Indonesia Economy

Plans are in place to develop Indonesia’s nuclear power capacity to overcome the country’s shortage of electricity and ease its dependence on hydrocarbons. However, some concerns remain as to the safety of atomic energy in a quake-prone region so soon after the disaster in Japan, with opponents to the scheme pushing alternative energy as the answer to Indonesia’s power needs.

Indonesia is confident it can ride out any waves whipped up by the storm affecting much of the global economy, thanks in part to its low dependence on exports and booming domestic demand. There are some concerns, however, that reduced interest rates and high consumer spending could reignite inflation.

With live cattle exports from Australia to Indonesia resumed and plans for banking investment and a free trade deal in the works, burgeoning economic ties between the neighboring countries seem back on track.

A recent wave of investment in manufacturing in Indonesia could herald the country’s rise as an international industrial player. A rapidly growing domestic market of more than 230m people, as well as the potential for exports both regional and across the globe, are major draws for companies from around the world.

Indonesia’s newly published economic master plan sets out ambitious targets to become one of the world’s biggest economies over the next 15 years. The plan unveiled by President Susilo Bambang Yudhoyono (SBY) also put the spotlight on the need for heavy investments in infrastructure coupled with improvement in the investment climate.

The need to relax rigid labour restrictions that enforce high severance pay and make it hard to fire staff is becoming a priority for Indonesia. With outdated employment laws affecting investor confidence and benefitting neither employers nor staff, the country is accelerating moves to update employment regulations.