Indonesia’s Investment Climate by Rani Jarkas

Indonesia has become a favorite emerging country for international investors, as ongoing reforms in areas such as macroeconomic framework, banking supervision, accounting standards, transparency and governance issues by the government have enhanced the local investment climate. Moreover, the country possesses positive fundamental elements, including a huge population, growing middle class and young workforce, enormous domestic market, endowment of a wide variety and abundant natural resources like natural gas, coal, geothermal, palm oil, cocoa, tin, nickel and bauxite as well as a pool of diversified import export markets.

Map of Indonesia (ranijarkas.wordpress.com)

Map of Indonesia (ranijarkas.wordpress.com)

Indonesia has regained the confidence of international investors after the Asian Financial Crisis in 1997‐1998. To get its economy back to a strong footing and increase its credibility, Indonesia has undertaken the following reforms: Making changes to the macroeconomic framework; Strengthening supervision of the banking industry and scrutiny of accounting standards, and Improving transparency, enhancing governance issues, and reducing corruption.

Through a more flexible exchange rate regime and an inflation‐targeting framework, Indonesia has created a more stable macro economy. The better banking system helps stabilize and lower non‐performing loans together with increasing the profitability and efficiency of banks in general. Furthermore, more transparency on information and data reduces investors’ concerns over governance and other issues, leading to increased confidence and investments.

The results of those reforms are evidenced from the positive growth in Indonesia during the global economic crisis in 2008‐2009. In 2009, Indonesia managed to grow its GDP by 4.6% when the advanced economies registered a negative growth roughly in the 3%‐5% range. Indonesia grew by 6.2% in 2012 and in 2014, stronger economic growth is expected around the lower end of the 5.8-6.2% range. Indonesia’s economy grew by 5.7% in 2013, making “The World’s Most Stable Economy in the Last Five Years” according to The Economist Magazine. Future economic expansion is expected to include more inclusive growth as nominal per-capita GDP is expected to quadruple by 2020, according to a Standard Chartered report.

Rani Jarkas, the Chairman of Cedrus Investments.

Rani Jarkas is a highly experienced financial services executive, with over 20 years of international banking experience. Currently, Mr. Jarkas is the Chairman of Cedrus Investments, a global boutique investment firm. Cedrus’ domain expertise is in life sciences, natural resources, energy, cleantech and nanotechnology. – Rani Jarkas

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