Southeast Asia is the newest and most fast-paced frontier for global business. The region is known for its rich natural resources, large population and extensive manufacturing capabilities.
|Jakarta is poised to become a world-class Mecca for business.
At the start of the 21st century, when the BRIC (the developing countries formed by Brazil, Russia, India and China) group was identified, it soon became apparent that Southeast Asia was inexplicably missing.
Shortly afterward, the Organization for Economic Cooperation and Development (OECD) added South Africa and Indonesia, redubbing the nations as the BRIICS.
This new name aptly captures the sentiment and role of these nations as the emerging foundations of the global economy.
A growing nation
Indonesia’s national motto, “Unity in Diversity,” neatly encapsulates the archipelago nation’s biodiversity, cultural history and economic potential. Indonesia is comprised of around 13,000 islands, and boasts a formidable population of more than 240 million people. It is this strong domestic consumption base that has allowed Indonesia to prevail as one of the world’s strongest economies despite various economic crises abroad.
With a gross domestic product (GDP) of $707 billion in 2010, Indonesia is the largest economy in Southeast Asia. The country’s strong consumer base has been the driving force in the country’s yearly GDP growth for the past several years: growing by 4.5 percent in 2009, 6.1 percent in 2010, and 6.4 percent in 2011.
Nominal per capita GDP is also increasing. From about $3,005 in 2010, this figure is expected to triple to at least $9,000 in 2020. The number of credit cards issued has also increased, according to Bank Indonesia, to 14.2 million in August 2011, a 9 percent increase from the year before.
Indonesia’s growing middle class, with its newfound income, is enjoying its new spending power and thus consuming more. It’s a fact that the Indonesian people themselves are the driving force behind Indonesia’s economic success and future potential.
“Indonesia already has very good conditions for attracting investment,” says Yoshinori Katori, the Japanese ambassador to the country. “As the government continues to work on transportation infrastructure, telecommunication networks, electricity, water supply and waste management, I’m quite sure the climate will only strengthen further.”
“Our country is at a turning point,” says Agus Tjahajana, director general for industrial corporation of the Ministry of Industry. “The people and the nation are continually evolving, and our currenteconomic success is a testament to the strength of Indonesia.”
The government is taking careful steps toward the development of its country. Initiatives such as the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI) display how focused the government is toward ensuring Indonesia’s economic sustainability. With the MP3EI program and its ilk focused on developing industries and sectors according to region and locality, the rival cities of Jakarta and Surabaya are vying for the top position in Indonesia’s burgeoning economy.
|Ambassador of Japan to Indonesia
A tale of two cities
“Jakarta will always be the center of economic activity in Indonesia,” says Eddy Kuntadi, president of the Jakarta Chamber of Commerce and Industry. “As such we need to lead by example in showing proper planning and development for all Indonesian cities.”
The nation’s capital is the focal point for several industries, andwith new developments in infrastructure taking place throughout the city, Jakarta is poised to become a world-class Mecca for business.
In West Java the growing metropolis of Surabaya is giving the capital strong competition. Surabaya experienced 7.2 percent growth in 2010, which was more than Indonesia’s as a whole.
Known as the “Hero City” by Indonesians because of the history of participation of its citizens in the Indonesian nationalist movement that freed the country from its Dutch colonial rulers, Surabaya constantly challenges Jakarta for supremacy in business and commerce within Indonesia.
“Though we hope to overtake Jakarta in production and business,” says Chalis Yudo Soebagio, vice president director at the East Java Chamber of Commerceand Industry, “I believe the two cities will grow together and jointly contribute significantly to the economic fortune of all of Indonesia.”
A golden relationship with Japan
Of course, Indonesia also possesses its rich inheritance of natural resources. Energy and mineral resources are at the top of the country’s exports, and Japan is now Indonesia’s largest export trading partner.
“Japan and Indonesia have a long history together,” says Muhammad Lutfi, the ambassador of the Republic of Indonesia in Tokyo. “Japan needs Indonesia and Indonesia needs Japan. The potential both countries possess is huge, and their partnership is vital to the success of both nations.”
The two countries have maintained healthy and mutual bilateral relations for decades. Recently, more direct agreements between the two countries have solidified the relationship. In 2007, Japan and Indonesia entered into a free trade agreement (FTA) and in 2008, an economic partnership agreement (EPA) was signed by leaders from both nations.
Both agreements seek to strengthen the ties between the two nations, liberalize trade, promote direct foreign investment and foster mutual cultural and economic growth for Indonesia and Japan.
“Japan and Indonesia are traditional partners,” says Kuntadi. “By collaborating together, based on Japan’s technological advantages and Indonesia’s abundance of natural resources, there is a more promising future for both countries to grow and prosper together. Indonesia is the ideal manufacturing base for Japanese companies.”
Today, there are over 1,000 Japanese companies in Indonesia, which employ around 300,000 people. With companies like Toyota leading the way, Japanese companies are now looking to expand their production facilities elsewhere in the country.
“Indonesia has great potential for all kinds of business,” says Masahiro Nonami, president director of Toyota Motor Manufacturing Indonesia. “Japanese and Indonesians work very well together, and the synergy between the two nations is evident in their shared economic success.”
“We have received an increase in the number of inquiries from small to medium-size Japanese companies this year, particularly from car parts companies,” says Kenichi Tomiyoshi of JETRO.
The automotive industry, along with textiles and manufacturing, is just one of several key industries that display the strong ties between Indonesia and Japan.
Friends in deed
“We received a lot of support from Indonesia in light of what happened last March 2011,” says Katori. “We would like to take this opportunity to thank them for their prayers and support. When I arrived in Indonesia, I noticed an outpouring of sympathy and I felt very honored.”
“We have very strong ties and our feelings are very close,” he continues. “Indonesia is a country rich with natural resources, while Japan practically doesn’t have them, so Indonesia is very important to Japan.”
After more than 50 years of diplomatic ties between Indonesia and Japan, the two nations have continued their long and fruitful history together into the 21st century and beyond.