!! Indonesia Economic Outlook !!

Key Drivers of Economic Growth

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Indonesian government projects robust growth and improving economic indicators during 2010-2014
Nominal GDP per capita (2010-2014) US$ Projected Unemployment Rate (2010-2014)

CAGR: 11%

Projected Poverty Rate (2010-2014)

!! Inflation to remain moderate, 46 %

Source: Ministry of Finance

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Positive view of Indonesia is increasingly shared by global players

IMF Projected Nominal GDP Growth (2009 2015)
Russia Indonesia China India South Korea Brazil Turkey USA Japan

Among the 18 largest economies, Indonesia is projected to experience 2nd fastest nominal GDP growth (Russia #1) from 2009 to 2015

ASEAN

(excl. Indonesia)

Source : International Monetary Fund, World Economic Outlook Database, April 2010

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Updated: IMF projects Indonesia will achieve the fastest growth among the 18 largest economies
IMF Projected Nominal GDP Growth (2009 2015)
Indonesia Russia China India Brazil Turkey South Korea Japan USA

ASEAN

(excl. Indonesia)

Source : International Monetary Fund, World Economic Outlook Database, October 2010

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Indonesian economy will increasingly dominate ASEAN and will begin surpassing European markets
Indonesia Economic Growth (nominal) ($ billion)
CAGR 15%

CAGR 12.8%

Indonesias economy as % of ASEAN-6 ASEAN

(Total 11 Countries)

42% 40%

49-54% 46-51%

54-66% 49-59%

European Countries: Spain Netherlands 46% 84% 57-59% 100-104% 78-86% 135-149%

Source : International Monetary Fund, World Economic Outlook Database, October 2010

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Indonesia, according to Yayasan Indonesia Forum, is on the path to becoming a high income country
Indonesia Visi 2030 GDP per capita Projection
1992
Lower Middle Income Country

2015

Upper Middle Income Country

2023

High Income Country

15% CAGR SUSTAINABILITY Actual: GDP per capita has reached US ACCELERATION $3,000 in 2010 PREPARATION 12.8% CAGR

10.7% CAGR

3,000

Three Growth Stages

!! Preparation: Revamp of growth systems, technology adoption, design for growth !! Acceleration: Industrialization, latest technology, high growth of services sector !! Sustainability: Value adding industrialization, focus on domestic economy and social welfare
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Source: Yayasan Indonesia Forum, team analysis

By 2030, Indonesia will surpass Brazil and Russia to become ! the #5 economy in the world
Projected Top Economies by GDP

2010 1)! Europe 2)! USA 3)! China 4)! Japan 5)! Brazil

2020 1)! USA 2)! Europe 3)! China 4)! Japan 5)! Brazil

2030 1)! China 2)! USA 3)! Europe 4)! India 5)! Indonesia

13) Indonesia 9) Indonesia

Source: 2010-IMF, 2020-Team analysis using CAGR 2010-2014, 2030-Yayasan Indonesia Forum, team analysis
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Taking a longer term view, Indonesia is on the path to becoming a global economic player
Key Targets Become #5 economy in the world

Indonesia Visi 2030

!! GDP per capita will reach US$18,000 !! Huge market of 285 million consumers

Optimize natural resources

!! Rich in cultural heritage and natural attractions " become top 10 global tourist destination !! Achieve energy independence

Even or shared distribution of wealth

!! Indonesia to enter top 30 HDI (Human Development Index) countries in the world

30 companies in Fortune 500

!! From 10 companies in Top 2000 to 30 companies in Top 500

Source: Yayasan Indonesia Forum Notes: HDI takes into account life expectancy, literacy, and GDP per capita

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!! Indonesia Economic Outlook !! Key Drivers of Economic Growth

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Four key factors stimulating growth of economy

!! Maturing democracy Political Environment !! Regional autonomy !! Supportive regulations " balanced open markets !! Strengthening institutions Integration with regional and global network !! Efficient domestic production chain !! Commodities with global competitive advantage !! Integration into global production chain !! Rapidly growing productive population Demographics !! Balanced gender ratio !! Low dependency ratio Resilient Financial System !! Government debt and foreign reserves at healthy levels !! Improving investment climate !! Indonesian banks performed well during global crisis
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Demographics: growth of productive population will fuel stable and rapid economic growth
Expected Population Pyramid (20002020)
Male Indonesia2000 Female Male Indonesia2020 Female

Population (in millions)

Population (in millions)

Total (million) Male (million) Female (million) Productive population (2055 years old)

214 107 107 103 (48%)

268 134 134 136 (51%)

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Demographics: in the longer run, Indonesia will have a very favorable dependency ratio
2030 Expected Dependency Ratio (%)

Indonesia 2010 Dependency Ratio: 48.7

!! Indonesia to obtain demographic bonus and raise savings potential : ! Reduced birthrate " lower dependency ratio ! Increase in life expectancy " longer productive age !! Excess productive population may be exported to fill employment gaps in other markets

Source: United Nations Population Division (medium variant data used) Note: Dependency ratio is estimated figure: total population age 0-14 + above 65 divided by total productive population (age 15-65)
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Resilient Financial System: Indonesia is well prepared for external economic shocks
Government Debt to GDP ratio (1999-2009) Foreign Reserves (2005-3Q2010)
(in USD Billions)

2% R: 2 G A C

!! Healthy balance sheet " good prospects for Indonesia to be upgraded to Investment Grade next year !! Approaching record levels for both Government Debt to GDP and foreign reserves
Source: Ministry of Finance
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Resilient Financial System: however, Indonesias banking penetration still lags its neighbors " huge upside
TOTAL DEPOSITS PER GDP * TOTAL LOANS PER GDP *

Indonesia

Indonesia

Malaysia

Malaysia

Singapore

Singapore

Thailand

Thailand

China

China

India

India

Note: *All data based on 2008 figures, except : Singapore and India (Q2 2008), Indonesia (2009) Source: Countries Central Banks, Researchandmarket.com, Country Report

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Near term challenges need to be addressed to achieve balanced and sustainable growth and realize the vision
8 Focus Areas of National Economic Committee (KEN) Input Requirement Action Steps Targets

Energy Sufficiency

Unemployment Target: 5-6%

State and Private Financing

Bureaucratic reforms (Government and SOEs)

Infrastructure and Connectivity

Sustainable Growth Target: 7.7%

Food and Water Sufficiency

Poverty Target: 8-10%

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Build Indonesian Human, Build National Identity

Development of Human Physical Indonesia

Structuring the quantity and improving quality create a productive, innovative and entrepreneurial human Knowledge economy with a population of productive, creative, innovative and entrepreneurial spirit

Education Health

Indonesian Population as Capital of Development !Jobs provider

Development of Human Life Indonesia

Improvement of the social order creating a culture of cooperation, competition and positive conflict

!Skilled workforce !Market with high purchasing power

Reconstruction of Social and Cultural

Multiculturalism pro-existence

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Human development is the basis for Indonesia to reach the world stage

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Indonesia to become a developed country

Indonesia Developed Country Towards a World Stage
Entrepreneurship and SMEs, Business Competition, Trade Logistics, International Trade

Production Process Human Development

Creating added value through the production process and various support elements

Management Development
Government Support and Effective Bureaucracy

Building a complete Indonesian person Quantity, Quality and Spirit

Natural Resources
Managing natural resources through Agriculture, Tourism, Environment

The Unity of Indonesia

Political systems, Defense and Security, Law Spatial Planning and Land systems Communication and Transportation systems
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Thank You!

Chairul Tanjung
Ketua Komite Ekonomi Nasional (KEN)