Indonesia

Local business leaders and foreign investors alike are expressing confidence in the outlook for Indonesia’s insurance sector despite a traditionally low base. Continued economic growth, low levels of penetration and good performances from leading firms so far this year are all upside indicators.

A flurry of new regulations in the mining sector over the past several months has made foreign investors cautious and threatened Indonesia’s status as a darling of emerging-market analysts. Although financial data suggests that macroeconomic risks stemming from the new protectionist stance will be limited, the government has made clear its desire to shift towards more local control of the economy.

With an increased emphasis on delivering connection quality and boosting the use of value-added services (VAS), Indonesia’s intensely competitive telecoms sector is in transition. This entails substantial investments in infrastructure and greater efforts by operators to improve service quality. Over the coming years, the structure of the sector may also change, as players collaborate more closely or even consolidate.

With several major infrastructure projects slated for 2013-14 and a land acquisition reform bill waiting in the wings, Indonesia is clearly working to address one of the most severe restrictions to its competitiveness. The bill will help clear away obstacles for the many public works in the pipeline, but significant legal and financial obstacles remain that will continue to slow growth.