Number of credit cards in Indonesia to reach 290 million by 2017

Key Highlights of a report by Market Research (Market Research)

- The Indonesian card payments channel registered significant growth during the review period (2008–2012), recording a compound annual growth rate (CAGR) of 21.26% to reach 113.2 million cards in circulation by the end of 2012. It is anticipated to grow at a projected CAGR of 20.36% over the forecast period (2013–2017), to reach 289.9 million cards in 2017.

- Growth in the Indonesian cards payments channel is expected to be driven by increasing demand for prepaid cards, a better regulatory framework, a growing market for online and mobile commerce, and a positive economic outlook.

- Indonesia's central bank, Bank Indonesia (BI), enforced new regulations for the credit card category in January 2013, placing a cap on interest rates charged by banks on credit cards. BI also set the minimum monthly income requirement at IDR3 million (US$32), and the maximum available credit limit at three times this rate. Credit card users must be at least 21 years old.

- The popular payment channels in Indonesia are credit transfers, checks and cards. The payments channel structure has changed significantly in the past decade and new channels with paperless transactions have gained popularity. Most transactions, however, are still made with cash.

- In terms of transaction value, the channel grew at a CAGR of 19.68% from IDR846.7 trillion (US$87.3 billion) in 2008 to IDR1.7 quadrillion (US$185.2 billion) in 2012.

- Debit and credit card transactions remained the key growth drivers, followed by prepaid cards which registered increased demand from Indonesian consumers.

- Over the forecast period, the total card transaction value is expected to grow at a CAGR of 12.52%, to reach IDR3.3 quadrillion (US$328.8 billion) by the end of 2017.

Indonesia's motorbike sales growth slows in Nov to 10.6 pct y/y

Motorbike sales in November rose 10.6 percent from a year ago, compared with a 14 percent annual increase in the previous month. The number of motorbikes purchased in November was 687,329, or 3.8 percent fewer than bought in October. (Source: Reuters). It needs to be seen if the slowdown is only because of the increase in the interest rate or if this is an indication of slowing economy. 

Target is lower the lending growth

Bank of Indonesia has called for lower lending growth, which is above 20 per cent. BI has asked the banks to target between 15 to 17 per cent. This call has been positively taken by most of the banks (http://www.thejakartaglobe.com/business/banks-side-with-bi-governor-on-need-to-lower-lending-growth/). Though this is a prudent and proactive move to avoid overheating specially in the property sector, BI has to be careful to not dampen the demand. 

Indonesia Foreign Exchange Reserve has increased

The Indonesian central bank (Bank Indonesia/BI) has announced that the country's foreign exchange reserves last October were US$97 billion, an increase of US$1.3 billion over September.

Indonesia's annual import bill is around $226.6 billion i.e. around $19 billion per month. Thus, the foreign exchange reserve is equal to around 5.2 months of imports. To compare with India, its foreign exchange reserve is around $280 billion and import value is around $580 billion per annum i.e. around 5.8 months of imports. Same numbers for Singapore is foreign exchange reserve of around $174 billion and imports of around $490 billion i.e. 4.3 months of imports.

FDIs in Indonesia are at highest ever recorded

Total investments jumped 23 percent year-on-year to top Rp 100.5 trillion (US$8.9 billion) in July-September, the highest ever recorded, despite the capital outflows and financial market turbulence that took place during that period.

The new BKPM chairman, who was just elected last month, targeted to realize Rp 450 trillion of investments next year, a 15 percent increase compared to this year.

Investments account for around 25 percent of Indonesia's gross domestic product (GDP), which is the second-biggest growth driver after household consumption.

(Source: Antara News)

Online Banking in Indonesia is quite low relative to Asian counterparts

Online banking is increasing all over Asia and has already surpassed branch banking in 2012. Some countries such as China are much ahead where already 60% of total transactions are registered online. Whereas, some countries such as Indonesia, Vietnam, and Philippines are behind.

In Indonesia of the 55 million Internet users, about 25% of the population, only 7% of these internet users actually do online banking, which indicates online banking is still relatively underdeveloped in Indonesia. Enhancements in the mobile online banking platforms including better security and ease of use, may help the industry attract more users and increase market penetration.

(Source: Finextra)

Banks: Overall Indonesian Banks have moderate foreign exchange exposure

Following is from Fitch Ratings Report

''Fitch Ratings believes the credit profiles of most major Indonesian banks will be resilient to rising pressures on the rupiah and a more challenging operating environment, as reflected in their Stable rating Outlooks.

The banks' resilience is mainly due to the modest proportion of foreign-currency loans and low net open foreign-currency exposure at the banking system level, strong standalone loss-absorption cushions, and - in some cases - firm backing from highly rated foreign parents.

The major Indonesian banks have generally become more selective in extending foreign-currency loans over the years, focusing on borrowers that generate income in matching foreign currencies. In response to the potential decline in asset quality amid more challenging economic conditions, the banks have taken measures to identify vulnerable borrowers, step up monitoring, and explore restructuring solutions for viable businesses. The banking system's foreign-currency loans form 15.5% of total loans as at end-June 2013, around its historical low.

Foreign-currency loans have been funded predominantly by matching foreign-currency deposits, with the loans/deposit ratio of the banking sector remaining below 100%. The foreign-currency net open position exposure of the banking sector has been at an average 2% of capital over H113, well below Bank Indonesia's limit of 20%. This helps protect against impairments stemming from a sharp depreciation of the rupiah, which has fallen more than many other Asian currencies over mid-2013.

Fitch expects the loss-absorption cushions of most Indonesian banks to remain strong. Their core operating profitability is strong and the average Tier-1 capital adequacy ratio is around 16%. Many major foreign-owned banks tend to have lower core capital buffers than that, but Fitch believes they are likely to benefit from extraordinary support from their highly rated parent banks.''

Banking Sector: Steps toward SMEs

Yesterday PT Bank Danamon Indonesia, Tbk (Danamon) and PT Asuransi Jiwa Manulife Indonesia (Manulife Indonesia) launched a partnership that provides insurance solutions to small and medium enterprises (SME). This is yet another effort by the commercial banks in Indonesia to provide better / more services to SMEs.

MSMEs are very important to Indonesian Economy

BPS estimates that in 2006 they constituted 99 percent of all businesses in the country, employed 97 percent of the work force, and accounted for 54 percent of that year’s GDP. 

The great majority of all Indonesian firms are micro enterprises—about 82 percent. Small and medium firms account for a significant but much smaller share of all firms, 15.8 and 0.6 percent, respectively.

Though SMEs are extremely important and is also recognized by the commercial banks still there exists a big gap due to which SMEs are still facing constraints in terms of financing. Very detailed report on this subject by IFC is a good read. Some of the highlights are as follows:

The key factors small-medium businesses gave for developing their businesses are financial: 

the need for more capital (59 percent) and, closely related, gaining access to loans (19 percent). The main constraints they face were again dominated by financial considerations: insufficient finance (26 percent) and, closely connected, financial management (9 percent). 

Loan Experience

Only 30 percent of small-medium firms have ever tried to obtain a loan from a licensed lender; of these 77 percent were successful. 

For the specific loan transactions, commercial banks are the most frequent credit source for small-medium firms, accounting for 76 percent of the loans issued. Cooperatives are in second position (11 percent) followed by Sharia banks (3.1 percent). Informal lenders were not asked about in this question. 

Factors determining the choice of lender are convenience of location, ease of the application process, and a relationship with the financial institution or a particular bank officer. 

Loan amounts are modest, averaging IDR 354 million for loans issued. About a quarter (24 percent) are under IDR 15 million; only 21 percent are over IDR 200 million. Loan terms are short, with over 39 percent being for a single year and 50 percent being for 2-3 years. 

Three-fourths of loans issued had flat interest contracts – a particularly striking finding.

Internet Banking

Only about 17 percent of firms currently use computers and the internet (59 percent of medium versus only 10 percent of small firms). Only 3.5 percent engage in internet banking, suggesting that this should be a service ripe for expansion. 

When respondents who now use computers and the internet were asked if they would be interested in purchasing an internet-based tool for purchasing and payment management, a surprisingly large share (23 percent) said they already do (18 percent of small, 29 percent of medium firms). Another 4 percent said they were “very interested” and 25 percent expressed some interest in acquiring such a tool. Some said they would even pay small amounts to do so.

What do these firms want in financial services providers? Of ten characteristics listed in the survey, four got a positive response from 55 percent or more of the owners/managers interviewed: 

•  low fees,

•  speed in making loan decisions,

•  flexible lending policies,

•  limited documentation requirements.

Definition of SME 

There is no commonly agreed definition across institutions and countries of what is a small firm

Ministry of SMEs and Co-operatives and Bank Indonesia. Micro firms are defined as enterprises with net assets less than IDR 50 million (land and buildings excluded) or enterprises which have less than IDR 300 million total annual sales. Small firms are enterprises with net assets from IDR 50 million to IDR 500 million (land and buildings excluded) or with total annual sales from IDR 300 million to IDR 2.5 billion. Medium-sized firms are those with net assets from IDR 500 million to IDR 10 billion (land and buildings excluded) or with total annual sales from IDR 2.5 to 50 billion.
As per World Bank Enterprise Survey. Size is defined by the number of employees: from 5-19 the firm is small, and from 20-99 it is a medium-sized firm. The survey covers only the formal sector and firms with more than 5 employees

Employment Numbers:

Estimated employment numbers (following numbers do not have any source) 

Micro - 89 million 

Small and Medium - 15 million

Large - 4 million

Banking Sector: Excellent year but consensus on slowdown in next year

Increase in Net profit by 15-25 per cent

Bank Mandiri (State controlled, largest bank in terms of assets of around USD 60 bn, currently trading at price to book of 2.6x) - profit increased by 15 per cent y-o-y to 12.8 trillion rupiah ($1.2 billion)

BCA (Privately owned, largest bank in terms of market cap of around USD 24 bn, total assets of around USD 45 bn, trading at a price to book of 4.5x) - net profit increased by 25 per cent y-o-y to Rp 10.4 trillion ($1 billion). 

PT Bank Permata (privately owned by Indonesian conglomerate Astra International (44.5%) and Standard Chartered Bank (44.5%), with total assets of around USD 13 billion, trading at a price to book of 1.14x) - third-quarter net profit rose 21 percent to 1.32 trillion rupiah ($118 million).

(Reuters)

Slowdown expectations

The central bank is already indicating that it expects loan growth to slow down, at rate of 14 to 15 percent

Bank Mandiri: also expected a credit growth slowdown next year to between 15 and 20 percent. It also expects net interest margin to decline to 6.8 percent by the end of this year from 7.0 percent in the second quarter.

Most of the banks' profitability increased by around 25-30%

Bank Mayapada Internasional posted 25 percent growth in net income to Rp 352.42 billion ($32 million) in the January-September period from a year earlier.

Bank Jatim, regional development bank for East Java, booked a 29 percent increase in profit to Rp 681.07 billion , while its net interest income increased 22 percent to Rp 1.77 trillion.

Bank Mestika Dharma, a Medan-based lender that is reported to be the target of an acquisition by a Malaysian lender, posted a 14 percent rise in profit to Rp 259.02 billion in the period.

Higher profit at Mayapada and Bank Jatim followed similar reports from other lenders. Bank Negara Indonesia, Bank Rakyat Indonesia and Bank Danamon Indonesia last week also announced profit increases in their nine-month statements.

(The Jakarta Globe)

Banking: M-banking outpacing I-banking in Indonesia

Most of the banks have recorded increased fee income derived from M-banking, which is growing faster than Internet banking. Examples include:

BCA: 30-40 per cent growth of m-banking volume and value (Total 4.3 million m-banking users generating transactions worth IDR 90 trillion ~ $ 9 billion) 

Bank Permata: 30 per cent growth in value and volume

Bank Mandiri: 50-60 per cent growth in value and volume (Total 700,000 users of m-banking as compared to 600,000 users of Internet banking) 

BRI: Expects 50 per cent growth in m-banking next year. (Total 4.28 million users of SMS banking as compared to 640,000 Internet banking users) 

(Source: Jakarta Post)

Forecast: Lending growth to slowdown in 2014

Lending has been growing at around 22%+ over the last three years in Indonesia vis-a-vis around 13% growth in the deposits. This has led to an increase in the average Loan to Deposit ratio, which is a cause of worry for the banks in Indonesia. Lending growth is expected to result in an excellent year for the banks as can be seen from the 9 months results. BRI's nine-month earnings rose by 17 per cent in spite of marginal drop in the Net Interest Margin (NIM) from 8.43 to 8.25 per cent mainly due to the growth in lending (The Jakarta Globe).

However, as per Bank of Indonesia (BI) the lending growth is expected to slow down significantly in 2014 to 15.3 to 16.6 per cent on the back of slowing economy and recent hike in the interest rate (Reuters).

Forecast: Slower Lending on the back of slowdown in economy

Gatot Suwondo, president director of Bank Negara Indonesia, the country’s fourth-largest lender by assets, said he expected a slowdown in lending.

“We are seeing a lot less companies coming to us seeking financing for new projects,” Gatot told reporters on the sidelines of the Asia-Pacific Economic Cooperation CEO Summit in Nusa Dua, Bali, earlier this week.

Meanwhile, consumer demand, which accounts for half of gross domestic product, slowed in August, according to BI’s Retail Sales Survey.

Growth in the retail sales index slowed to 1.3 percent year-on-year, according to the survey published on Thursday, below the 15.2 percent growth posted in July.

On a month-by-month basis, retail sales shrank by 3.2 percent in August from the preceding month, in line with demand returning to normal after the Islamic holiday of Idul Fitri.

The slowdown in retail sales affected all commodity groups, with clothing posting the biggest decline, the central bank said in the survey report.

BI says it expects retail sales to decline further — dropping 14.3 percent in September compared to August — as consumers cut back on expenses after the high-spending month of Ramadan and Idul Fitri.

Consumers also felt less optimistic about the economy, with the Consumer Confidence Index falling in September to 107.1 from 107.8 in August, the central bank reported. An index reading above 100 suggests optimism.

(Source: The Jakarta Globe) 

Slowdown in Real Estate Demand

Following is the forecast by Indonesia Property Watch for the real estate sector in Indonesia:  

"Indonesia Property Watch (IPW) has taken into account the possibility of a decline in demand for real estate by at least 20 per cent in 2014, besides the slowing growth of property prices," said IPW Executive Director Ali Tranghanda. Ali noted that the drop in demand is caused by a variety of factors such as the increase in mortgage interest rates, the slowdown in purchasing power, and the Central Bank's new regulation being implemented in the property financing sector.These issues impact property growth, which is expected to continue to slow down, with growth estimated at 25 per cent in 2014. (Source: Bernama) 

It is worthwhile to note that the growth is still expected to to 25% per annum, though lower than around 35% expected in 2013. Property prices have been increasing at the rate of 50-60% per year and still the rental yields are higher than most of the countries. 

Urban Java - SES classification and expenditure allocation

Around 55% of the Urban Population of Indonesia spends more than IDR 300 000 (or USD 30) per month (Bureau of Statistics). Using the same % for Java translates to around 44 million consumers spending more than USD 30 per month.


Following is the SES classification by Nielson:

From the chart below it can be seen that in Jakarta around 47% and in all of Java around 25% of population are in SES segment of B and above i.e. monthly household expense of more than IDR 800 000 (or USD 80) per month.

How do Indonesians spend money? The allocation between food and non-food item is around 50:50 in Indonesia. Though this would vary based on the SES classification, following is the national average:

Expenditure on non-food items such as housing, clothes, transport, entertainment, and education of 50% is in line with expenditure in a developing country. This number could be 5-7% higher for Urban population. However, as the economy of the country continues to grow the % allocation towards non-food item will continue to increase. For an example in the US even the 'poor' segment spends more than 80% on non-food items (Daily Mail):

Urban Java - Per capita expenditure

In this note my objective is to arrive at the per capita spend in Urban Java. I have tried to arrive at this number following two different methods:

1) GDP = around $900 billion
Household expenses (i.e. private consumption excluding purchases of dwellings) = 60% of GDP i.e. around $ 500 billion. (World Bank). i.e. around $2100 per capita.
GDP generated by the urban areas = 74% (expected to grow to 86% by 2030 as per MGI)
This means of consumer spending of $500 billion, roughly $400 billion is by urban areas, assuming same % of consumer spend in urban and rural.
Urban population is of around 120 million + out of which around 80 million + are in Java. Thus, of $400 billion, Java accounts for around $270 billion.

So the target market of Urban Java has a population of 80 million with a market size of $270 billion i.e. per capita spend of around $3400.

2) Java contributes to around 58% of the total GDP (Central Board of Statistics) i.e. around $520 billion. Urban Java's consumption expenditure is higher at 70% (Credit Suisse). Thus, total consumption in Java is around $365 million i.e. per capita spend of around $4500.

Thus, the per capita spend in Urban Java is between $3400 - $4500.

Urban Java - Majority of Urban Population in Indonesia

This is a continuation of the subject 'consumer segmentation'. Yesterday, I reached to a conclusion that Urban and Rural segmentation is a good starting point and listed down few major urban concentrations. Today I will dive deeper in one of the largest urban concentrations i.e. Java Island.

Urban Java has the highest concentration of wealthiest consumers in Indonesia due to which it is the most important market for almost all the marketers, especially in consumer goods and services.  Of the top 5 largest cities, top 4 are on Java Island.

Total population of Java is around 140 million, which is more than two times of Thailand, or more than Mexico, or equal to that of Russia's population. Of this 140 million people Urban population is over 80 million, which is more than overall population of Turkey.

Even by ethnicity Javanese constitute the largest at 45%+ of the total population.

It would be good to have data specific to population in Java but due to its unavailability I will use overall Indonesia's data as a proxy. GDP per capita of the country is expected to be around USD 5000 in 2014, which will form the basis of my calculation. It might seem that the GDP per capita of Urban Java would be higher than the national average due to concentration of higher earning urban population. However, the highest GDP per capita is of resource rich East Kalimantan, which is around 3.5x the national average. Apart from Jakarta, which is around 2.5x the national average, no other city from Java appears in the list of top 10 provinces based on GDP per capita. Thus, overall numbers for Java should be considered at some discount over the national average, while analyzing Java separately.

Expenditure: Around 30% of the total Urban population spends over $30+ per month and around 70% less than $30 per month for consumption. I am not writing the full breakdown of segmentation, which is available on the below mentioned source - Statistics Indonesia, but I have only considered the break-off point of dollar a day. Thus, in Urban Java around 24 million people spend over dollar a day on consumption.

Next topic would be to analyze the expenditure basket.


Note: Java is divided into four provinces - East Java, Central Java, West Java, and Banten. And two special regions -Jakarta and Yogyakarta.

Sources:
Statistics Indonesia
World Bank

Consumer Segmentation

I returned today from my travel, due to which the gap in writing the post.

Today's topic is related with consumer segmentation. Indonesia is a large country and for a marketer it is essential to categorize the consumers to be able to target effectively. In some countries ethnicity is an important determinant, while in other religious preferences play a dominant role. Given the geographical spread of the country it is possible to categorize the consumers based on the different islands or provinces.

However, in spite of the geographical spread, various ethnicity and religious preferences the consumer preferences correspond more closely to the income group than any other factors. This means that the purchasing decisions of a consumer is more due to the income than lifestyle or local culture.

Thus, the urban and rural classification is a good starting point for segmentation. Urbanization is on the rise in this country, steadily increasing from 31% in 1990 to 51% in 2012 (Comparative numbers - In 2012 China's and India's urban population stood at 51% and 32% respectively). And the rate of urbanization is around 2.45% (Source: https://www.cia.gov/library/publications/the-world-factbook/fields/2212.html). As per the UN the urban population of Indonesia is expected to increase to 68% by 2030.

Top 5 of the largest cities are - Jakarta, Surabaya, Bandung, Bekasi, and Medan - which accounts for around 17-18% of the total urban population.

Consumers Characteristics

While scanning for business opportunities one of the important requirements is to try and understand the consumers. It is not recommended to characterize and box the consumers of any country as it needs a granular understanding. However, there are some broad characteristics which would apply to most of the consumers in Indonesia. They are as follows:

1) FOCUS ON FAMILY: As many people I have interacted with and inquired about their purchase decisions, what strikes as a common thread is that most of the people have their family on top of their mind while making purchase decisions i.e. most of them would first make the purchase for family members than for themselves.

2) SHOPPING AVENUE: I have interacted with mostly all age group people and of different classes. Though it is bit different in case of the young generation but most of the Indonesians prefer to shop at small shops called Warungs (in picture below) and Minimarts. Though, many young people prefer the new shopping malls' stores, but it seems like majority still favors small shops that are conveniently located and apparently their prices are lower than the supermarkets in the malls.

3) MEDIA AND WORD OF MOUTH: This again is changing in case of the young generation but most of the Indonesians still prefer the traditional media, advertisements, and recommendation by friends or salespeople. Though, younger generation is looking for recommendation over the Internet.

4) BARGAIN HUNTING: This characteristic

is quite similar to the Indian consumers, as they also enjoy hunting for bargains and is independent of the person's wealth. When I talked to people they seem to enjoy when they are able to make a purchase by striking a bargain and would not mind going to wet (and messy) market for that purpose.

5) INTERCONNECTED: In one way this is a derivate of their family focus. But why I prefer to mention it separately is the fact that they have used the digital platform to strengthen the connection. There are around 64 million facebook users roughly the same number of Internet users. So it is important for any marketer to target the digital media.

Based on the above if one were to think of a new product or service then something that improves the lives of family members (say focused on elderly or children) could be a good idea.

Demographic Dividends

Not only Indonesia’s population is large and economy is growing rapidly, the demographic trends are also in the country’s favor. There are 240 million people out of which around 75 million are middle or above class, whose monthly household spend is IDR 2 million or above (i.e. around USD 180 p.m.+ or USD 2200 + per annum). And this class is expected to increase by 8 to 9 million every year (McKinsey report).

More than 60% of its residents are in their principal working years i.e. between 20-65 years. And another 27% is below 15 years i.e. low dependency ratio and large incoming workforce.

Granular look - half of 75 million reside in the five most-populous provinces in Java. 12 cities with more than 1 million of middle and above class, but this is expected to disperse and by 2020, the number of cities with 1million + middle class is expected to be 22, as per McKinsey. Key emerging cities are - Palembang, Makassar, Batam, Semarang, Pekanbaru, and Padang)

Taxation

Today I will cover some key taxation requirements.

Income Tax: All residents are required to pay income tax, which is progressive with top tax rate @ 30% applicable on the income over IDR 500 million per annum (appx USD 45k).

Corporate Tax: The rate of corporate tax on profits is 25%. The regime encourages share listing, as the corporate tax rate is lower at 20% for entities with 40% or more shares listed. SMEs with a turnover of less than IDR 50 billion (appx USD 4.5 million) are entitled to a discount of 50% of the tax rate.

Withholding Tax: There are varieties of withholding taxes. Generally @ 20% is applicable on payments to non-residents.

VAT is applicable @10% on transactions involving goods and services with few notable exceptions mentioned on the following link (http://www.kpmg.com/global/en/issuesandinsights/articlespublications/vat-gst-essentials/pages/indonesia.aspx).

Stamp Duty is minimal at IDR 3000 to 6000

Property Tax is 0.5% of the property value. However, effective rate would be 0.1% (if property value is below IDR 1 billion) or 0.2% (if the value is above IDR 1 billion).

Land and Building transfer attracts 5% of gross transfer value as income tax payable by the seller and 5% as acquisition duty payable by the purchaser.

Legal Framework

In this post I will cover some legal aspects more relevant from foreign investors' standpoint. Most of the legal system follows European Law.

About convertibility - IDR (Indonesian Rupiah) is fully convertible without any restrictions. Though there are certain rules such as notification to BI (Bank of Indonesia) if the amount is more than USD 10,000. Channeling of funds should be through Indonesian resident banks. But nothing restrictive.

Similarly entities are allowed to avail foreign loans though notifications and regular reporting is required. In some cases pre-loan notification is also required such as when the loan tenor is more than a year.

Company Structures for an investors: Primarily 4 types - 1) Limited Liability 2) Representative Office 3) Direct Participation in a listed company, and 4) Direct Participation in certain sectors.

Similar to European Civil Law the companies in Indonesia have two layers of management and shareholders (supervisors) - wherein management is called board of directors and supervisors are called board of commissioners. 

How to establish a company: At least two shareholders are required and the process, though simple, takes around two months. Following are the broad steps:

1) Take an approval from BKPM (Foreign Investment Coordinating Body). This can be done either before or after formation of a company. 

2) Send the Articles for approval by Ministry of Law and Human Rights (MoLHR)

3) After obtaining above approvals register the company with Department of Trade. 

Representative Offices: Foreign investors can also open a rep office instead of registering the companies if the purpose is mainly to liase, after sales services, or market research. As this entity is allowed to enter into agreements with staff and lease premises, but is not allowed to conduct any business activities. 

Restricted Structures: Partnerships and to large extent Co-operatives are not open to foreign participations.  

Macro Economic Factors

This is my first post with respect to Indonesia, and this is mostly about the macro economic factors. It is possible that one would find different numbers from different sources and it can be all over the places. For an example GDP per capita figure ranges between USD 3680 to USD 5000 by some accounts. However, it does not change the fact that the 240 million population based economy has either crossed or just about to cross $1 trillion mark. The growth rate is healthy since 2010, growing over 6% and is estimated to grow at the rate of 6.2% in 2014. The growth is driven by the real consumption, which is growing at the rate of around 5% y-o-y. Unemployment rate is low and has reduced from a high of 8% in 2009 to 6% in 2013. 

However, on trade front there is an increase in the imports and decline in the exports resulting in a significant decline in the trade balance. In 2013, current account is estimated to be in deficit (3% of GDP) as comapred to 2% surplus in 2009. 

S&P has rated BB+, which the country is expected to maintain in the medium term.