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  Indonesia Economic Outlook

 Key Drivers of Economic Growth

Indonesian government projects robust growth and improving economic indicators during 2010-2014

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Nominal GDP per capita (2010-2014) – US$

  Inflation to remain moderate, 4–6 %

Source: Ministry of Finance

Projected Unemployment Rate (2010-2014)

Projected Poverty Rate (2010-2014)

CAGR: 11%

Positive view of Indonesia is increasingly shared by global players

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IMF Projected Nominal GDP Growth (2009 – 2015)

Russia

Source : International Monetary Fund, World Economic Outlook Database, April 2010

Indonesia

China

India

South Korea

Brazil

Turkey

USA

Japan

ASEAN (excl. Indonesia)

Among the 18 largest economies, Indonesia is projected to experience 2nd fastest nominal GDP growth (Russia #1) from 2009 to 2015

Updated: IMF projects Indonesia will achieve the fastest growth among the 18 largest economies

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IMF Projected Nominal GDP Growth (2009 – 2015)

Indonesia

Source : International Monetary Fund, World Economic Outlook Database, October 2010

Russia

China

India

Brazil

Turkey

South Korea

Japan

USA

ASEAN (excl. Indonesia)

Indonesian economy will increasingly dominate ASEAN and will begin surpassing European markets

page 5 Source : International Monetary Fund, World Economic Outlook Database, October 2010

Indonesia Economic Growth (nominal) ($ billion)

Indonesia’s economy as % of

ASEAN-6

ASEAN (Total 11 Countries)

42% 49-54% 54-66%

40% 46-51% 49-59%

Spain

Netherlands

46% 78-86% 57-59%

84% 135-149% 100-104%

European Countries:

CAGR 12.8%

CAGR 15%

  Preparation: Revamp of growth systems, technology adoption, design for growth

  Acceleration: Industrialization, latest technology, high growth of services sector

  Sustainability: Value adding industrialization, focus on domestic economy and social welfare

Three Growth Stages

Indonesia, according to Yayasan Indonesia Forum, is on the path to becoming a high income country

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Indonesia Visi 2030 GDP per capita Projection

Source: Yayasan Indonesia Forum, team analysis

Lower Middle Income Country

Upper Middle Income Country

High Income Country

1992 2015 2023

PREPARATION

ACCELERATION

SUSTAINABILITY

Actual: GDP per capita has reached US$3,000 in

2010

15% CAGR

12.8% CAGR

10.7% CAGR

3,000

By 2030, Indonesia will surpass Brazil and Russia to become the #5 economy in the world

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2010 2020 2030

1)  Europe

2)  USA

3)  China

4)  Japan

5)  Brazil

13) Indonesia

1)  USA

2)  Europe

3)  China

4)  Japan

5)  Brazil

9) Indonesia

1)  China

2)  USA

3)  Europe

4)  India

5)   Indonesia

Projected Top Economies by GDP

Source: 2010-IMF, 2020-Team analysis using CAGR 2010-2014, 2030-Yayasan Indonesia Forum, team analysis

Taking a longer term view, Indonesia is on the path to becoming a global economic player

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Key Targets Indonesia Visi 2030

Become #5 economy in the

world

Optimize natural resources

Even or shared distribution of

wealth

30 companies in Fortune 500

  GDP per capita will reach US$18,000   Huge market of 285 million consumers

  Rich in cultural heritage and natural attractions become top 10 global tourist destination

  Achieve energy independence

  Indonesia to enter top 30 HDI (Human Development Index) countries in the world

  From 10 companies in Top 2000 to 30 companies in Top 500

Source: Yayasan Indonesia Forum Notes: HDI takes into account life expectancy, literacy, and GDP per capita

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  Indonesia Economic Outlook

 Key Drivers of Economic Growth

Four key factors stimulating growth of economy

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Political Environment

Demographics

Resilient Financial System

  Maturing democracy

  Regional autonomy

  Supportive regulations balanced open markets

  Strengthening institutions

  Rapidly growing productive population

  Balanced gender ratio

  Low dependency ratio

  Government debt and foreign reserves at healthy levels

  Improving investment climate

  Indonesian banks performed well during global crisis

Integration with regional

and global network

  Efficient domestic production chain

  Commodities with global competitive advantage

  Integration into global production chain

Demographics: growth of productive population will fuel stable and rapid economic growth

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Expected Population Pyramid (2000–2020) Male Indonesia–2000 Female

Population (in millions)

Male Indonesia–2020 Female

Population (in millions)

Total (million) 214 268

Male (million) 107 134

Female (million) 107 134

Productive population (20–55 years old) 103 (48%) 136 (51%)

Demographics: in the longer run, Indonesia will have a very favorable dependency ratio

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Note: Dependency ratio is estimated figure: total population age 0-14 + above 65 divided by total productive population (age 15-65)

2030 Expected Dependency Ratio (%)

  Indonesia to obtain demographic bonus and raise savings potential :

– Reduced birthrate lower dependency ratio

–  Increase in life expectancy longer productive age

  Excess productive population may be exported to fill employment gaps in other markets

Source: United Nations Population Division (medium variant data used)

Indonesia 2010 Dependency Ratio: 48.7

Resilient Financial System: Indonesia is well prepared for external economic shocks

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Source: Ministry of Finance

Government Debt to GDP ratio (1999-2009) Foreign Reserves (2005-3Q2010)

  Healthy balance sheet good prospects for Indonesia to be upgraded to “Investment Grade” next year

  Approaching record levels for both Government Debt to GDP and foreign reserves

CAGR: 22%

(in USD Billions)

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Resilient Financial System: however, Indonesia’s banking penetration still lags its neighbors huge upside

Indonesia

TOTAL DEPOSITS PER GDP * TOTAL LOANS PER GDP *

Note: *All data based on 2008 figures, except : Singapore and India (Q2 2008), Indonesia (2009) Source: Countries Central Banks, Researchandmarket.com, Country Report

Malaysia

Singapore

Thailand

China

India

Indonesia

Malaysia

Singapore

Thailand

China

India

Near term challenges need to be addressed to achieve balanced and sustainable growth and realize the vision

State and Private Financing

Bureaucratic reforms (Government and SOEs)

Energy Sufficiency

Infrastructure and Connectivity

Food and Water Sufficiency

Unemployment Target: 5-6%

Sustainable Growth Target: 7.7%

Poverty Target: 8-10%

Targets Action Steps Input

8 Focus Areas of National Economic Committee (KEN)

Requirement

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Build Indonesian Human, Build National Identity

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Structuring the quantity and improving quality create a productive, innovative and entrepreneurial human

Improvement of the social order creating a culture of cooperation, competition and positive conflict

Knowledge economy with a population of productive, creative, innovative and entrepreneurial spirit

Multiculturalism pro-existence

Development of Human Physical Indonesia

Development of Human Life Indonesia

Education Health

Reconstruction of Social and

Cultural

Indonesian Population as

Capital of Development

• Jobs provider

• Skilled workforce

• Market with high purchasing power

Human development is the basis for Indonesia to reach the world stage

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Indonesia to become a developed country

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Indonesia Developed Country

Towards a World Stage

Entrepreneurship and SMEs, Business Competition, Trade Logistics, International Trade

Human Development Management Development

Production Process

Natural Resources

Building a complete Indonesian person

Quantity, Quality and Spirit

Government Support and Effective Bureaucracy

Creating added value through the production

process and various support elements

Managing natural resources through

Agriculture, Tourism, Environment

The Unity of Indonesia

Political systems, Defense and Security, Law Spatial Planning and Land systems

Communication and Transportation systems

Thank You

Chairul Tanjung Ketua Komite Ekonomi Nasional (KEN)