Indonesia - 2010 Outlook Indonesia faces a new decade of tantalizing opportunities.

For the past 10 years, Indonesia has been grappling with a difficult transition in political systems: from the deeply entrenched patronage-style system of the !oeharto era, to a system based on democracy and the rule of law. Indonesia has made considerable strides, ha"ing accomplished two successi"e direct presidential elections #in $00% and $00&', and myriad local elections. (he military has withdrawn from politics, the press is genuinely free, and a "igorous new independent )nti * +orruption +ommission #,-,' has prosecuted scores of cases. -erhaps most importantly, the Indonesia public clearly appreciates and supports democracy. (his bodes well for continual elections promise long-term political stability, whereby power can change hands peacefully well into the future. )s a result of its achie"ement o"er the past decade, Indonesia now stands out among its regional neighbours. .emocratization has produced political stability, which in turn has pro"ided for macro-economic stability, low inflation, and strong domestic consumer demand. (he financial system is sound and Indonesia possesses a wealth of natural resources. For these reasons, in"estor interest has increased appreciably. In addition, there ha"e been e/pectations that the last year s re-election of -resident 0udhoyono * with a strong popular mandate * would enable the new go"ernment to focus seriously on fundamental reforms to unleash Indonesia s latent potential for higher growth. 1conomic 2utloo3 - Firmly 2n (rac3 Indonesia is likely to be one of the first economies to recover from the global recession with the third highest growth rate in the G20. 4.- growth is li3ely to pic3 up 5.56 in $010 and 7.56 in $011. (he economy s strength is generally attributed to three factors: Firstly, low dependence on e/ports. In $008 e/ports were roughly 906 of Indonesia s 4.-. In $00& domestic consumption is e/pected to generate 7:6 of 4.-. In $010 we e/pect pri"ate consumption to remain resilient due to lower ban3 lending rates #and higher consumer credit growth' and labour employment generated by real in"estment. !econdly, infrastructure pro;ects. (he e/pected rise in real in"estment will partially be attributed to F.I and infrastructure de"elopment, #through both fiscal stimulus and public-pri"ate partnership' particularly the construction of the trans-;a"a toll road networ3 and badly needed power plants. (he growth rate in real in"estment is e/pected to pic3 up to 8.:6 in $010, helped by low global interest rates. (hirdly, higher global commodity prices. Indonesia is a large net-e/porter of energy, including gas, coal and palm oil * Indonesia is the world s biggest palm oil producer. <ith prices of coal and palm oil rising, higher energy prices worldwide will help accelerate Indonesia s e/ports and 4.- growth.

=igher commodity prices are also e/pected to 3eep the trade and current accounts in surplus. <e e/pect the trade surplus to fall from >!., 90bn in $00& to >!. $8bn in $010 on the bac3 of higher imports of capital goods. !ource: ?ritish +hamber of +ommerce in Indonesia @anuary $010.