For over three decades, China has boasted a robust and upwards economy. It is currently the second largest economy next to the United States of America [CNBC]. Its economy was primarily supported by the country’s competitive labour, production and, manufacturing costs. But, In recent years, the country’s economic growth has slowed down.
What contributed the most to this slow growth rate was the Chinese Stock Market crash of 2015. After the incident, the country’s financial leaders overhauled its monetary policy to promote an accelerated credit growth system. It was an attempt to shift to a consumption-based economy. And as a consequence, it overvalued the currency due to excessive debt creation and money printing [Investopedia].
As a result, China’s current overall debt increased from 164% to 300% of the GDP. That is why many global investors are moving the resources to other nations like Australia and other ASEAN countries.
Now, how does this trend affect Indonesia’s economic landscape? And, how will this affect future investments in this country? Find out more on this blog why investors should take a closer look at the largest ASEAN market this year.
China’s Economy and How it Affects Indonesian Trade and Commerce
China is Indonesia’s biggest trade partner, earning a total of 23 billion USD worth of coal, petroleum, lignite, and palm oil exports in 2017 [Worlds Top Exports]. Unfortunately, the current economic slowdown will impact these sectors. But, the positive effect of this financial situation is that investors are quickly moving their supply line from China and the United States to ASEAN countries like Indonesia.
Meanwhile, the existing markets in Indonesia are slowly becoming more lucrative as well, due to the tariff war. Many financial analysts even predict that one of these markets will exceed 100 billion USD by the year 2025.
Financial Sectors Expected to Make it Big in 2019
Previously undervalued industries in Indonesia are now becoming more lucrative due to the economic slowdown. So, which financial sectors are currently leading in the country?
Steel and Iron Exports
Last December 2018, it was reported that steel and iron product exports to the United States increased by 87.7 per cent. On the same period, Indonesia’s total exports to the US grew by 3 per cent [CNBC]. That is why there are many investors who are looking to capitalise on this market.
Internet Economy
Google-Temasek estimates that Indonesia’s internet economy will exceed 100 billion USD by 2025. This is due to the rapid online economy growth observed within the region.
Furthermore, the country’s e-commerce industry is expected to improve as more Indonesians are gaining access to the internet via a mobile device [CNBC]. So, this makes it a prime location for a start-up business such as e-commerce, social networking, and online services.
Venture Capital
Reuters reports that Go-Jek, Indonesia’s answer to Uber and Grab, raised more than 1.5 billion USD capital from investors including BlackRock and Google. With its remarkable success, many global investors are already taking steps to find their own internet success story in the country. So, don’t miss this opportunity to take part in this sector.
Put Your Investments in a Stable and Competitive Economy
Indonesia is the biggest market in the ASEAN region. It has shown consistent and stable growth despite the global economic slump. Thus, making it an ideal country to invest.
But, before any international venture capitalist can finance a lucrative business in the country, one must comply with the statutory requirements. And, fulfilling these tasks can be difficult. So, it would be best to seek advisory solutions from a trusted corporate service provider.
Contact DesFran corporate service solutions today.
Reference:
China’s monetary policy is complex and shifting. Here’s what you need to know, cnbc.com
What does Indonesia export to China? (2017), atlas.media.mit.edu
Google-Temasek report predicts Southeast Asia’s internet economy will exceed $240 billion by 2025, cnbc.com
Indonesia’s Go-Jek raises $1.5 billion as the ride-hailing market heats up: sources, reuters.com
