Indonesia, Southeast Asia's largest economy, is rapidly emerging as a powerhouse. Boasting a GDP over US$ 1 trillion, it has navigated global challenges ranging from trade wars to the pandemic with impressive resilience and growth. Its strategic location, rich natural resources, and a young, talented workforce have been key to Indonesia’s rise. Embracing digitization and sustainable industries like electric vehicle battery production have further strengthened its position.
Deutsche Bank's Global Head of Emerging Markets and Asia Pacific Research Sameer Goel, sees a deeper economic transformation underway in Indonesia into a regional powerhouse.
What’s unique about Indonesia’s economy?
Currently the world's largest producer of nickel, second largest producer of tin, and fourth largest producer of bauxite, Indonesia owns an abundance of natural resources critical to building an ecosystem for EV battery manufacturing.
And it's not just all about natural resources. Indonesia's large population and rising wages have fuelled growing purchasing power and a buoyant consumer market too. Unlike most economies in the region, whose working age populations have already peaked or are close to peaking, Indonesia is still reaping demographic dividends.
What makes you optimistic about Indonesia’s growth potential?
We see several comparative advantages that should help Indonesia become an economic powerhouse for the region.
A combination of abundant natural resources, a relatively young population, growing middle class purchasing power, and a policy push to improve the investment climate, all make Indonesia strategically well placed to reap the benefits of the global transition to clean energy, and the push by multinational companies (MNCs) to diversify their regional supply chains. Sameer Goel
If sustained, this transformation should lead to a mutually reinforcing cycle of a stable currency, lower borrowing costs and reduction in country risk premium for Indonesia over the coming years.
What are some key trends in relation to Indonesia’s investment environment and business climate?
Political stability and a series of legislative and administrative reforms to improve the investment and business climate have been important to Indonesia’s transformation into an economic powerhouse in the region, as have its advantages of a young population and plentiful natural resources.
We’ve seen several reforms to improve the ease of doing business. The 2020 Omnibus law was a big step in Indonesia's economic transformation. It helped streamline bureaucracy, making labour laws more attractive for corporates by easing restrictions, reformulating the calculation of minimum wage, and simplifying licensing requirements to increase the ease of starting a business.
Indonesia aims to transform its primary natural resource sector into a higher value-added industry by banning unprocessed mineral exports, thereby forcing global manufacturers to invest in processing plants onshore. The strategy has resulted in a structural increase in global investment into the metals and machinery sector, overtaking natural resources which used to be the largest recipient of FDI.
As part of its down streaming ambitions, Indonesia aims to develop its nickel-based industries to become a global battery and EV supplier in order to capture more of the economic value of its resources. With the global EV market expected to grow at a CAGR of 18% to reach $1.6tn by 2030, Indonesia's exports trend looks set to continue.
Strong trade ties across Asia, Europe, and the Americas solidify its global integration. With a focus on infrastructure, digitalization, and sustainability, Indonesia presents a wealth of opportunities for businesses seeking expansion in Southeast Asia.
Deutsche Bank in Indonesia
Deutsche Bank has a significant presence in Indonesia, a key market in the bank’s ASEAN network. The bank provides a range of corporate banking solutions to multinational companies, large local corporates, and financial institutions in Indonesia1. These services include cash management, FX, custody, and trade finance1. It also offers investment banking services, including fixed income and currencies.
Recently, the bank doubled its local capital to IDR 10 trillion (EUR 600 million) to support its growth in Indonesia. This move underscores the bank’s commitment to the Indonesian market and allows it to undertake more activity for its clients. This is Deutsche Bank’s third capital increase in Asia Pacific this year, further to previous investments in Vietnam and South Korea.
In recognition of its comprehensive suite of solutions, Deutsche Bank Indonesia received a range of industry awards last year, including Asiamoney’s ‘Best Corporate Bank’, Refinitiv’s ‘Best FX Market Maker’ and The Asset’s ‘Best Islamic Custodian’. Furthermore, Deutsche Bank is supporting Indonesia’s sustainability goals by helping transition away from using coal as its main energy source3. This initiative is part of a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy.
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Indonesia, Southeast Asia's largest economy, is rapidly emerging as a powerhouse. Boasting a GDP over US$ 1 trillion, it has navigated global challenges ranging from trade wars to the pandemic with impressive resilience and growth. Its strategic location, rich natural resources, and a young, talented workforce have been key to Indonesia’s rise. Embracing digitization and sustainable industries like electric vehicle battery production have further strengthened its position.
Deutsche Bank's Global Head of Emerging Markets and Asia Pacific Research Sameer Goel, sees a deeper economic transformation underway in Indonesia into a regional powerhouse.
What’s unique about Indonesia’s economy?
Currently the world's largest producer of nickel, second largest producer of tin, and fourth largest producer of bauxite, Indonesia owns an abundance of natural resources critical to building an ecosystem for EV battery manufacturing.
And it's not just all about natural resources. Indonesia's large population and rising wages have fuelled growing purchasing power and a buoyant consumer market too. Unlike most economies in the region, whose working age populations have already peaked or are close to peaking, Indonesia is still reaping demographic dividends.
What makes you optimistic about Indonesia’s growth potential?
We see several comparative advantages that should help Indonesia become an economic powerhouse for the region.
If sustained, this transformation should lead to a mutually reinforcing cycle of a stable currency, lower borrowing costs and reduction in country risk premium for Indonesia over the coming years.
What are some key trends in relation to Indonesia’s investment environment and business climate?
Political stability and a series of legislative and administrative reforms to improve the investment and business climate have been important to Indonesia’s transformation into an economic powerhouse in the region, as have its advantages of a young population and plentiful natural resources.
We’ve seen several reforms to improve the ease of doing business. The 2020 Omnibus law was a big step in Indonesia's economic transformation. It helped streamline bureaucracy, making labour laws more attractive for corporates by easing restrictions, reformulating the calculation of minimum wage, and simplifying licensing requirements to increase the ease of starting a business.
Indonesia aims to transform its primary natural resource sector into a higher value-added industry by banning unprocessed mineral exports, thereby forcing global manufacturers to invest in processing plants onshore. The strategy has resulted in a structural increase in global investment into the metals and machinery sector, overtaking natural resources which used to be the largest recipient of FDI.
As part of its down streaming ambitions, Indonesia aims to develop its nickel-based industries to become a global battery and EV supplier in order to capture more of the economic value of its resources. With the global EV market expected to grow at a CAGR of 18% to reach $1.6tn by 2030, Indonesia's exports trend looks set to continue.
Strong trade ties across Asia, Europe, and the Americas solidify its global integration. With a focus on infrastructure, digitalization, and sustainability, Indonesia presents a wealth of opportunities for businesses seeking expansion in Southeast Asia.
Deutsche Bank in Indonesia
Deutsche Bank has a significant presence in Indonesia, a key market in the bank’s ASEAN network. The bank provides a range of corporate banking solutions to multinational companies, large local corporates, and financial institutions in Indonesia1. These services include cash management, FX, custody, and trade finance1. It also offers investment banking services, including fixed income and currencies.
Recently, the bank doubled its local capital to IDR 10 trillion (EUR 600 million) to support its growth in Indonesia. This move underscores the bank’s commitment to the Indonesian market and allows it to undertake more activity for its clients. This is Deutsche Bank’s third capital increase in Asia Pacific this year, further to previous investments in Vietnam and South Korea.
In recognition of its comprehensive suite of solutions, Deutsche Bank Indonesia received a range of industry awards last year, including Asiamoney’s ‘Best Corporate Bank’, Refinitiv’s ‘Best FX Market Maker’ and The Asset’s ‘Best Islamic Custodian’. Furthermore, Deutsche Bank is supporting Indonesia’s sustainability goals by helping transition away from using coal as its main energy source3. This initiative is part of a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy.
Further links on the topic
Learn about Deutsche Bank in Asia
Deutsche Bank in Indonesia
Deutsche Bank Research
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