Indonesia Matters is an ongoing campaign aiming to deepen relations between Indonesia and the UK. This supporting information has been prepared for interested individuals to incorporate into their communications. If you are planning social media activity, please use the hashtag #IndonesiaMatters.
Why Indonesia Matters
250m people, a rapidly growing middle class, abundant natural resources and political stability make Indonesia a fast emerging power. Currently the 16th largest economy in the world[i], with economic growth of 5-6%pa for the last 10 years[ii], it is predicted to become the 7th largest by 2030[iii]. Only China, the US, India, Japan, Brazil and Russia will be bigger.
Indonesia is the 4th most populous country in the world, 60% below the age of 30, with 55m skilled workers[iv]. It boasts a middle class of 45m people; larger than the population of Australia, or Malaysia and Singapore combined[v]; and is expected to grow to 135m by 2030.
Indonesia is the world’s 3rd largest democracy[vi]. Improving the business environment and national infrastructure are top priorities for the Government led by President Joko “Jokowi” Widodo. Indonesia is ranked 91 out of 189 in 2016 (up 15 positions from the previous year) in the latest Ease of Doing Business report. Indonesia is the 3rd largest market in the world for Twitter and 4th largest for Facebook[vii].
Indonesia is nearly 40% of the ASEAN economy. With the creation of the ASEAN Economic Community last year, the region comprises 10 countries with 633m people, and is expected to grow at a continued 5% pa over the next 25 years[viii].
Total trade (goods and services) between the UK and Indonesia in 2015 was £2.243b (UK exports up 11.5%). 72% of top executives and CEOs polled are positive about Indonesia[ix]. There is potential for much more:
- Aviation: According to IATA, Indonesia will become the sixth largest market globally for air travel, with up to 270 million passengers, by 2034.x This massive expansion will present opportunities for the UK aerospace sector in supplying aircraft and technical support.
- Airports: Government has set a target to complete maintenance of 296 existing airports, construction of 15 new airports, and Air Traffic Control facilities.The Government’s ambitious infrastructure plans will offer many more opportunities.
- Asian Games 2018: Building on London 2012, there will be opportunities in large-scale event management, broadcasting, power, communications, infrastructure and design.
- Defence: Indonesia is by far the second largest defence market in South East Asia after Singapore. Indonesia’s has doubled its defence budget over the last 5 years to USD7.2bn and the Parliament announced its intention to again double the country’s defence budget to USD15bn (approximately 1.1% GDP) by 2020.
- Education: With over 60 million students and almost 4 million teachers in 340,000 educational institutions, Indonesia is the third largest education system in the Asia region and the fourth largest in the world. The Indonesian Government plans to train 130 million skilled workers by 2025 and build 341 vocational schools in 2016. xi
- Marine: There are 240 active shipyards in Indonesia supporting the development of the maritime sector. The number of national vessel grows 134% from 2005 to 2014, from around 6,000 vessels to 14,150 units. xii
- Oil and gas: Indonesia is the world’s 10th largest gas producer and its petroleum consumption is around 1,700,000 barrels of oil per day xiii. Total market size in terms of spending on current operations/new projects in 2015 was £13.4bn and there are supply chain opportunities in new and upcoming projects.
- Rail: Indonesia is aiming to add 3,258 km to the existing railway network including: MRT, LRT, high speed train, tram in almost all main islands in Indonesia. This plan will require £18bn of investment. xiv
- Smart Cities: Indonesia is developing plans for 15 smart cities to manage cities wisely and increase residents’ welfare. The Indonesian Government plans to spend more than £320 billion on infrastructure projects over the next 5 years.
- Waste: In 2014, Municipal Solid Waste (MSW) produced was over 70m tons and growing rapidly in line with economic growth. Annual population growth of 1.5% and urbanisation rates means over half of the population live in urban areas. In early 2016 Presidential Decree 18 was issued to accelerate the development of waste to energy in 7 cities.
Both democratic states, multi-faith societies and island nations; Indonesia and the UK have shared values and interests:
- The UK and Indonesia have a history of science and innovation partnerships: 1,200 joint publications between 2000 and 2014. Indonesia is a partner country for the Newton Fund – the UK’s £375m official development assistance fund that aims to promote research and innovation cooperation.
- Football remains the most watched game in Indonesia. There are approximately 55 million Manchester United fans alone and all the major English teams have huge fan clubs.
- The Union flag remains the most reproduced fashion emblem in Indonesia and is commonly found on public transport, clothing and stickers.
- There is huge demand for UK culture and creativity with music ranging from the Rolling Stones to Coldplay to Adele to Ed Sheeran; and movies such as Mr Bean, Harry Potter, James Bond, and Shaun the Sheep. Demand for Indonesian creativity is growing worldwide with designers showcasing their collections in London and creating costumes for blockbuster films.
As the UK is in Europe and beyond, Indonesia is a regional and global player:
- Indonesia is a member of the G-20, has chaired the WTO Ministerial, the Asia-Pacific Economic Cooperation (APEC), the Open Government Partnership along with the Global Fund to Fight AIDS, Tuberculosis, and Malaria.
- Indonesia is at the heart of the ASEAN: hosting its headquarters; leading EU-ASEAN trade discussions; and ASEAN-China negotiations on the South China Sea to ensure the future stability of the major trading route.
- Indonesia has retained its seat at the UN Human Rights Council (UNHRC), is a major contributor to UN global Peacekeeping Operations, and is campaigning for a non-permanent seat on the UN Security Council.
Overseas Business Network Market Access Support
Many British SMEs have already benefited from the escalated engagement. Click here to view their success stories and testimonial.
[vii] We Are Social, Tech in Asia, The Marketers, Social Bakers, 2014 Figures
[viii] Ernst & Young. 2012. Rapid-Growth Markets Forecast: Autumn 2012