Indonesia

Strengthened by new deals in the transport, energy and agri-business sectors, foreign direct investment (FDI) in Indonesia’s East Java province has shown promising growth in recent years. Although the majority of FDI in Indonesia is sourced from other Asian nations, European investment has grown steadily since 2010, with East Java now poised to benefit from recently strengthened trade ties with the Netherlands.

Growth in housing prices in Indonesia is expected to slow in 2014 as stricter mortgage rules take effect, although some segments are still predicted to perform strongly.

A move by Indonesia to limit its raw minerals exports could hasten the development of a local processing industry, but the strategy has downside risks as buyers look to alternative sources.

Expectations that rising incomes among Indonesia's burgeoning middle class will generate a retail boom were boosted by rosy end-of-year sales results. However, the upward trend is threatened by both global and domestic trends.

The economy in Indonesia rounded out 2013 by posting relatively solid growth, despite a decline in global commodity prices and an increase in energy imports. The coming year’s performance is expected to be in high single digits, but risks include a tightening of external financing conditions and a softening of private consumption.

Slower growth in Indonesia may provide an impetus to realise a range of reforms that the government is planning, changes that could open several important and attractive sectors to greater foreign investment.