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Indonesia is uniquely positioned to emerge as one of Asia’s most influential nations, with its abundant resources, strategic location, and dynamic population.
Let’s explore five key topics that illustrate the country’s vast potential.
- Geography
Let’s start with Indonesia’s immense scale and geography, which form the foundation of its influence.
Indonesia’s archipelago, when superimposed on Eurasia, spans a distance from Ireland to Turkmenistan—an extraordinary geographical scale.
Its population is dispersed across thousands of islands, bustling with activity—from farms to factories.
This challenging geography has spurred a digital services boom.
Jakarta, the capital, has emerged as one of Southeast Asia’s most successful incubators of technology companies.
Nearly 80% of Indonesians own smartphones, connecting the country like never before.
Jokowi, the previous president, earned the nickname “builder-in-chief” by constructing scores of airports, ports, dams, and hundreds of kilometers of toll roads.
His most ambitious project? The planned relocation of the capital to East Kalimantan: Nusantara.
Read our previous article on Nusantara: click here.
- Demographics
Indonesia’s demographics represent an important potential asset.
As the world’s fourth-most populous country, its 276 million people make it a gigantic consumer market.
The population is also young: 25% are under 15, while only 7% are over 65.
This youthful demographic offers tremendous opportunities for innovation and workforce productivity.
Indonesia’s 200 million eligible voters have nurtured a vibrant democracy.
In the run-up to this year’s presidential election, political debates attracted roughly 100 million viewers, while campaign rallies have increasingly focused on issues rather than mere fanfare.
- Economics
Despite falling short of the promised 7% annual growth, Indonesia has emerged as one of the best-performing economies globally.
It is the sixth-largest emerging market by GDP, with a GDP per capita that exceeds India’s and Vietnam’s when adjusted for purchasing power.
If Indonesia stays on this trajectory, it could become one of the world’s ten biggest economies within a decade.
However, significant disparities remain. While Jakarta’s GDP per capita rose to around $19,000 in 2022, Central Java’s was below $3,000, with some remote islands even poorer.
- Commodities
The backbone of Indonesia’s economy is commodities, and its resources are in high demand as the world shifts toward renewable energy.
Indonesia dominates global nickel production, a critical component in electric-vehicle batteries.
By 2030, the country is projected to rank as the fourth-largest producer of green commodities, trailing only Australia, Chile, and Mongolia.
To capitalize on this potential, the government has implemented a “downstreaming” policy, banning the export of certain raw materials and encouraging multinational firms to establish local refineries.
The goal is to produce electric-car batteries with a total capacity of 140GWh by 2030—nearly equivalent to global production in 2020.
- Foreign Direct Investment
Indonesia’s mix of location, size, and resources makes it a key player in global superpower rivalries.
Investment has poured in from both the United States and China, with Chinese firms contributing significantly more.
However, President Prabowo faces two challenges:
- Escalating Sino-American tensions could result in tariffs or sanctions affecting Chinese firms that Indonesia relies on.
- While downstreaming has proven successful for nickel, it has hindered other sectors, such as solar power.
Countries like Malaysia, Thailand, and Vietnam—offering fewer restrictions to investors—are increasingly attractive to firms seeking to relocate supply chains from China.
Read our previous article on the « China +1 strategy ». click here.
As President Prabowo assumed office on October 20, 2024, the challenge is clear: can he guide Indonesia to realize its vast potential and cement its place on the global stage?
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PS : If you enjoyed this article, you may also like the ones we have previously written in the last 18 months. Find them all on our website, section NEWS. Click here.
Picture and source : The Economist