Much has been written about Indonesia’s 2022 successes- record inbound FDI and highest GDP growth since 2013, driven by booming commodity prices (thermal coal, palm oil and nickel) combined with a rebound in household consumption following lifting of COVID 19. While 2023 and 2024 GPD is expected to slow for a number of reasons, by 2030 Indonesia, which is already the largest economy in Southeast Asia is on track to become the world's 7th-largest economy, overtaking Germany and the United Kingdom.
Therefore, we focus this paper analysis on specific areas of current and near term future growth:
- Mapping US$50+ billion in 2022-2023 inbound investment from East Asia, GCC and G7, focused on infrastructure, renewable energy, NEVs and semiconductors;
- Digitisation/VC- we use the 2022 version of the Google, Temasek and Bain study as an base to track inbound 2022 VC investments which showed continued strong activity in fintech and e-commerce,
- Infrastructure projects (near term) –Jakarta-Bandung HSR (2023 launch) and Trans-Java Toll road (completion 2024);
IPOs/equities – Globally, 2022 IPO markets were well below 2021 levels. That said, Indonesia’s IDX was up 4%, while USA, China and Japan showed sharp declines. There were similar declines in IPOs. Indonesia led ASEAN in volume; however several of the early 2022 IPOs encountered significant headwinds later in the year;
- Renewable energy- In 2021, Indonesia's renewables energy mix was 13.83%; hydropower 7.9%, geothermal 5.6%, and other forms 0.33%. Indonesia must reach 23% by 2025 to reach its climate objective. We discuss 2022 hydropower projects launched with Japan and China to help attain these goals.
We also track the 2022 progress of two major Indonesian projects which are innovative, and thus more challenging to fund in today’s markets; INA – a different sort of Sovereign Wealth Fund (SWF) and Nusantara – a new capital city which we see as hugely aspirational.