Standard Chartered Bank expects economic growth in Indonesia in 2013 to remain robust at 6.2%. The bank believes this is a realistic assumption amid global economic uncertainty and higher subsidized fuel prices which limits people's purchasing power. The greatest pillar of support for Indonesia's GDP growth is domestic consumption, and which is supported by Indonesia's demographic composition as the country not only has a large population (over 240 million people), but also a young one (half of the population is below thirty years of age).
Indonesia's per capita GDP has been rising steadily in recent years, resulting in an expanding middle class segment that consumes more and more products. Not surprisingly, Indonesian companies engaged in the consumer goods industry and property sector have posted excellent financial results in recent years. For this reason, foreign companies are eager to enter the Indonesian market. However, the influx of foreign investments are constrained by various factors, including the lack of adequate infrastructure (both quality and quantity), bureaucratic issues, and a weak legal system. Moreover, the Standard Chartered Bank believes that the Indonesian government should provide more fiscal incentives for foreign companies, for example in the form of tax holidays.
According to Standard Chartered Bank analyst Fauzi Ichsan, the Indonesian government should also focus more on ensuring optimal government spending and monitor (and act) when stockpiles of certain food products are inadequate (thus giving rise to inflationary pressures).