Indonesia's GDP is growing at over 6 percent annually.

Indonesia has by far the largest economy in Southeast Asia.

Indonesia is the world's third largest democracy, with a thriving open economy.

Indonesia ranks number five worldwide in export success stories and number one in Southeast Asia.

In 2007 Indonesia’s GDP expanded at 6.3 percent, the fastest pace since the 1998 fiscal crisis.  A slowdown in the global economy is expected to cause Indonesia’s real GDP growth to slow slightly in 2008, to 6.1 percent, despite strong domestic demand.

Economic reforms will slow as the 2009 parliamentary and presidential elections approach.  Although President Yudhoyono retains strong public support, his administration needs to speed up the decline in poverty and unemployment rates in order to establish a strong platform for reelection in 2009.

After two years of debate, the Indonesian Parliament finally approved the new Investment Law in March 2007.  Compared to the previous law, the new legislation is friendlier to foreign investors, addressing key issues such as land rights.  The law's "negative list," however, restricts foreign ownership in a number of sectors.

Realized direct foreign investment in Indonesia grew strongly in 2007, to over $9 billion through October, up from $6 billion the previous year.  Major sectors for investment were transport, storage, communication, chemical and pharmaceutical, and food.  Major investor countries were Singapore, United Kingdom, Japan, Taiwan and South Korea.

Indonesia’s security situation has improved, with no terrorist bombings in the country in 2006 and 2007.  Although terrorist cells continue to operate, the government has made vigorous and effective efforts to eliminate them.

The new Negative Investment List announced in 2007 closed 23 types of business to foreign and domestic investment; reserved 43 sectors for small and medium-sized enterprise (SME) investment and 33 sectors for partnership; and opened 98 sectors to foreign investment.  In total, 11 sectors became more restrictive for foreign investment, including telecommunications and insurance.

Although the current administration has taken steps to tackle corruption, it continues to be endemic.  Continuing allegations of high-level corruption, especially in the judiciary, point to the need for continued reform and implementation of good governance practices.  Far more effective mechanisms are needed to enforce commercial, criminal and administrative laws, which currently afford little actual protection to foreign investors.

Indonesia’s infrastructure continues to be inadequate, as very little new investment has flowed into the sector.  Poor roads, ports, and power supplies continue to hamper growth.

Although the Indonesian government has steadily improved the regulatory and legal framework for the protection of intellectual property rights (IPR), poor enforcement of laws governing IPR continues. For example, U.S. industry maintains that over 90 percent of all CDs (audio, film, software) sold in Indonesia are pirated.

Population: 237,512,355 (July 2008 estimated)

GDP (purchasing power parity): US$ 845.6 billion (est.2007)

GDP (official exchange rate): US$ 410.3 billion (est.2007)

GDP real growth rate: US$ 6.1 percent (est.2007)

GDP Per capita: US$ 3,400 (est.2007)

Inflation (CPI): 6.3 percent (est.2007)

Investment (gross fixed): 23.6 percent of GDP (est.2007)

Unemployment: 9.7 percent (est.2007)

Sector Opportunities. Assuming significant progress on economic and investment law reforms, opportunities should flourish in the telecommunications, transportation, oil and gas, electric power, water treatment and sanitation, and engineering sectors.

Infrastructure. Large infrastructure and reconstruction projects should drive increasing demand for all types of construction machinery and building materials.

Increased security. The police and other government entities are improving their capabilities to deal with the terrorist and crime threats by procuring sophisticated security equipment and services for airports, ports and tourist destinations.

Climate. Indonesia's tropical climate makes disease control particularly challenging, creating a good market for medical and laboratory equipment and pharmaceuticals.

Best Prospects. Other "best prospects" for American business in Indonesia include aircraft and parts, computer and peripherals, industrial chemicals, retail, medical equipment and supplies, and food and business service franchising.

Aircraft and parts

Education and training

Electrical power systems

Environmental technologies

Franchises

Health food supplements

Industrial chemicals

Medical Equipment and supplies

Oil and gas equipment and services

Retail

Telecommunications equipment and services

Cotton

Soybeans

Consumer ready to eat foods

Wheat

Consider Indonesia Brochure (PDF, 452KB)