nd fastest nominal GDP growth (Russia #1) from 2009 to 2015
Updated: IMF projects Indonesia will achieve the fastest growth among the 18 largest economies
page 4
IMF Projected Nominal GDP Growth (2009 – 2015)
Indonesia
Source : International Monetary Fund, World Economic Outlook Database, October 2010
Russia
China
India
Brazil
Turkey
South Korea
Japan
USA
ASEAN (excl. Indonesia)
Indonesian economy will increasingly dominate ASEAN and will begin surpassing European markets
page 5 Source : International Monetary Fund, World Economic Outlook Database, October 2010
Indonesia Economic Growth (nominal) ($ billion)
Indonesia’s economy as % of
ASEAN-6
ASEAN (Total 11 Countries)
42% 49-54% 54-66%
40% 46-51% 49-59%
Spain
Netherlands
46% 78-86% 57-59%
84% 135-149% 100-104%
European Countries:
CAGR 12.8%
CAGR 15%
Preparation: Revamp of growth systems, technology adoption, design for growth
Acceleration: Industrialization, latest technology, high growth of services sector
Sustainability: Value adding industrialization, focus on domestic economy and social welfare
Three Growth Stages
Indonesia, according to Yayasan Indonesia Forum, is on the path to becoming a high income country
page 6
Indonesia Visi 2030 GDP per capita Projection
Source: Yayasan Indonesia Forum, team analysis
Lower Middle Income Country
Upper Middle Income Country
High Income Country
1992 2015 2023
PREPARATION
ACCELERATION
SUSTAINABILITY
Actual: GDP per capita has reached US$3,000 in
2010
15% CAGR
12.8% CAGR
10.7% CAGR
3,000
By 2030, Indonesia will surpass Brazil and Russia to become the #5 economy in the world
page 7
2010 2020 2030
1) Europe
2) USA
3) China
4) Japan
5) Brazil
13) Indonesia
1) USA
2) Europe
3) China
4) Japan
5) Brazil
9) Indonesia
1) China
2) USA
3) Europe
4) India
5) Indonesia
Projected Top Economies by GDP
Source: 2010-IMF, 2020-Team analysis using CAGR 2010-2014, 2030-Yayasan Indonesia Forum, team analysis
Taking a longer term view, Indonesia is on the path to becoming a global economic player
page 8
Key Targets Indonesia Visi 2030
Become #5 economy in the
world
Optimize natural resources
Even or shared distribution of
wealth
30 companies in Fortune 500
GDP per capita will reach US$18,000 Huge market of 285 million consumers
Rich in cultural heritage and natural attractions become top 10 global tourist destination
Achieve energy independence
Indonesia to enter top 30 HDI (Human Development Index) countries in the world
From 10 companies in Top 2000 to 30 companies in Top 500
Source: Yayasan Indonesia Forum Notes: HDI takes into account life expectancy, literacy, and GDP per capita
page 9
Indonesia Economic Outlook
Key Drivers of Economic Growth
Four key factors stimulating growth of economy
page 10
Political Environment
Demographics
Resilient Financial System
Maturing democracy
Regional autonomy
Supportive regulations balanced open markets
Strengthening institutions
Rapidly growing productive population
Balanced gender ratio
Low dependency ratio
Government debt and foreign reserves at healthy levels
Improving investment climate
Indonesian banks performed well during global crisis
Integration with regional
and global network
Efficient domestic production chain
Commodities with global competitive advantage
Integration into global production chain
Demographics: growth of productive population will fuel stable and rapid economic growth
page 11
Expected Population Pyramid (2000–2020) Male Indonesia–2000 Female
Population (in millions)
Male Indonesia–2020 Female
Population (in millions)
Total (million) 214 268
Male (million) 107 134
Female (million) 107 134
Productive population (20–55 years old) 103 (48%) 136 (51%)
Demographics: in the longer run, Indonesia will have a very favorable dependency ratio
page 12
Note: Dependency ratio is estimated figure: total population age 0-14 + above 65 divided by total productive population (age 15-65)
2030 Expected Dependency Ratio (%)
Indonesia to obtain demographic bonus and raise savings potential :
– Reduced birthrate lower dependency ratio
– Increase in life expectancy longer productive age
Excess productive population may be exported to fill employment gaps in other markets
Source: United Nations Population Division (medium variant data used)
Indonesia 2010 Dependency Ratio: 48.7
Resilient Financial System: Indonesia is well prepared for external economic shocks
page 13
Source: Ministry of Finance
Government Debt to GDP ratio (1999-2009) Foreign Reserves (2005-3Q2010)
Healthy balance sheet good prospects for Indonesia to be upgraded to “Investment Grade” next year
Approaching record levels for both Government Debt to GDP and foreign reserves
CAGR: 22%
(in USD Billions)
page 14
Resilient Financial System: however, Indonesia’s banking penetration still lags its neighbors huge upside
Indonesia
TOTAL DEPOSITS PER GDP * TOTAL LOANS PER GDP *
Note: *All data based on 2008 figures, except : Singapore and India (Q2 2008), Indonesia (2009) Source: Countries Central Banks, Researchandmarket.com, Country Report
Malaysia
Singapore
Thailand
China
India
Indonesia
Malaysia
Singapore
Thailand
China
India
Near term challenges need to be addressed to achieve balanced and sustainable growth and realize the vision
State and Private Financing
Bureaucratic reforms (Government and SOEs)
Energy Sufficiency
Infrastructure and Connectivity
Food and Water Sufficiency
Unemployment Target: 5-6%
Sustainable Growth Target: 7.7%
Poverty Target: 8-10%
Targets Action Steps Input
8 Focus Areas of National Economic Committee (KEN)
Requirement
page 15
Build Indonesian Human, Build National Identity
page 16
Structuring the quantity and improving quality create a productive, innovative and entrepreneurial human
Improvement of the social order creating a culture of cooperation, competition and positive conflict
Knowledge economy with a population of productive, creative, innovative and entrepreneurial spirit
Multiculturalism pro-existence
Development of Human Physical Indonesia
Development of Human Life Indonesia
Education Health
Reconstruction of Social and
Cultural
Indonesian Population as
Capital of Development
• Jobs provider
• Skilled workforce
• Market with high purchasing power
Human development is the basis for Indonesia to reach the world stage
page 17
Indonesia to become a developed country
page 18
Indonesia Developed Country
Towards a World Stage
Entrepreneurship and SMEs, Business Competition, Trade Logistics, International Trade
Human Development Management Development
Production Process
Natural Resources
Building a complete Indonesian person
Quantity, Quality and Spirit
Government Support and Effective Bureaucracy
Creating added value through the production
process and various support elements
Managing natural resources through
Agriculture, Tourism, Environment
The Unity of Indonesia
Political systems, Defense and Security, Law Spatial Planning and Land systems
Communication and Transportation systems
Thank You
Chairul Tanjung Ketua Komite Ekonomi Nasional (KEN)