Now Is A Good Time To Invest in Indonesia Says BI Governor

Now Is A Good Time To Invest in Indonesia Says BI Governor
Image by Kusomo Nugroho on Unsplash

Last week’s Bank Indonesia’s (BI) Annual Investment Forum 2020 in Bali was an opportunity for BI to support recent government initiatives and help stimulate Indonesia’s economy.

According to Medcom, the annual event is “part of an international seminar hosting prominent economists, investment managers, global asset managers, and central bankers” and an influential platform from which to exchange ideas and realize development goals as well as corporate growth and potential.

The time is right

It’s also where BI Governor, Perry Warjiyo delivered an upbeat message at the Visionary Talk session saying that now is the right time to be investing in Indonesia.

This is a sentiment shared by JP Morgan and Morgan Stanley. Bloomberg recently reported “after two years of stagnant growth, Indonesian stocks will hit a record in 2020, when President Joko Widodo’s policies to shore up the economy take effect, say analysts from JPMorgan and Morgan Stanley.”

Despite a low level of economic expansion in Q3 of 2019 (5.02%), the International Monetary Fund (IMF) “estimated earlier this month that the global economic growth rate was 2.9% in 2019 while the so-called ASEAN-5 (Malaysia, Singapore, Thailand, the Philippines and Indonesia) grew 4.7% during the same period,” say The Jakarta Post.

Young, mobile and tech savvy

So why is their so much potential in Southeast Asia, and Indonesia in particular?

In a recent interview with the Jakarta Globe, HSBC Private Banking’s chief market strategist for Southeast Asia, James Cheo, believes the region “could ride out the current global slowdown and soon catch up with the world’s economic powerhouses.”

According to Cheo, there are three-primary drivers for this: demographic, urbanization and digital.

“Sixty percent of Southeast Asians are under the age of 35. In the next ten years, they will come of age: they’ll start working and get their first paycheck. They will increase their purchases. They’ll buy cars. They’ll get married and buy a house. They’ll have kids and spend more money on education, and of course, they’ll travel to see the world.”

Southeast Asia has also embraced all things digital with open arms. “There are around 360-million mobile phone users in the region, but still only half use them to make transactions. There’s a huge opportunity here as well,” Cheo added.

Aspiring Middle Class

It seems Indonesia’s stars are aligned. At the end of January, The World Bank released an article around Indonesia’s middle class suggesting it “has been growing faster than other groups with at least 52-million economically secure Indonesians, or one Indonesian in every five.”

This is seen as “a major driver of economic growth as the group’s consumption has grown at 12% annually since 2002 and now represents close to half of all household consumption in Indonesia.

Add to that the fact that the eConomy SEA 2019 Report published by Google Temasek and Bain & Company ranked Indonesia and Vietnam as the region’s fastest growing Internet economies, with Indonesia’s potential dwarfing every other country because of its sizeable population.

Cutting Red Tape

It’s clear Indonesia has enormous market opportunity and the push to improve the country’s investment climate through initiatives such as the much-anticipated Omnibus Bills are well placed, well timed and are largely being well supported. Cheo offers a word of caution however.

“Now is the right time to push through significant changes,” he told Jakarta Globe, but he also “warned foreign investors not to expect a complete overhaul of local bureaucracy, though they should still see the government’s insistence on reform as a sign of good things to come.”

We agree there are challenges and potential has to be supported by implementation and mindset. This is just the beginning and many things need to be addressed and improved, which will of course, take time. But the journey has definitely begun and the future looks bright.

“One of the keys to strengthening Indonesia’s economy is through an accommodative policy mix,” Perry said, “adding that his institution (BI) would continue to apply a similar policy mix this year to support the country’s economic growth.”

Medcom expanded on this by suggesting BI’s policy mix instruments would be geared to “building economic growth momentum. The policy rate has been reduced, liquidity loosened, and rupiah exchange rates stabilized.”

Digital-based instruments

But BI has more to offer. The Medcom report goes on to say “macro-prudential policy will also be relaxed. The accommodative monetary and macro-prudential policy mix aims to increase bank intermediation and other economic financing from both the supply and demand sides.”

“In addition, BI will also maintain accommodative payment system policy with a focus on strengthening digital-based instruments and public infrastructure, including QR Code Indonesian Standard (QRIS) implementation. Moreover, financial market deepening and development of the Islamic economy and finance will be continued in order to foster economic growth momentum.”

Sources: The Jakarta Post, AEC News Today, Medcom, Antara News, Bloomberg, Jakarta Globe, World Bank, World Economic Forum

#investindonesia #sevenstones #sevenstonesindonesia #bankindonesia #omnibus #goldenage #investmentforum #indonesiainvest #jokowi

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Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

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Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.