Indonesia is predicted to be the world’s 5th largest economy by 2030 and it is right on Australia’s doorstep.

杭州桑拿

It is a massive country, spanning 5,000 kilometres across 17,000 islands, meaning there numerous religions and cultures to understand, especially for businesses.

Australian exports to Indonesia grew by 9 per cent last year.

It’s our 10th largest trading partner for both exports and imports.

They buy our wheat and live animals and we buy their oil and heating and cooling equipment.

Techonology is also a growing sector.

Singapore-based Aaron Chipper has been doing business in Jakarta for more than 20 years.

He’s currently the Chief Financial Officer of Fusion Payments, a business-to-business mobile solutions provider, and has seen the benefits of working in an expanding economy.

“Working with telcos we’ve seen the massive growth in say the rise of smartphones and a far more connected populous,” he said. “The use of internet as well has also grown as well as people using that to build small businesses.”

PricewaterhouseCooper Partner and Asia specialist, Andrew Parker, said Mr Chipper was operating in a growing part of Indonesia’s economy.

“Indonesia is a very young country so the use of technology, in particular mobile technology, is very, very prevalent. In terms of social media, it is one of the most active markets in the world. The opportunity in Indonesia is a consumer market. Indonesia has been a consumer growth story now for the best part of a decade.”

Half of Indonesia’s population is under the age of 30.

“Indonesia is a very young country so the use of technology, in particular mobile technology, is very, very prevalent. In terms of social media, it is one of the most active markets in the world.”

PwC predicts by 2020, there will be 14 million middle-class consumers.

“Those consumers as their incomes rise will spend money on things like technology, which they’re already doing, but also health, education services, financial services, these are all growing industries in Indonesia,” Mr Parker said.

Like Australia, those incomes rose as Indonesia benefited from the commodities boom becoming the world’s biggest thermal coal exporter.

The University of Melbourne’s Professor Ross Garnaut said China’s economic slowdown was hurting Indonesia.

“During the China-resources boom they became the biggest coal, biggest thermal coal exporter in the world, overtaking Australia for exports of coal for generating electricity. That gave rise to a lot of incomes growth, employment, government revenue while it was happening but just like out coal industry was dumped by the change of policy in China the chance of growth modelling, the Indonesian coal industry took a heavy hit as well, and that’s painful for many people especially in regional areas like Kalimantan and Sumatra where coal mining is important.”

GDP fell to 4.67 per cent year on year in the second quarter to its slowest rate since 2009.

Its current account deficit is at US$8.6 billion and the ratio of foreign debt to GDP stands at 34 per cent.

All up, it is in a worse position than in 2008.

That’s caused President Joko Widodo to introduce a new package of reforms cutting taxes to support employment while relaxing business regulations to attract foreign investment.

Professor Ross Garnaut was cautious.

“How these work in practise we’ll have to wait and see, the general tone of this government isn’t one of strong deregulatory activity, so I’d be surprised if the changes in reduced regulation are transformational.”

Indonesia’s currency has also taken a hit, but Professor Ross Garnaut said that was not necessarily a bad thing.

“How these work in practise we’ll have to wait and see, the general tone of this government isn’t one of strong deregulatory activity, so I’d be surprised if the changes in reduced regulation are transformational.”

“I hope they don’t get in the way of letting the exchange rate fall, one of the reasons why the indonesian government thought action was necessary was because the rupiah, has fallen a lot in value over the last couple of years, and that reminds many Indonesians of difficult times during the Asian financial crisis but that fall in the value of the currency is necessary after the resources boom to improve competitiveness and allow growth in industries other than coal.”

Aaron Chipper said it was reasonably straightforward to set up a business in Indonesia.

“On paper it is actually reasonably straightforward to set up a business. obviously everything is done in Bahsa-Indonesia so it takes a little time to figure these things out but also getting involved with local partners makes a massive difference so they can help guide you through the local processes.”

While on a much larger scale, Professor Garnaut said Malcolm Turnbull gave the Australia-Indonesia relationship a new start.

“I think he gives us a chance of a new start, the Abbott aberration was not seen very warmly in Indonesia. Some of the actions of the government was seen as being unnecessarily unproductive and raucous and I think that the new prime minister’s style will be more co-operative, [it] will be seen as being more respectful.”

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