<img class="alignnone size-full wp-image-2468" alt="Post - reasons to be cheerful" src="http://redwingconsulting.com/wp-content/uploads/Post-reasons-to-be-cheerful.jpg" width="700" height="200" />
<h4 style="text-align: justify;"><b>From both a macro and micro perspective Indonesia continues to deliver strong, cross-sector economic growth numbers and a propensity for rapid changes in consumer behaviour as increasing prosperity reaches all levels of society. In turn this represents an opportunity for foreign institutions to take a long, hard look at the investment prospects arising in what is both Southeast Asia’s largest economy and the world’s fourth most populous country.</b></h4>
<h5 style="text-align: justify;"><b>Good news in many places</b></h5>
<p style="text-align: justify;">Numerous media reports this year have highlighted the accelerating momentum of the Indonesian economy - both nationally and regionally - as well as the positive downstream impact on consumer attitudes and preferences.</p>

<ul>
	<li>Fastest growing consumer market after China and India (<a href="http://www.smartplanet.com/blog/bulletin/the-country-with-fastest-growing-consumer-market-after-china-and-india/17978" target="_blank">link - CBS blog)</a></li>
	<li>Investment levels in Indonesia will reach a new high in 2014, up one third on expected 2013 levels (<a href="http://www.thejakartaglobe.com/business/actual-investment-to-grow-to-51b-in-2014-chatib/" target="_blank">link - Jakarta Globe)
</a></li>
	<li>Consumer confidence is on a sustained high, with Indonesians being rated as “very optimistic” (<a href="http://www.masterintelligence.com/content/intelligence/en/research/press-release/2013/indonesia-tops-consumer-confidence-in-asia-pacific--mastercard-i.html" target="_blank">link - MasterCard Intelligence)
</a></li>
	<li>Conspicuous consumption fuelling demand across multiple product sectors (<a href="http://www.guardian.co.uk/world/2012/dec/18/motorbikes-indonesia-economy-consumer-goods" target="_blank">link - Guardian</a>)</li>
	<li>Economic prosperity and political influence is spreading to the secondary cities in Indonesia (<a href="http://www.bloomberg.com/news/2013-04-10/ghost-of-suharto-seen-in-boomtowns-leading-indonesia-s-growth.html" target="_blank">link - Bloomberg</a>)</li>
	<li>The 3 Cs - Cola, Coffee and Cigarettes - signify the strength of the investment case for Indonesia (<a href="http://beta.fool.com/leokornsun/2013/04/10/the-three-cs-of-investing-in-indonesia/29959/" target="_blank">link - Motley Fool</a>)</li>
	<li>Indonesia is emerging as the next major automotive market after China and India (<a href="http://www.austrade.gov.au/About-Austrade/News/Latest-from-Austrade/Indonesia-emerging-as-the-next-major-automotive-market" target="_blank">link - Austrade</a>)<b>
</b></li>
</ul>
<h5 style="text-align: justify;"><b>Rapid growth driven by strong fundamentals</b></h5>
<p style="text-align: justify;">By any measure, the outlook for technology investment in Indonesia looks good: a base of 55 million internet users today (larger than Korea’s) will grow rapidly to 125 million users by 2015 (more than Japan’s). And in parallel with this expansion, everything from e-commerce to online media to B2B applications will grow rapidly.</p>
<p style="text-align: justify;">This growth is driven by one of the world’s most vibrant mobile markets: Indonesia’s huge and growing mobile market now has 278 million subscribers, 15% of mobile users already have smartphones, and the mobile ad market delivered around 200 billion impressions last year, second only to the US. On top of this, Indonesia is in the top five countries for both Facebook and Twitter usage, with Jakarta being the world’s most active Twitter city.</p>
<p style="text-align: justify;">Indonesia’s internet market is likely to offer some of the biggest opportunities for tech investors in Asia over the coming decade.</p>

<h5 style="text-align: justify;"><b>A huge consumer market that experiences step-change growth spurts</b></h5>
<p style="text-align: justify;">Indonesia’s middle-class is already big, and it’s booming. It will double over the next seven years to 85 million people, and by 2030 there will be 135 million middle-class consumers. At that point, Indonesia’s economy will be the 7th largest in the world, exceeding the economies of both Germany and the UK.</p>
<p style="text-align: justify;">Indonesia is a young, tech-savvy nation, full of people who are extremely enthusiastic to own and use the latest gadgets and technologies. The main barrier to ownership is not interest or desire, it is price.</p>
<p style="text-align: justify;">So the fact that consumer expenditure is increasing at the same time as technologies are becoming cheaper means that the price-affordability balance for the average Indonesian can change very quickly. Indonesia experiences massive step-changes of growth as waves of pent-up demand are suddenly satisfied when the technology hits key price points.</p>
<p style="text-align: justify;">And no less than 60% of Indonesia’s economy comes from domestic demand, so Indonesia is a huge consumer market.</p>

<h5 style="text-align: justify;"><b>A unique tech sector in Asia</b></h5>
<p style="text-align: justify;">Indonesia is both a young country (with an average age of 28) and is enjoying the payoff of a demographic dividend (i.e. the proportional size of the working population is still growing). Unlike China, which faces the upcoming challenges of an aging population, and India which must manage huge population growth, Indonesia has the dual tailwinds of healthy population growth rates and a steadily expanding workforce.</p>
<p style="text-align: justify;">Indonesia’s youthfulness also leads to a very active tech sector. Literally hundreds of startups have been formed over the past few years, with the pace of business formation accelerating from 2010 onwards. Many of the startups have a mobile focus, reflecting the mobile-first nature of Indonesia, with numerous others focused on social media, e-commerce, payment platforms, online advertising and B2B markets.</p>

<h5 style="text-align: justify;"><b>But this is not the whole story</b></h5>
<p style="text-align: justify;">The real potential of the tech sector is in providing services that meet the specific needs of Indonesia’s growing consumer class.</p>

<ul style="text-align: justify;">
	<li>Improving the education of their children</li>
	<li>Enabling them to make better healthcare choices</li>
	<li>Providing more convenient ways to make bill payments</li>
	<li>Providing online shopping experiences that reflect their social behavior patterns</li>
	<li>Making it easy for them to travel within Indonesia, and facilitating their increasing desire to make overseas trips</li>
</ul>
<p style="text-align: justify;">So there is a major opportunity on the upside as the Indonesian tech sector moves from a perspective of seeking to localise international websites to one where it develops unique local solutions. Somewhat paradoxically, these local solutions will require overseas capital and expertise to bring in the requisite skills and experience necessary to build large-scale online companies.</p>

<h5 style="text-align: justify;"><b>Huge rewards await those willing to invest capital and skills</b></h5>
<p style="text-align: justify;">What Indonesia needs from foreign institutions are:</p>

<ol style="text-align: justify;">
	<li>Investors who are prepared to invest not just in physical assets and service delivery, but also to invest in building the skills and expertise base in Indonesia.</li>
	<li>Investors who are willing to take an initial 3-5 year time perspective, and who recognise the benefits of investing in Indonesia for the long term.</li>
	<li>Investors who are prepared to work closely with local entrepreneurs in order to understand local needs and to fund the development of solutions relevant to this huge market.</li>
</ol>
<p style="text-align: justify;">The end-game win will be to get in at the ground floor of the internet revolution in the world’s fourth-largest country by population, and an opportunity to establish a beachhead as Indonesia moves to becoming one of the world’s largest consumer market economies.</p>
<p style="text-align: justify;"></p>

<h1 class="h s-2">fastest growing consumer market after China and India</h1>