For a long time, Indonesia has been Asia’s best-kept secret. The success stories of big Asian economies, such as China and India, have overshadowed the narrative of Indonesia’s economic progress and all of the potential that this country has to offer.
Increasingly, there is growing awareness, including among Canadians, about Indonesia’s potential. Indonesia is a member of the G20 and the 16th largest economy. It has a population of 250 million people and a significant number of them are among a growing middle class. A recent study by PricewaterhouseCoopers (PwC) projected that Indonesia will be the world’s fourth-largest economy (PPPs) by 2050.
The backbone of Indonesia’s economy is demographics — it has a high percentage of working-aged citizens. Given that, Indonesia offers a huge market potential for trade and investment.
Over the years, the governments of Indonesia and Canada have developed frameworks to stimulate economic relations. In 2016, the bilateral trade volume reached $3.07 billion. Canada is ranked 19th in Indonesia’s list of investors by country, with the total amounting to $600 million, and Indonesia is the largest market as well as investment destination for Canadian companies in Southeast Asia.
Based on 2016 trade data, the Top 10 exports from Indonesia to Canada include: woven clothing and apparel, electrical equipment, rubber, knitted clothing, footwear, mechanical appliances, cocoa, coffee, tea, spices and paper. Meanwhile, the top 10 products Canada exports to Indonesia include cereals (mainly wheat), wood pulp, mechanical appliances, ores, electrical equipment, scientific and technical instruments, aluminum, vegetables, plastic and pharmaceutical products.
As the fourth-largest producer of coffee in the world with more than 814,629 tons of production per year, Indonesia hopes to see more Canadians enjoying our specialty coffee. We hope when they drink Sumatran coffee at Tim Hortons, for example, they will think of Indonesia.
Indonesia also hopes to send more fishery products and furniture to Canada. Indonesia’s total fishery product exports saw an 8.4-per-cent jump in 2015 with total exports that year amounting to $317.98 million, of which Canada imported $46.02 million. Indonesia’s furniture exports totalled $2.9 billion in 2015, with Canada importing $58.4 million of that.
We hope economic co-operation between Indonesia and Canada will grow rapidly in the coming years. In particular, Canada’s business communities can benefit from the simultaneous efforts by the Indonesian government to ease doing business in Indonesia. In fewer than two years, our government, under President Joko Widodo, has launched 14 economic stimulus packages, which, among others, provide tax holidays and shortened and simplified investment procedures. In 2016, Indonesia’s ease-of-doing-business rating by the World Bank leapt to 91st-best of 190 countries from 106th place in 2015. Indonesia’s economic outlook was also upgraded to positive from stable by Moody’s, Fitch and the Japan Credit Rating Agency (JCRA) in 2017.
By pursuing prudent economic policies, Indonesia has been able to maintain healthy GDP growth of five per cent. To further stimulate economic progress, Indonesia has embarked upon massive infrastructure development projects. It is currently building thousands of kilometres of railways and highways as well as airports and seaports across the archipelago. Between 2014 and 2019, Indonesia will need an additional electricity supply of 7,000 megawatts per year. This represents an opportunity for Canadian companies to be Indonesia’s partner through investment, in view of Canada’s technological advancement and innovation.
In an age when the digital economy is the new frontier, Indonesia enjoys a demographic dividend with its young, digitally savvy workforce. The government works hard to ensure that by 2019, Indonesia will have a reliable internet connection across the archipelago, with a fibre-optic network connecting all districts. As of March 2017, more than 130 million Indonesians are active internet users. Moreover, creativity among our younger generation offers a unique opportunity for entrepreneurs to collaborate in creative digital projects.
This trend opens up another area of potential economic co-operation between Indonesia and Canada. In anticipation of such a promising new era in economic relations, the two governments need to set up a comprehensive economic agreement that also incorporates the digital economy.
Indonesian Ambassador Teuku Faizasyah is also Indonesia’s permanent representative to the International Civil Aviation Organization (ICAO). Contact him at dubes@indonesia-ottawa.org or by phone at (613) 724-1100.
