Business Analysis of Indonesia

Essay by SBelle535University, Bachelor'sA, December 2014

download word file, 19 pages 0.0



Indonesia's Business Analysis

Executive Summary

Indonesia is the world's fourth most populous nation and has asserted itself as a prime destination for international business and investment. The country was able to withstand the global financial crisis of 2008 and even posted growth during that period. Indonesia joined China and India as the only G- 20 members to post growth during the financial crisis and was the only G-20 member to lower its debt-to-GDP ratio. The success of Indonesia's economy was due in large part to its relatively low involvement in global supply chains and resilient domestic demand. Forecasted average growth is expected to be 6.3% annually from 2011-2015, higher than any other Association of Southeast Asian Nations (ASEAN) member country.

While there is significant potential, Indonesia still suffers from an inadequate infrastructure that affects shipping ports, roads and railways. Corruption remains endemic with the Transparency International ranking Indonesia 118 in its 2012 corruption perceptions index.

Skilled labor is sometimes hard to find, due to the declining unemployment rate. Investors are often confronted with generally complex and time consuming bureaucracy and unclear regulatory frameworks, which are further complicated by the government's efforts to decentralize powers to the 33 regions. The International Finance Corporation's Doing Business survey in measure the ease of business transactions such as enforcing contracts or starting a business and in 2012, Indonesia was ranked 128 out of 185, ahead of fellow ASEAN member The Philippines, but behind China and Russia.

In order to entice foreign investors, the Government of Indonesia has tried to adopt more pro-investment policies, strengthening its Investment Coordinating Board to reduce red tape and create a one-stop shop for investors, offering numerous tax reliefs and other incentives, and relaxing some restrictions on foreign investment in certain sectors.