Indonesia

Strong domestic demand, combined with a recovery in export orders, is boosting growth in Indonesia’s manufacturing sector, although the prospect of rising labour costs has also highlighted the importance of ensuring efforts to increase productivity are maintained.

A drive to ensure universal health care provision by 2014 in the world’s fourth-most populous country necessarily entails large-scale investments, and is opening up opportunities for the private sector.

The development of Indonesia’s road network has not always kept pace with its impressive rate of economic growth in recent years but the government is committing substantial resources to overhauling the system, with a number of key projects under way and opportunities for the private sector growing.

Foreign institutions are to be targeted to help fill major gaps in Indonesia’s skill base as a result of a weak and undersupplied education system. A recent bill opens tertiary education to overseas interests but the challenge will lie in balancing the goals of social equality with the mandate to promote high-quality education at a low cost.

A series of large-scale government bond issues in Indonesia is the latest sign of the benefit of an improved credit rating in accessing international capital. The government is lining up a $1.75bn global bond issue for October, including a $1bn sukuk (sharia-compliant bond) and $750m worth of Japanese yen-denominated conventional bonds.

Several of Indonesia’s developmental priorities – promoting local industry, stimulating domestic consumption and improving infrastructure – have come into sharp focus in recent months, as the government attempts to temper demand and keep pace with growth. In an effort to suppress a bubble in consumer spending, the central bank has set a minimum down payment of 30% on new automobiles and 25% on motorcycles.