Indonesia’s economy continues to record growth in the third quarter of 2023, with gross domestic product expanding by 4.94%, primarily driven by strong private consumption. Investment continues to demonstrate a noteworthy performance, with a growth rate of 5.77% in the third quarter, surpassing the 4.63% recorded in the second quarter. While the growth of real exports has decelerated due to softer external demand, the services exports sector maintains its momentum, propelled by a surge in international travelers.
Given these dynamics, Indonesia’s Finance Minister Sri Mulyani Indrawati anticipates that economic growth for 2023 will hit 5.04%, with expectations of acceleration in 2024.
Promising Destination for Investors
With its abundant natural and human resources, coupled with anticipated robust economic growth and diverse potential, Indonesia emerges as a promising destination for investors. President Joko Widodo affirmed the nation’s commitment to fostering a conducive and competitive investment climate during the 2023 Asia-Pacific Economic Cooperation (APEC) Summit.
Key investment opportunities lie in priority sectors, notably the industrial downstream sector. Capitalizing on its large nickel reserves, Indonesia harbors ambitious plans for the expansion of its electric vehicle industry. In just three years, Indonesia has inked agreements worth more than US$15 billion for battery and electric vehicle production with multinational manufacturers. The country aims to produce 600,000 electric vehicles by 2030, kicking off production next year.
The energy transition sector stands as another pivotal area that requires investment, knowledge and cutting-edge technology. Indonesia currently boasts a renewable energy potential of 3,600 GW and is actively engaged in the development of a Green Industrial Park covering 30,000 hectares. Moreover, Indonesia’s new capital city, Nusantara, presents diverse investment opportunities across sectors such as infrastructure, transportation, technology, education, energy, finance, tourism, health and housing.
Against this backdrop, the president urged investors to seize opportunities more aggressively and quickly, emphasizing that the current environment presents an ideal time to invest in Indonesia.
Startup Ecosystem Has Room to Grow
In the realm of digitalization, the country has fostered a vibrant tech ecosystem, producing multi-billion-dollar tech platforms, super apps and tech startups. A leading investor in the tech startup space is Alpha JWC Ventures. The Indonesia-based venture capital firm has established a remarkable track record for grooming some of the region’s most successful tech companies. Despite a sluggish global economy that has led to declines in tech company stocks, the region, and in particular Indonesia, continues to attract heightened interest from international investors, according to the venture capital firm.
Compared to mature markets like Silicon Valley or Europe, ASEAN’s tech industry and its startup ecosystem have plenty of potential to grow. In the long term, Alpha JWC’s vision is to help place Indonesia and the wider ASEAN region firmly on the global tech scene.
Manufacturing Sector a Driving Force
In the meantime, Indonesia’s manufacturing sector continues to stand out as one of the primary contributors to the national economy. An exemplary player is Jakarta-based paint and coating manufacturer, PT Mowilex Indonesia (Mowilex), which has effectively maintained its position as one of the market leaders in the country. Niko Safavi, CEO of Mowilex, says, “What has enabled our company to remain competitive in an industry dominated by multinationals and strong domestic players is not only our environmental stance or thought leadership, but also our relentless pursuit of delivering high-quality products to the market.”
The company was the first domestic paint and coating manufacturer in Indonesia to produce water-based paints in the 1970s, back when lead-based and solvent-based paints, known for their potential long-term health risks and emissions, were widely used. More recently, Mowilex has reinforced its commitment to environmental sustainability by launching Indonesia’s first plant-based paint, reflecting its aspiration to be at the forefront of eco-friendly innovation.
Another manufacturer driven by a culture of innovation is PT Nippon Indosari Corpindo Tbk. (Indosari), the company behind Indonesia’s leading bread brand, Sari Roti. Within the manufacturing sector, the food and beverage industry stands out as one of the engines of growth in the country, and Indosari has demonstrated resilience by deliver ing profits amid challenging conditions.
The company plans to work with a leading milk producer to enter the beverage category with a new product, Sari Choco Milk. It will also expand into the spreadable space with Choco Spread, as it seeks to enrich its product portfolio and reduce its reliance on packaged bread.
Coal Exports Continue to Surge
Notably, Indonesia’s exports of thermal coal surpassed 413 metric tons over the first 10 months of 2023, cementing its position as the world’s largest coal exporter. This marked an impressive 11.5% surge compared to the same period in 2022, reflecting that coal exports remain a cornerstone of Indonesia’s economic momentum. Geo Energy Resources, a low-cost coal producer in Indonesia, has recently made strategic investments to increase its coal reserves, ensuring the sustainability of its business for the next 20 years. The low sulphur and low ash content of its coal reserves will attract strong demand from domestic and international markets, particularly Asia, and command a premium above market price, the company says.
As Indonesia strides forward, balancing innovation across sectors with traditional strengths in global trade, it solidifies its standing as a formidable force on the world economic stage.