INDONESIA PESTLE ANALYSIS 2015

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INDONESIA PESTEL ANALYSIS1

CAPITAL CITY: Jakarta

LAT/LONG: 6N-11S & 95-141E

LANGUAGE: Bahasa Indonesia

CURRENCY: IDR

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POLITIC

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INDEPENDENCE DATE | Aug 17, 1945

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PANCASILA 1945 Constitution (known as UUD45) Presidential

Country Symbol Na/onal Principle Legal basis Government System

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Political Parties

In 2014, 12 political parties contested the national legislative election. Formed 2 coalitions & Jokowi is from the minority one.

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Political Situation

Executives need to initiate win-win relationship with legislatives especially those from opposition parties to accelerate the development program execution

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Political Situation

Splits that occurred in some political parties might cause uncertainty in term of loyalty to the coalition. Jokowi could have benefited from this situation.

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ECONOMY

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Macro Economic Indicator

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GDP (US$ bio)

868.3

GDP per capita (US$)

GDP growth Inflation rate

3,475 5.8% 8.38%

N/A N/A 5.1% 8.36%

Consumer Price Index

109.8*

119.0*

2013

2014

Note: *) Highest level Source: World Bank, Statistics Indonesia

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Benchmark interest rate

7.50%

Lending interest rate

Export/import (bio US$)

FDI/DDI (mio US$)

11.70% 182.6/191.7 28.6/12.3

7.75% 11.90%161.7/ 163.7**

21.7/ 9.6***

Xchange rate to US$1

IDR10,451

IDR11,878

2013

2014

Note: *) projected figures **) Jan-Nov 2014 ***) Jan-Sep 2014 Source: Bank Indonesia, Statistics Indonesia

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Poverty

11.5%

GINI index Consumer conf index

Business conf index

0.41 116.5 104.7

11.0% N/A 116.5 N/A

2013

2014

Source: World Bank, Statistics Indonesia

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Economy

An average of 5.9% pa economic growth rate during 2010-2014 inflation rate reached 6.4% pa for the same period

Source: World Bank, Statistics Indonesia, Canvassco analysis

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2014 IS THE MOST

STRUGGLING YEAR

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THE GLORY OF 2011


IDR Exchange Rate

Rupiah has been continuing to weaken mostly due to external factors that affect demand of US$ in the country


Poverty

People live below poverty line was still more than 10% of the population with GINI index reach 0.41 in 2013


Monetary & Fiscal Policy

Central bank(BI) enforce tight monetary policy

Government targets tax radio to GDP around 14-14.5% in 2014

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SOCIO CULTURAL ANALYSIS

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Socio Indicator

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Population (mm people)

250

population growth pa

Density (people/km2)

Gender ratio (M:F)

1.49 138 101:100

253 1.2 140 101:100

Gender inequality index

0.500

N/A

2013

2014

Source: Statistics Indonesia, United Nations Development Programme

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Socio Indicator

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Number of household

63.5

Av. household size

Working population

Unemployment

3.9 120.2 6.3%

64.7 3.9 121.7 5.9%

Human Dev index

0.684

N/A

2013

2014

Source: Statistics Indonesia, United Nations Development Programme

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Indicator

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Main religion No of formal religion

Major tribes No of tribes

Muslim Six Java >1300

Country size

5.2 mn km2

Source: Statistics Indonesia


Population

Indonesia is the top 4 populous country

Male population is only slightly higher than female’s


Human Development

Gender inequality index is 0.500 of which in medium human development

Source: United Nations Development Programme


Socio Economic

Sustainable FDI and DDI growth. Domestic market is very important as Indonesia is the top four populous country and most of them are on the consumer class


Socio Culture

Although more than 85% of Indonesian is Muslim, the culture is still strongly influence by Hindu Buddhist especially those originally from Java and Bali

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TECHNOLOGY

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Technology survey

The fourth largest users of Facebook Fifth largest users of Twitter. Jakarta ranking number one (over Tokyo) in 2012 for the total number of posted tweets.


Manufacture Industry

Technology used is considered as “out dated” even though manufacturing is the largest contributor of GDP


Agricultural

High technology is only implemented in certain areas such as seed cultivation, pest control, animal health and few others.


Trade, Hotel & Restaurant

High tech is mostly in term of e-payment (cashless). Other area is e-ordering (e-booking)


Green environment

Despite government programs in promoting green environment, deforestation and environmental pollution are still happening.


Deforstation

Beat Brazil in 2012 of 840,000ha due to forest conversion to plantation, industrial and housing areas. Besides forest fires and possibility of illegal lodging.


Green house gas emission

Indonesia is the 3rd major producer of green house gas emission after China and USA of which 85% were from deforestation.


Enacted regulations for various industries related to quality of waste

and emission, hazardous material and waste management, environment

conservation, and many others.

Major pollution is still happening from transportation, manufacture and energy sectors


Investing in Indonesia

2014 negative investment list has been enacted aiming to boost both FDI and DDI.

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INVESTING IN INDONESIA36

Energy (oil & gas and power), transportation, pharmaceutical and trading are affected verticals.

For few industrial sectors, it takes more than a year to formally obtain the operating license.


Uncertainly

Regulatory revisions might cause business uncertainty especially for foreign investments


Regulatory Barrier

Due to loyalty to political parties and coalitions, approval process for regulatory decisions among legislative power could take a long time.

INDONESIA PESTLE ANALYSIS 2015

Business

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