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For many years, Indonesia’s sizeable infrastructure gap has hindered industrial development. On Java – the country’s most densely populated island – roads, airports and seaports are under pressure due to the large amount of people and goods that need to be moved. At the same time, Indonesia faces challenges connecting other islands across the vast archipelago. Due to this, infrastructure and transport have been key priorities for the government in recent years. At the start of his second term in office in 2019, President Joko Widodo, better known as President Jokowi, launched a $412bn programme to boost investment in the country’s transport infrastructure. While infrastructure development is likely to be affected in the short term by the disruptions caused by the global outbreak of Covid-19 in early 2020, the government is working to ensure that major projects are attractive to private investors in the coming years. This chapter contains interviews with William Sabandar, President Director, Mass Rapid Transit Jakarta; and Liew Mun Leong, Chairman, Changi Airport Group.

Indonesia has long been a key supplier to global energy markets, but focus has shifted from export-oriented production towards meeting domestic demand. Current objectives include meeting the demand for consumer fuel through crude and palm oil, addressing electricity demand via coal and renewables, and using natural gas to supply predominantly industrial consumers. The government aims to consolidate control over upstream crude oil activities, primarily through the state-owned enterprise Pertamina, but still welcomes foreign investment in the sector. Long considered one of the world’s premier mining destinations, Indonesia finds itself in a transition period in 2020 amid significant questions about the future of the industry. The archipelago is home to considerable reserves of a wide variety of metals that are crucial to the global economy, and several metals that are key inputs for electric vehicles and industrial-scale batteries. This provides opportunities for foreign investment in mining services and downstream industries. This chapter contains interviews with Dwi Soetjipto, Chairman, SKK Migas; and Hilmi Panigoro, President Director, MedcoEnergi.

Indonesia’s insurance sector holds considerable potential, given the country’s current low penetration rate, large domestic population and growing middle class. While the industry suffered a setback in early 2020 when allegations of a “pump-and-dump” scheme involving investment funds managed by two state-owned insurers came to light, the strong and immediate regulatory response should restore confidence in the market. It is also an opportunity for other insurers that have demonstrated sound management of customer premium to differentiate themselves. Meanwhile, rapid advancements in the country’s digital economy are helping to increase financial literacy and provide new distribution channels to reach Indonesia’s fast-growing consumer class.

The development of Indonesia’s capital markets has been buoyed by strong investor interest and high, consumption-led economic expansion on the back of a push to boost annual GDP growth. Ongoing reforms hope to liberalise Indonesia’s financial landscape and provide a legal and regulatory basis for product diversification and deeper institutional investment. Nevertheless, slower regional growth as a result of the Covid-19 pandemic looks likely to strain liquidity and test debtors’ ability to repay, while also possibly acting as a barrier to fundraising. In the medium term, the proliferation of digital financial tools will continue to bring new retail players to the market – a move that has encouraged the government to include financial literacy education alongside its reforms to increase the participation of Indonesians in order to deepen the market. This chapter contains interviews with Inarno Djajadi, President Director, Indonesia Stock Exchange; and Jemmy Paul Wawointana, President Director, Sucor Asset Management.

Indonesia’s financial technology sector is one of the most dynamic and competitive in the world, as evidenced by the emergence of four unicorn companies – start-ups valued at over $1bn – and one decacorn, valued at over $10bn. These new tech giants include one digital payment firm, OVO, while the rest offer a number of integrated payment options in e-commerce, ride hailing and delivery services, and travel bookings. Surrounding them is a fast-growing ecosystem that is helping expand financial inclusion to previously underserved segments of the population. Investment comes from a range of domestic and international sources, both public and private. Global backers, including Google and China’s Ant Financial, have entered into joint ventures in Indonesia. This chapter contains interviews with Reynold Wijaya, CEO and Co-Founder, Modalku; and Vincent Iswara, CEO, DANA.

Indonesia’s banking sector is large and crowded, with more than 1600 licensed commercial and rural banks. However, there remains plenty of untapped potential, given that the country has the fourth-largest unbanked population worldwide, at 83.1m people as of November 2019. Policymakers want both the number of banks and the unbanked population to shrink. As more Indonesians join the formal financial sector, it is expected that banks will consolidate, thanks to increased foreign investment and mergers. Regulators have been relaxing rules in hopes of attracting foreign entities that are keen to buy banks and create bigger players in the process. This chapter contains interviews with Jahja Setiaatmadja, President Director, Bank Central Asia; and Batara Sianturi, CEO, Citi Indonesia, and Chairperson, International Banks Association of Indonesia.