Indonesia

Indonesia

Trade and investment relationship with Australia
  • Total two-way trade: $15.4 billion (2016)
  • Trade in goods: $10.9 billion
  • Trade in services: $4.5 billion
  • Total two-way investment stock: $10.4 billion (2016)
  • Australian investment in Indonesia: $9.2 billion (2016)
  • Indonesian investment in Australia: $1.2 billion (2016)
Key features of the market
  • Population: 258.7 million
  • GDP growth: 5% (2016)
  • GDP: US$932.4 billion (2016)
  • GDP per capita: US$3,604.30 (2016)
  • Ease of doing business: 91 of 190 (2017)

AANZFTA IA-CEPA RCEP

Urbanisation: Indonesia is urbanising at one of the fastest rates globally. By 2025, 68 per cent of all Indonesians (194 million people) are predicted to be living in cities,21 putting pressure on urban liveability. This will create opportunities as Indonesian citizens aspire to better quality of life and urban amenity.

Indonesia's significant growth in internet access together with the uptake in smartphone ownership is enabling government, business and consumers to take advantage of new digital technologies and opportunities.

Infrastructure: The Indonesian Government is committed to expanding economic activity and reducing income inequality across the archipelago. President Widodo's connectivity agenda prioritises spending on maritime, aviation and transport infrastructure to connect islands and rural regions to major cities. Eastern Indonesia is a focus of the Government's economic policies.

The Government also plans to develop '10 new Balis' across rural and regional areas to provide employment and economic growth, and is actively courting foreign tourism investors, developers and service providers.

Food and beverages: Exports of agricultural products, including live cattle, frozen beef, sugar and wheat, continue to represent a large part of Australia's exports to Indonesia. There's demand for food ingredients and innovative technologies for Indonesia's substantial local food processing sector.

Education and vocational training: The Indonesian Government has made upskilling its workforce a top priority for the next five years to boost productivity.

Currently, only around 50 per cent of Indonesian adults have completed primary education and just 15 per cent have a tertiary qualification. 45 per cent of Indonesians currently employed are underqualified for their job.22 Australian education and training providers are well placed to help address Indonesia's skills development.

Digital transformation: There are more active SIM cards than people in Indonesia, a testament to the country's rapid digital transformation. The Indonesian fintech sector has expanded rapidly, from a handful of companies two years ago to over 140 today. Go-Jek, one of the country's home-grown 'unicorns,' has evolved from a motorcycle taxi booking app to a platform offering cashless payment and a wide range of other e-services. The relatively open regulatory framework governing fintech (compared with the heavily regulated banking sector) may offer opportunities for Australian firms. There may also be opportunities for Australian online health and education services as smartphone penetration continues to grow alongside the Indonesian middle class and as worker upskilling programs are rolled out.

Resources and energy: Indonesia continues to be an important player in the global mining scene with significant levels of coal, copper, gold, tin and nickel. Mining, oil and gas combined contribute around 10 per cent of Indonesia's GDP. There are significant coal and mineral mining prospects in Indonesia, although significant regulatory and taxation challenges remain. Indonesia is a main export destination for the Australian mining equipment, technology and services sector.