{"id":2197,"date":"2012-09-20T11:16:02","date_gmt":"2012-09-20T15:16:02","guid":{"rendered":"https:\/\/dev.epictranslations.com\/?p=2197"},"modified":"2012-09-20T11:16:02","modified_gmt":"2012-09-20T15:16:02","slug":"the-archipelago-economy-unleashing-indonesias-potential","status":"publish","type":"post","link":"https:\/\/dev.epictranslations.com\/ara\/the-archipelago-economy-unleashing-indonesias-potential\/","title":{"rendered":"The archipelago economy: Unleashing Indonesia’s potential"},"content":{"rendered":"

Most international businesses and investors know that modern Indonesia boasts a substantial population and a wealth of natural resources. But far fewer understand how rapidly the nation is growing. Home to the world\u2019s 16th-largest economy, Indonesia is booming thanks largely to a combination of domestic consumption and productivity growth. By 2030, the country could have the world\u2019s 7th-largest economy, overtaking Germany and the United Kingdom. But to meet its ambitious growth targets and attract international investment, it must do more.<\/p>\n

Indonesia has an attractive value proposition. Over the past 20 years, labor productivity improvements, largely from specific sectors rather than a general shift out of agriculture, have accounted for more than 60 percent of the country\u2019s economic growth. Productivity and employment have risen in tandem in 35 of the past 51 years. And unlike typical Asian \u201ctiger\u201d economies, Indonesia\u2019s has grown as a result of consumption, not exports and manufacturing. The archipelago nation is also urbanizing rapidly, boosting incomes. By 2030, Indonesia will have added 90 million people to its consuming class\u2014more than any other country except China and India.<\/p>\n

Nevertheless, to meet the government\u2019s goal of 7 percent a year growth by 2030, the economy must grow faster. Given current trends, the McKinsey Global Institute estimates that Indonesia has to boost productivity growth to 4.6 percent a year\u201460 percent higher than it has been during the past decade. Amid rising concern about inequality, the country must also ensure that growth is inclusive and manage the strains that the rapidly expanding consumer classes will place on its infrastructure and resources.<\/p>\n

Of course, Indonesia should tackle well-known problems such as excessive bureaucracy and corruption, access to capital, and infrastructure bottlenecks. But in addition it must address its impending skills gap; the country could, for example, develop a private-education market that might quadruple, to $40 billion, by 2030. If at the same time Indonesia took action in the three key sectors below, it could create a $1.8 trillion private-sector business opportunity by 2030:<\/p>\n