Thursday, 1 October 2015

How To Make More! Huge Opportunity! 250M People To Join The Middle Classes

Wednesday, 30 September 2015

How To Make More! Huge Opportunity! 250M People To Join The Middle Classes

Mostly, I write balanced bullish articles about Indonesia, its beauty and its opportunity.  This article is no different.  I am also convinced that with 250M people it offers itself and the world a truly foreseeable, sustainable economic growth.  After all, Indonesia has a successful entrepreneur at its helm, a wealthy man in his own right.  He is portrayed as a man of the people and appears to have no truck with the old ways of corruption and graft.

However, all is not moving at the required speed so what's wrong? Particularly given Indonesia's past, their new desire to move forward and implement procedures;  they are at least giving us the sight of a level playing field. But, all is not as it seems.
  • Indonesia wants retirees, they want them to buy land and villas and live here in peace and quiet. That continues to not be possible as the rules around land and property ownership are vague, i.e. Can you own? Can you lease? Is the lease's legal today and will they still be legal tomorrow?.
  • Indonesia wants outside investment, so why not?  I would caution that regulation and consistency are still an issue; as and when this is resolved its clear that Investment will come.  After all, where better than a green field site with a country determined to build an Infrastructure, along with a vast labour force willing and able to work.

However, new roads, sea and rail links, bringing access to high population hubs are only part of the story. It is factories and manufacturing that will alleviate the unemployment. Unemployment which has occurred from the worldwide resources' downturn. The factories that will come are from China, Europe and the Americas.  Therefore, regulation needs clarity and consistency.

As an example and perhaps a role model.  Nearby countries have for a long time encouraged growth, encouraged foreign firms and incentivized investment. Malaysia provides superb infrastructure, ports, glitzy buildings and a relaxed regulatory environment.  In fact their policies are not only pro foreign investment they are remarkably consistent.  Consistencies are a staple for us in the West, in Indonesia they appear a luxury; this has to be addressed.

The success of Malaysia whilst it is good, it would pale into insignificance against a burgeoning Indonesia as and when this opportunity lifts off. Business forums complain of red tape, that regulation appears to be introduced whimsicaly. Regulations are then changed in a hasty manner. It is generally felt that the Indonesian government infer a take it or leave it attitude towards foreign investment. The result of which foreign investors are firmly sitting on their hands when it comes to Indonesia.

Indonesia has grounds to be proud, they have indeed made tremendous progress, you can easily see this as you look to the Jakarta skyline. They do have a sizeable domestic market and all things being equal, it is they that should benefit from it. But, other countries have also had sizeable markets, but, they have for a long time realized, enjoyed and benefited from outside assistance.

In 1997 Indonesia along with Asia experienced a currency and economic crisis.  It was only by chance, due to Indonesia's archipelago being rich in resources, that in 2004 a resources led recovery took hold. That recovery has now ended as the world economy and in particular China has slowed.

Therefore, the government is right in their ambitions to move the economy away from resource dependency and more towards manufacturing and consumerism.  But, Indonesia is losing the perception game and it must now support a more friendly approach to the global investment world, if it is to realize its dreams.

I now dream of the day that the people can realize their ability and perhaps their right to move towards the middle classes.  Participating as paid up, tax paying members of the Indonesian economy as well as the global community. Since there is not a more deserving and long-suffering race of people.

I have real faith that the Indonesians have chosen a good leader. As I believe he has the right initiatives in place; what we are seeing are just teething problems from an introverted government, transforming into that of an extrovert launching itself onto the International stage.

So as, I have said in the past it is the early bird etc..

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