Investing In Indonesia - Current Trends And Pitfalls

Indonesia is South East Asia’s largest economy and a stable democracy.

Indonesia at a glance

Its economy has grown impressively since the Asian financial crisis of 1998, with a nominal GDP estimated at USD 1.074 trillion in 2018 and with an annual growth rate of 5.06% in Q1 2018. It currently ranks as the world’s 16th largest economy and fourth most populous country, with a population of approximately 261 million1.

Indonesia’s economy has traditionally relied on natural resources and agriculture, but in recent years, it has also seen strong growth in the consumer, e-commerce, fintech, infrastructure projects, logistics, manufacturing, and service sectors.

This has been led by a combination of factors, including a relatively young population, a rapidly growing middle class, increasing Internet and smartphone use, increased government spending and private sector participation in infrastructure, and a recovery in commodity prices.

Some recent deal trends

Digital economy

In 2016, Indonesia had 132.7 million Internet users, of which 106 million were active social media users and 92 million were active smartphone users2. Around 9% of the country’s population, comprising 24.74 million people, made online transactions in 2016, with a total transaction value of USD 5.6 billion3.

This spurred significant investments in Indonesia’s digital economy. Some recent landmark deals include:

• Go-Jek: It recently raised USD 1.2 billion from investors including Tencentat a reported valuation of about USD 3 billion. Originally starting as a ride-sharing app for motorbike rides, the company has expanded its offering into car rides, delivery, shopping, food, and even cleaning, massage, and beautician services delivered to the residences of Indonesian consumers.