Indonesia is the world’s fourth most populous nation (278 million people) and 7th largest economy in terms of purchasing power parity (PPP), estimated by the IMF at $4 trillion in 2022 and projected by PwC to be the fourth largest economy in the world by 2050.
Indonesia has made enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to under 10 percent in 2019 before the COVID-19 pandemic hit
With a 5.03% (yoy) national economic growth in the first quarter of 2023, Indonesia has overcome the crisis of 1998 (a 13% GDP collapse) and the COVID pandemic (a 2% drop in 2020), delivering 5% plus growth on average since the late 1970's
The fiscal stance of the Indonesian budget has normalized since the COVID pandemic and, in line with fiscal consolidation, public debt has gradually declined and stands at 39.2 percent of GDP in March 2023
However, according to the World Bank, potential growth is moderating due to reduced labor input, weak human capital formation and slowing productivity growth.
Decribed as an 'invisible toll', mandated closure of schools for more than 21 months during the pandemic has gravely impacted math and language skills, hitting poor households hardest with a loss of 1.5 to 2 years of learning
Since taking office in 2014, the Indonesian president, Joko Widodo (known as Jokowi) launched a large infrastructure program, building 18 ports, 21 airports and 1,700km of toll roads - an indispensable foundation of industrial policy
Backed by 'green' commodity riches, nickel (22% of known world reserves) and bauxite, gold and copper, Indonesia hopes to make 'downstreaming', from natural resources to value-adding industries, a reality
A ban on nickel exports since 2020 is supporting the build-out of domestic refineries, and breaking the 1 million MT mark in 2021, production increased by another 600,000 MT in the following year to reach 1.6 million MT in 2022
Emergence of South-East Asia as an industrial powerhouse, as discussed in "Investments are Magnetic Fields", attracts foreign investments (FDI) in substantial but uneven volumes
The Indonesian EV (electrical vehicles) value chain - from mining and smelting to production of batteries and assembly of EVs - represents more than 50% of total FDI 2021 - with more to come, attested by the line-up of Asian carmakers
As case in point, the absence of the US amongst the Indonesia's major FDI contributors is perplexing
The jury might still be out for successful completion of Indonesia's industrial catch-up strategy, but the price for current American distraction does not need to be so high