By Muhammad Al Aula/Doha
Thanks to Dr Arno Maierbrugger for bringing Indonesia into the focus of Qatar’s radar as a big investment opportunity in the Pacific Rim (“Indonesia, the next big opportunity for Qatar”, Gulf Times, May 12)
Indonesia is indeed an exciting economic player not only in norm-setting arenas like its in-depth involvement at G-20 or Asia-Pacific Economic Co-operation (APEC) but also globally. Its vibrant real economic development has opened up many opportunities for investors around the world.
Home for 240mn people with 48% in the middle class level, according to a study¹, Indonesia has had steady development under a very prudent fiscal stewardship which focused on controlling debt-to-GDP ratio.
It is not a coincidence that Moody’s and Fitch² have uplifted Indonesia’s credit rating to investment grade status as they see the country’s fiscal policy has been very disciplined to reduce the debt-to-GDP ratio from a worrying 95.1% in 2000 to a very confident of less than 25% in 2011. It is the highest in Asean, apart from Singapore which has no government debt³.
It is worth mentioning that the country’s policy has been proven to be resilient under the economic crisis in 2008 when Indonesia still recorded positive growth together with China and India.
As Qatar is very active investing their resources to every corner of the world, Indonesia will be a perfect destination for the Middle East heavyweight investor.
In five years, Indonesia Investment Co-ordinating Board has identified a massive $160bn of investment is needed, in which $60bn will be publicly funded. This investment is planned to build around 20,000km of roads, 15,000 MW of power plants, as well as other infrastructure including ports, oil refineries and other supporting infrastructure.⁴
That investment in a massive market with a large proportion of middle class people, which is also perfectly represented by Indonesian employees at the oil and gas sectors in Qatar, will guarantee closer ties between the two countries.
The presence of Ooredoo and QNB’s portfolios in the country, with all their optimistic plans to enlarge their business activities there, is a testament of what Indonesia can promise.
From the trade side, any follow-up action from the Qatari side to invest more in Indonesia will, no doubt, bring a significant increase to the current optimistic figures. The statistics from the Indonesian ministry of trade reflects the significant increase of the total trade from $683mn in 2011 to $1.6bn last year.
Qatar’s exports to Indonesia jumped dramatically from $600mn in 2011 to a staggering $1.56bn in 2012. At the same time, Indonesia’s exports to Qatar surged to $92.7mn last year from $74mn in 2011.⁵
This trade balance will be much more beneficial when Qatar investment troops project their strategic goals onto the giant in the South East Asia, as Dr Arno Maierbrugger rightly puts it, in “a move that would greatly impact the trade balance of the two countries”.
* The writer is third secretary for economic affairs at the Indonesian embassy in Doha. He is a graduate from the School of Law, University of Manchester, UK.
1) http://www.nielsen.com/us/en/newswire/2012/reaching-indonesias-middle-class.html
2) http://www.tradingeconomics.com/indonesia/government-debt-to-gdp
3) http://www.bkpm.go.id/contents/general/4/sound-economy
4) http://www.bkpm.go.id/contents/p23/ppp-infrastructure-show-case-projects/23
5) http://www.kemendag.go.id/en/economic-profile/indonesia-export-import/balance-of-trade-with-trade-partner-country?negara=156