Indonesia is among the hottest markets for businesses seeking to tap the rapid growth in Asia and Singapore firms which already know the nation should begin looking at its energy- and mineral-rich eastern islands, said Stephen Bailey, CEO of the Washington-based political risk consultancy Frontier Strategy Group (FSG).
Considering the size of Indonesia’s population and steady increases in household income, the country is catching up with several higher-profile markets in Asia, said Mr. Bailey in an interview with The Business Times.
“At 230 million, its population is significantly larger than Brazil’s. Income per capita is still low, comparable to India’s, but we expect to see 2010 having registered a 25 percent increase. That translates into a huge opportunity for consumer-facing industries, which we expect to grow at least 15 percent per year over the next four years,” he said.
Mr. Bailey, however, warned against seeing Indonesia as one huge country. Rather, it should be seen as a diverse mix, with substantial intra-country transportation costs, multiple languages and a pervasive “insider” culture.
Thus, executives are advised to take a staged approach to investment by starting in Jakarta and the Java island, then moving to the eastern islands.
Mr. Bailey, however, reckoned that Singapore firms which know the country well should begin looking at the eastern islands, where investors and funds are being drawn by the discovery and production of natural gas and other resources. While the eastern islands are currently underserved and underdeveloped, they have substantial business potential that is still untapped by foreign firms, he added.