Economic & Trade
Economic Profile of Indonesia
Indonesia’s Economy and Business Climate
Economy
Indonesia has the largest economy in Southeast Asia, is one of the emerging market economies of the world, and also the member of G-20 major economies. It has a market-based economy in which the government plays a significant role by owning more than 164 state-owned enterprises and administers prices on several basic goods, including fuel, rice, and electricity.
Indonesia still had the fastest-growing economy in Southeast Asia, with improving prices for the country’s key export commodities and a robust domestic market credited for the good result.
The country’s gross domestic product growth of 4 percent in the second quarter placed Indonesia among the top three fastest growing economies in Asia, the Central Statistics Agency (BPS) said. China posted more than 7 percent growth in the same period. Most of the growth in Indonesia came from the resilient domestic economy, which accounted for about 60 percent of the figure. However, the 4 percent gain from April to June 2009 was lower than the 4.4 percent growth posted in the first quarter of the year, a sign that the global economic slump is taking its toll here, primarily on the nation’s export sector. Country’s export commodities such as oil and gas, mined metals, gold, coal, crude palm oil, coconut product, tea, coffee, rubber, paper, electronic/ computer, textile, etc.
Indonesia Economy can be brighter than expected this year. Economic growth in the first semester of 2009 have reached 4.1 percent, and in the second semester 4.6 percent, bringing the total to 4.3 percent”. If the country`s economic prospects are predicted to improve in the second half of this year with an estimated economic growth of over 4 percent, it will even be better next year, with an estimated growth of 6 percent.
Another optimistic view also mentioned that the growth can exceed four percent but the growth is depends on the speed of global recovery. However, it is still too early for me to say that the US and the European economies will soon improve”. In advanced countries, initial economic recovery is now taking place. In the emerging markets, economic recovery is showing steady strength such as in China, India and South Korea. In the end this positive signal can boost capital to enter Indonesia. The present trend was having a positive impact on Indonesia’s economic performance in the second semester of this year. The strengthening of the economies of trade partner countries had improved Indonesia’s export performance.
Business climate
Indonesia has demonstrated some resilience in recent years, achieving an average economic growth rate of more than 5 percent over the past five years. Recent reform measures have put greater emphasis on improving the business climate, enhancing regional competitiveness, and creating a more vibrant private sector. Indonesia scores well in trade freedom, fiscal freedom, and government size. Public finance management has improved, and tariff barriers have been lowered. Indonesia is Asia’s most active reformer of business regulations in 2008/2009, making its rules more efficient to help increase opportunities for local and foreign firms.
Indonesia has implemented a significant number of reforms to improve the ease of doing business, and the Indonesian Government has maintained a consistent pace of reform implementation to improve the quality of business regulations, which will improve the investment climate, sustain strong economic growth rates, create more jobs and alleviate poverty. In 2008/2009, Indonesia also strengthened disclosure requirements for transactions between company insiders and other companies they control to protect investors.
In a decade Indonesia has attained remarkable achievements with democratization, decentralization, and economic and financial stability, even in the face of the global financial crisis, said the World Bank Country Director for Indonesia. Indonesia has the opportunity to grow rapidly over the next years. With even more drastic regulatory reforms to cut red-tape and bureaucracy, Indonesia can improve the environment for the private sector.
Indonesian Exports
Value of Indonesia export soaring in August 2009 reached 10.55 billion U.S. dollars, or 8.89 percent increase compared to last month. Conversely when compared to August last year fell 15.41 percent.
According to the Central Bureau of Statistics (BPS) that the Export of Indonesia in August 2009 was the first time through the 10 billion dollars since January. Non-oil exports in August 2009 reached 8.91 billion U.S. dollars, or up 8.76 percent compared to July 2009. While in the same period last year fell 6.28 percent. A cumulative value of exports from January to August 2009 reached 70.3 billion U.S. dollars, or 26.3 percent down compared to the same period last year.
While non-oil exports reached 60.01 billion U.S. dollars, or down 18.31 percent. Improving the largest non-oil exports in August 2009 occurred in fats and oils of animal or vegetable 699.9 million U.S. dollars, while the largest decline occurred in ore, crust, and the gray metal of 235.9 million U.S. dollars. Non-oil exports to Japan this August to reach the largest number of US$ 1.05 billion, followed to USA by US$ 930.7 million and China US$ 792.2 million with the contribution of all three reached 31.07 percent. As for exports to the European Union (27 countries) for 1.35 billion U.S. dollars. According to the sector, exports of industrial products the period January-August 2009 fell by 24.9 percent over the same period last year. Similarly, exports of agricultural products declined 9.77 percent. In contrast, exports and other mining products rose by 21.42 percent.
The more conducive global trends have bolstered the performance of the Indonesian economy. The latest assessments indicate potential for higher than expected domestic economic expansion during Q3/2009.Supporting this is more robust consumption and exports, surpassing earlier predictions. The upward trend in regional economies, led by China and India, have stimulated Indonesian commodity exports such as crude palm oil, coal and copper. Concerning domestic demand, consumption indicators such as sales of durables and retail goods show signs of improvement. Better than predicted private consumption spending is being fuelled not only by private savings, but also bank financing. In addition, the onset of relative improvement in incomes has helped boost private consumption. Even so, investment has seen only limited improvement. This is explained by the condition of domestic demand and the external sector, which have yet to recover to normal. In view of these developments, economic growth in 2009 is predicted at the upper limit of the 3.5%-4.0% projected range.
Trade and Economic Relation
The economic relations between Indonesia and Uzbekistan have been growing gradually since the establishment of the diplomatic relations of both countries in 1992. The Government of the Republic of Indonesia and the Government of the Republic of Uzbekistan has also signed important agreements and MoU, such as: Agreement on Promotion and Protection of Investment, Agreement on Avoidance of Double Taxation, Joint Declaration on Principles of the Relationship and Cooperation, Exchange of Letters between the Government of Indonesia and Uzbekistan on the Establishment of a Joint Commission, Agreement on Air Transportation, MoU on the Development of Tourism, Draft of MoU on Sister City between Banda Aceh and Samarkand.
Moreover, there are some agreements, MoU and Letter of Intention which were signed in business sector, such as Banking Arrangement between Central Bank of Uzbekistan and Bank of Indonesia, Agreement of Cooperation between Indonesian Chambers of Commerce and Industry and Chamber of Commodity Producers and Entrepreneurs of Uzbekistan, MoU between Tashkent Aviation Construction Plant of Chkalov and PT Dirgantara Indonesia, MoU on Cotton Trading, MoU on correspondence between Foreign Economic Activity of the National Bank of Uzbekistan and Bank Central Asia of Indonesia, etc.
Export Commodities of Indonesia
Indonesia : Furniture/ Rattan, Tea, Coffee, Crude Palm Oil, Food Products, Car Spare Part, papers, electronics / computers, Footwear, and Garment.
Indonesia-Uzbekistan Join Venture
At present, there are 2 Indonesian companies in Uzbekistan, which have invested in hotel/tourism and telecommunication sectors. Le Grande Plaza Hotel, and UzI telecommunication, which is a joint venture between Indonesian company and Uzbektelecom.
Direction to improve the trade relation between Indonesia and Uzbekistan
To promote the development of economic cooperation between Indonesia – Uzbekistan, Indonesian Embassy in Tashkent has conducted various events, such as Business Forum of Indonesia – Uzbekistan and also participating in any exhibition in Uzbekistan.
Activities of the Embassy of the Republic of Indonesia
Embassy of the Republic of Indonesia has conducted a meeting, gathering, business forum, and also participating in any events in Uzbekistan such as:
- Business Forum Indonesia and Uzbekistan;
- Exchange of Visit between high level official;
- Exchange of Visit between both businessmen;
- Meeting with the Uzbekistan Outbound Tour Operator;
- To conduct Indonesia Solo Exhibition;
- To participate in the local Exhibition:
UzWorldfood, UzAgrominitech, UzOil&gas, TITF. Etc
