The Finance Professionals' Post

Investing in Indonesia (Part II)

Worldview’s last piece on Indonesia highlighted the historical development of Indonesia’s economy and the success of its export-led growth model in spite of high corruption levels, legacy state-controlled enterprises, and political uncertainty in the aftermath of the Asian currency crisis and subsequent rise of Indonesian democracy. This follow-up article covers the recent performance of Indonesia’s equity and currency markets, putting Indonesia’s phenomenal gains in greater context.

Investing in Indonesia: The Tune of the Gamelan

The post-crisis performance of Indonesia has been phenomenal. With its overall economy virtually untouched by the financial crisis and its equity markets rapidly rebounding, Indonesia has outperformed virtually all major emerging-market competition, including Brazil. What characteristics have brought about this growth and expansion, and to what extent are these trends likely to continue?

Indonesia is an archipelago lying along the equator, north of Australia and south of Malaysia and the Philippines. Accounts vary as to the exact number of Indonesian islands, but most estimates range between 17,000 and 19,000, of which perhaps half have been named and nearly 1,000 are permanently inhabited. Five islands—Sumatra, Borneo, Java, Sulawesi, and West Papua—are substantially larger than the others and hold the majority of the population.