Indonesia, located in Southeast Asia, impresses not only with its natural resources but also with its economic potential. The active economic growth demonstrated by Indonesia motivates its government to aim even higher.
In this article, we will look at the country’s development prospects, government strategies, and reasons why you should consider investing and starting a business in Indonesia.
Indonesia’s prospects in the region and the world
As the largest country in Southeast Asia, Indonesia is confidently establishing its place on the global stage. Its territory, comparable in size to the USA, consists of over 17,500 islands and is rich in natural resources.
This significant natural wealth gives the country a competitive advantage, especially in the sectors of mineral extraction, coal, natural gas, oil, palm oil, and agribusiness. With its strategically important geographic location, Indonesia plays a key role in international trade and shipping by controlling vital maritime routes.
According to World Bank forecasts, Indonesia's GDP growth is expected to slow to 4.9% in 2024–2026 from the current 5%. The commodity boom is expected to fade, but infrastructure projects and reforms will drive both government and foreign investment. The services sector, including tourism, is also projected to grow, while exports may be limited by falling commodity prices.
The country’s income will increase thanks to tax reforms, while government spending will return to pre-pandemic levels. The World Bank emphasizes the potential for higher economic development and stability through reduced greenhouse gas emissions. Indonesia's shift to a low-carbon, climate-adaptive economy could be key to dynamic growth and effective poverty reduction.
Let’s take a closer look at the government’s development plans.
The Indonesian government is pursuing accelerated development and modernization of its key industries. Since 2005, it has been implementing a 20-year plan aimed at boosting economic growth and improving quality of life. This plan is divided into five-year phases, with the final phase concluding in 2025. Here are the main focus areas:
1. Infrastructure
Infrastructure development is a cornerstone of the government's strategy. This includes constructing new roads, bridges, and ports to ensure more efficient movement of goods and services. Expansion and modernization of airports are also planned to boost international tourism.
2. Business environment
Conditions for foreign investors and entrepreneurs in Indonesia are becoming more favorable. The government is focused on simplifying business registration and operations by removing bureaucratic hurdles, reforming the tax system, and strengthening property rights protections.
3. Technology and innovation
Indonesia is placing high hopes on the digital economy. The government emphasizes the development of high-tech industries and the IT sector. Creating a favorable innovation ecosystem includes supporting startups and attracting foreign investment in this segment.
4. Tourism
Tourism is one of Indonesia’s main economic drivers. The plan includes further developing Bali as a popular holiday destination and providing more support to entrepreneurs, both local and foreign, doing business on the island. The next step is to promote lesser-known regions by expanding infrastructure to attract more visitors.
5. Healthcare
The COVID-19 pandemic revealed the need to strengthen the healthcare system. Priorities include expanding access to healthcare, improving service quality, building high-tech clinics, and developing the pharmaceutical industry.
6. Education
Increased investment in education is also central to the government’s agenda. Creating high-quality education programs at all levels – from elementary to higher education – will help train the specialists required for future economic growth.
7. Energy
Clean energy is a top development priority. The government aims to reduce dependence on coal-fired power plants and is actively investing in renewable energy sources such as solar, wind, and hydro. New technologies will help increase the efficiency of natural resource use.
In summary, Indonesia's path to prosperity lies in the comprehensive modernization of its key economic sectors. By implementing its development strategy, the country plans to achieve significant national progress and boost its global competitiveness.
Given the positive outlook for continued economic stability and growth, now is the ideal time to start a business in Bali or other regions of Indonesia. If you're interested in leveraging the country’s potential for your company, reach out to the specialists at Good Luck Group for reliable support at every stage of your business journey. With our help, you can register your business in Indonesia, open a bank account, get legal and accounting assistance, and much more – without unnecessary bureaucracy or extra costs. Contact us with your question, and we’ll be happy to advise you!
