Chart of the Week
Indonesia is one of the giants of Asia, yet for most people it doesn’t come to mind when thinking about the continent’s economic vitality.
A few quick facts about Indonesia: a population of 234 million (4th in the world) that has been rapidly urbanizing since the 1970s. An estimated 22 million people live in or around Jakarta, making it the world’s second-largest urban area. Its natural wealth (oil, gas, metals, agriculture) enables it to be part of the G-20 group of major economies, and GDP growth in 2010 is estimated at 6 percent.
The chart shows how annual cement demand in Indonesia has more than doubled in the past decade, with the key driver being housing as the country deals with urban growth – nearly seven of every 10 Indonesians are expected to live in cities by 2030, up from 42 percent in 2000.
But the infrastructure needs run deeper than housing, and so do the opportunities.
A story last week in the Bali Times quoted top government officials saying that the nation wants to attract $90 billion in private infrastructure investment in the coming five years to build and upgrade roads, railroads, seaports, power generation, health care and other facilities critical to economic growth.
This represents a significant policy change in Indonesia, which attracted only $10 billion in foreign direct investment last year.
We watch government policies for signals of a change in investment climate. Indonesia, recognizing that it must deal with its changing demographics and at the same time remain competitive with its neighbors, may be sending an important signal that its doors will open wider to overseas investors.
This is a syndicated post. Read the original here.