Home Blog Understanding Indonesia’s Role in the ASEAN Economy Business Licenses | Company Registration | Indonesia Understanding Indonesia’s Role in the ASEAN Economy InCorp Editorial Team 19 June 2024 5 minute reading time Table of Contents Overview of ASEAN as a Potential Economic Superpower Indonesia's Contribution to ASEAN Economy Why Indonesia is a Good Destination for Investment Investment Opportunities in Indonesia Start Incorporating with InCorp Indonesia As ASEAN ascends to its status as an economic superpower, Indonesia has become a pivotal player in the region’s remarkable growth to become an economic superpower. With its dynamic economy, strategic location, and cultural diversity, Indonesia stands as a beacon of development in the Southeast Asian landscape. This article will delve into Indonesia’s instrumental role in propelling ASEAN’s trajectory toward becoming an economic superpower. We’ll also explore the key factors contributing to its rise as an economic superpower. Overview of ASEAN as a Potential Economic Superpower The Association of Southeast Asia Nations (ASEAN) has become prominent because of its economic growth. ASEAN showed successful regional integration and geopolitical importance, which makes it a significant player globally. It’s no longer a secret that ASEAN’s economic growth has become one of the world’s fastest-growing consumer markets. With that said, the rising economic superpower now holds its reputation as the seventh-largest economy, solidifying its status as a global powerhouse. By 2030, around 70% of ASEAN’s population is expected to join the middle class. Therefore, transforming the region into a thriving consumer market that could rank as the fourth-largest economy globally. Despite economic challenges and the impact of the COVID-19 pandemic, ASEAN has demonstrated resilience, creating opportunities for sectors like e-commerce and online businesses. Indonesia’s Contribution to ASEAN Economy Indonesia is crucial in developing ASEAN, especially with its status as the most populous country in Southeast Asia. Since its inception as one of the five founding members of ASEAN in 1967, Indonesia has played a pivotal role in shaping ASEAN’s vision, direction, and objectives. The country actively promotes regional integration, security, and stability across Southeast Asia. Indonesia’s influence extends to enhancing economic integration within ASEAN. With the fourth-largest economy in the region, Indonesia is a major producer of consumer goods and raw materials. A remarkable illustration lies in Indonesia’s pivotal role in effectively finalizing negotiations for the Regional Comprehensive Economic Partnership (RCEP), recognized as the world’s most substantial free trade agreement. RCEP involves ASEAN and several key trading partners, including China, Japan, and South Korea. READ MORE:Maximizing Growth Potential in the ASEAN Economic Landscape Why Indonesia is a Good Destination for Investment As a country that actively facilitates investment in Southeast Asia, Indonesia possesses several advantages to be your following investment destination. AdvantagesDescriptionStrategic LocationIt’s strategically located for easy access to ASEAN and Asian markets, serving as an attractive alternative to China, with proximity to major shipping and transport routes.Growing EconomyThe country has consistently maintained a GDP growth rate above 5%, primarily propelled by domestic consumption, constituting approximately 60% of the GDP.Government ReformsThe government is committed to fostering foreign investment and has implemented robust economic reforms, offering attractive incentive programs.Ease of Doing BusinessForeign investors benefit from favorable and improving rankings for ease of doing business.Abundant WorkforceWith a labor force of nearly 137 million people, most of whom are under 30 years old, Indonesia offers a youthful and abundant workforce.Special Economic ZonesIndonesia is actively developing Special Economic Zones, which provide incentives and benefits for investors.Growing Positive Investment ListIt’s strategically located for easy access to ASEAN and Asian markets, serving as an attractive alternative to China, with proximity to major shipping and transport routes.Growing Consumer SpendingConsumer spending is rising, with a population exceeding 237 million, a rapidly expanding middle class, and a services sector contributing more than 40% to GDP.Network of Free Trade AgreementsIndonesia has signed over 14 Free Trade Agreements, offering trade advantages in Asia, ASEAN, Europe, and other global regions.Abundance of Natural ResourcesIndonesia boasts a wealth of natural resources, including coal, silver, gold, nickel, copper, bauxite, thermal coal, tin, petroleum, and natural gas. Investment Opportunities in Indonesia Indonesia offers several advantages as one of the excellent investment destinations in ASEAN. Here are the key sectors as options for investment: 1. Mining and Petroleum Indonesia’s mining and petroleum sector has been a cornerstone of its economy since the 1970s, contributing to about 60% of total exports. 2. Manufacturing Currently making up 20% of GDP, Indonesia aims to boost this to 25% by 2030, aspiring to become a manufacturing hub comparable to Germany and South Korea. 3. Services The services industry is the largest job provider, employing more than 45% of the workforce and contributing around 45% to GDP. Tourism and hospitality, especially the demand for hotels, are expected to rise significantly as more tourists and business travelers visit the country. 4. Agriculture Agriculture is vital to the economy, engaging one-third of the workforce. It includes small-scale farming and large plantations producing various goods such as rice, rubber, palm oil, tropical fruits, nutmeg, cocoa, and coffee. 5. Digital Economy Indonesia’s digital economy has experienced remarkable growth recently and is projected to reach USD 124 billion by 2025. A prosperous and tech-savvy consumer base is reshaping consumption patterns, offering ample opportunities for foreign investors. 6. Infrastructure In 2014-2019, the Indonesian government announced an ambitious infrastructure plan worth USD 350 billion, with plans to invest an additional USD 400 billion in infrastructure projects nationwide. Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Subscribe Start Incorporating with InCorp Indonesia Indonesia, one of the original five members who founded ASEAN in 1967, occupies a vital position in ASEAN’s progress. The nation has shaped ASEAN’s vision, orientation, and goals for years. Indonesia has numerous advantages that make it an attractive investment destination across various sectors. To seize this opportunity, collaborate with InCorp Indonesia, which provides company registration and business license services to simplify your business operations in the country. Read Full Bio Pandu Biasramadhan Senior Consulting Manager at InCorp Indonesia An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.