Business Monitor International


Indonesia Business Forecast Report

Published 20 October 2014 | Quarterly

  • 59 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Indonesia Business Forecast Report

Core Views

  • Despite the fact that Joko 'Jokowi' Widodo emerged victorious in July's presidential elections, significant political uncertainty remains. In particular, Prabowo Subianto's Red and White coalition has shown signs that it will be a particularly obstructionist opposition in parliament, creating additional risk to the implementation of Jokowi's policy agenda. While we remain generally positive on the incoming administration, this is a key risk to our view. .

  • While his policy platform has not yet been fully elaborated , Jokowi's ability to streamline bureaucratic inefficiencies, improve public finances, strike a balance between pro-business and pro-welfare policies, as well as willingness to take politically unpopular but necessary measures to right economic imbalances could provide some upside potential for the infrastructure, mining and oil and gas sectors.

  • Economic growth will likely accelerate in 2015 as policy-making stabilises along with improving investor sentiment. Indonesia's macroeconomic outlook has stabilised considerably since 2013, including an improvement in the trade account as well as significantly lower inflation. This should allow Bank Indonesia (BI) room to ease policy in H115.

Major Forecast Changes

  • We have downgraded our end-2014 forecast on the Indonesian rupiah to IDR12,200 /USD from IDR11, 500 /USD previously owing to broad US dollar strength. That said, we remain positive on the currency's fundamental outlook, and expect it to recover somewhat in 2015 to average IDR11,850 next year.  

Key Risks To Outlook

  • Indonesia risks a return to the more polarised political environment witnessed before outgoing President Susilo Bambang Yudhoyono took office in the mid-2000s.

  • Indonesia's poor net international investment position, along with a current account deficit, make it vulnerable to periods of acute risk aversion in the global economy. In an environment of rising global interest rates, this is an increasing...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Jokowi Faces Obstructionist Opposition
8
Table: Politic al Overview
8
Long-Term Political Outlook
9
Outlook Improved, Uncertainty Lingers
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Risks To 2015 GDP Forecast
14
Table: Economic Activity
14
Fiscal Policy
15
Fiscal Position Sound, But Spending Mix Still A Concern
15
Table: Fiscal Policy
16
Monetary Policy
17
AEC: Financial Services Liberalisation Will Be Drawn Out
17
Exchange Rate Policy
20
Shifting To Neutral On IDR As US Dollar Takes Off
20
Table: CURENCY FORECAST
20
Table: Current Account
21
Chapter 3: 10-Year Forecast
23
The Indonesian Economy To 2023
23
A Bullish Long-Term Growth Story
23
Table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Operational Risk
25
Operational Risk Index
25
Operational Risk
26
Table: Op erati onal Risk
26
Transport Network
27
Table: Transp ort Netw ork Risks
28
Economic Openness
32
Table: Asia - Economic Openness
32
Table: Total Imp orts And Top 5 Products Imp ort ed (USDmn unless otherwise stated)
33
Table: Product Exports And Top 5 Export Partn ers (USD unless otherwise stated)
34
Chapter 5: Key Sectors
37
Oil & Gas
37
Table: Headline Forecasts
37
Table: Oil Production
38
Table: Oil Production
38
Table: Gas Production
39
Table: Gas Production
40
Infrastructure
41
Table: Energy And Utilities Infrastructure Data
44
Other Key Sectors
45
Table: Pharma Sector Key Indicators
45
Table: Telecoms Sector Key Indicators
45
Table: Defenc e and Security Sector Key Indicators
45
Table: Food and Drink Sector Key Indicators
46
Table: Autos Sector Key Indicators
46
Table: Freight Key Indicators
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Big Emerging Market Revisions
47
Table: Global Assumptions
47
Table: Developed States, Real GDP Growt H, %
48
Table: BMI VE RSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
48
Table: Em erging Markets , Real GDP Growth , %
49

The Indonesia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Indonesia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Indonesia's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Indonesia's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Indonesia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Indonesia, including currency volatility, the commodity price boom and protectionist policies.

The Indonesia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Indonesia economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Indonesia through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Indonesia Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Indonesia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Indonesia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Indonesia over the next 5-years?

BMI's Indonesia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Indonesia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Indonesia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Indonesia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Indonesia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Indonesia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Indonesia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Indonesia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Indonesia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express