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With one of the most competitive telecommunications markets in the world, prices have been dropping year after year as Indonesian operators fight for customers. The result has been rapid growth in subscriber numbers and especially high penetration rates in major cities such as Jakarta. The intense competition and falling prices have also led to under-investment in some parts of the network, inconsistent service quality, and a lack of commitment to research and development. However, economic realities are taking hold, and, as pricing stabilises, the market consolidates and leadership emerges, quality should improve as margins widen, and significant investments are likely to be made. Indeed, many of the weaknesses in the market are expected to be addressed as the business becomes more profitable and providers start to compete on quality.

Transportation and logistics in Indonesia are sectors of great opportunity, but also pose immense challenges. As the economy booms and travel increases, related businesses have grown and relevant infrastructure is being built. At the same time, the transportation networks and systems are put under stress as the economy expands rapidly. This is especially an issue in Indonesia, where existing infrastructure is often poor and the process of adding capacity can be slow and inconsistent. Over the next few years, transportation and logistics promise to develop quickly, although not always in a balanced way. Connectivity should improve, bringing some corridors up to international standard, though gaps may remain. This chapter contains interviews with Emirsyah Satar, President and CEO, Garuda Indonesia; and Richard Lino, President Director, IPC II.

With its low debt-to-GDP ratio and abundant resources, growing consumer demand, healthy political discourse and rising investment, Indonesia is set to lead the region and could become the world’s sixth-largest economy by 2030. The country has 11 commercial ports, more than 200 airports, an estimated 17,508 islands and around 245m people. The government is working to address the current lack of infrastructure with spending on roads, bridges, ports, airports and power stations, as well as by supporting public-private partnerships. If a few infrastructure deals get done in the next year, and if there is clear and verifiable progress and commitment of actual investment funds to these transactions, many more agreements could follow and a significant amount of infrastructure could be built. This chapter contains an interview with Ir. Hermanto Dardak, Vice-Minister of Public Works, and a roundtable with Arsjad Rasjid, President Director and Group Co-CEO, Indika Energy; Sinthya Rosely, CEO, Indonesia Infrastructure Guarantee Fund; and Raj Kannan, Managing Director, Tusk Advisory.

With foreign direct investment rising, factories being built and real estate booming, the construction sector in Indonesia is expanding rapidly. The government is undertaking programmes to improve infrastructure, building roads, airports, railways and ports. While Indonesia remains more consumption-oriented than places like China, investment is an increasingly important part of the mix. The construction sector is expected to continue to expand rapidly over the next few years as the property market sees further rapid growth. Unblocking bottlenecks, increasing capacity and improving efficiency are all vital tasks going forward as the sector evolves. This chapter contains interviews with Ketut Budi Wijaya, President Director, Lippo Karawaci; and Harun Hajadi, Managing Director, Ciputra

To say there has been a retail boom in Indonesia is an understatement. The people of the country have, over the course of a few years, become consummate shoppers staying up to date with the latest trends and spending freely. Indonesia’s economy has always been driven by the consumer, but now it is being taken to the next level as people now have more money to spend. Retail sales are likely to remain strong for the next year at least, partly on the back of the introduction of the minimum wage. As the sector develops, shopping is expected to become more convenient, with new brands entering the market. This chapter contains an interview with Henri Honoris, President Director, Modern Putra.

The economy is surging ahead and, as it expands, authorities are seeking to make the transition from low-cost production and supplying raw materials to more advanced nations to a high-value-added manufacturing industry. Low tariffs have led to more non-tariff barriers in the form of export bans and other incentives to encourage domestic industry. The government is pursuing initiatives to move up the value chain by emphasising higher-value-added products, such as green cars and design. The biggest challenge facing the sector is how best to manage the transition from low- to high-value-added production. Striking a balance between the needs of sunset industries and emerging ones will be tricky, but strong growth is almost guaranteed in the short to medium term for industry in Indonesia. Most of the proposed manufacturing investments should happen, and the simple maths of an expanding economy lead to an expanding industrial base. This chapter contains interviews with Purnomo Yusgiantoro, Minister of Defence; Johnny Darmawan, President Director, Toyota Astra Motor; and Vismay Sharma, President Director, L’Oreal Indonesia.