How Indonesia Did Business in 2024

How Indonesia Did Business in 2024: An Overview of Indonesia's Economy in 15 Key Points

In 2024, Indonesia's economy reflects dynamic growth and transformation, driven by robust government policies, strategic investments, and an unwavering focus on development. With a projected GDP growth of 5.2%, the nation capitalizes on its domestic consumption, thriving industries, and global trade partnerships.

1. Steady Economic Growth

   • Indonesia’s economy is projected to grow by 5.2%, driven by strong domestic consumption and investments.

2. Manufacturing Sector as a Growth Driver

   • The backbone of economic expansion, the manufacturing sector focuses on expanding value chains, particularly in high-value areas like mining and quarrying.

3. Mining Industry Highlights

   • Rich deposits of coal and nickel contribute significantly to economic growth.

4. Services and Construction Sector Impact

   • Wholesale and retail trade, alongside motor vehicle and motorcycle repairs, play a vital role. Infrastructure projects drive growth in the construction industry.

5. Agriculture's Contribution

   • Agriculture, forestry, and fishing sectors account for 12.5% of GDP, emphasizing reliance on natural resources.

6. MSMEs as Economic Pillars

   • Micro, Small, and Medium Enterprises (MSMEs) make up 99% of business units, contribute 61% to GDP, and employ 97% of the workforce.

7. Challenges for MSMEs

   • Limited access to finance due to stringent lending criteria, lack of collateral, and insufficient credit histories hinders MSME growth and export capabilities.

8. Rising Foreign Direct Investment (FDI)

   • FDI growth reflects international confidence, partly driven by Indonesia’s participation in the Regional Comprehensive Economic Partnership (RCEP).

9. Infrastructure Investments

   • Substantial investments in roads, ports, airports, and digital connectivity aim to reduce logistical costs and stimulate economic activities.

10. Logistics Sector Challenges

    • Despite investments of $450 billion, logistical costs remain high (21-23% of GDP), with regulatory barriers and infrastructure inefficiencies persisting.

11. Digital Advancements in Logistics

    • Tools like the National Logistics Ecosystem (NLE) and the Indonesian National Single Window are being adopted to streamline logistics operations.

12. Environmental Policies and Achievements

    • A moratorium on new palm oil plantations led to a 75% reduction in deforestation between 2019 and 2020.

13. Sustainability Goals

    • Indonesia aims for net-zero emissions by 2060, requiring scaled-up policies and sustainable practices across industries.

14. Strategic Development Focus

    • Approaching the end of its 20-year development plan in 2025, Indonesia prioritizes self-reliance, competitiveness, and comprehensive tax reforms.

15. Dynamic Growth Potential

    • Government policy reforms, strategic investments in infrastructure and technology, and the focus on manufacturing and MSMEs position Indonesia for significant growth.

REF :-

1. CRIF, July 2024

2. Climate Impacts Tracker Asia, July 2024

3. Fitch Ratings, February 2024