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The Future Challenges of Indonesia

Sandiaga S. UnoVice President Indonesian Chamber of Commerce and Industry for Micro Small and Medium Enterprises and Cooperatives

Ernst & Young and ICWA Panel DiscussionsMonday, 10 May 2010

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Indonesia’s Economic OverviewEconomic Fundamentals Remain Solid

Decreasing trend of debt-to-GDP ratio

Prudent fiscal policies

Record foreign reserves of US$75 billion as of end April 2010

Recent IMF projections for Indonesian growth outperforming the rest of Asia

Source : UBS, 2009

Key Facts

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Indonesia’s Economic OverviewRobust GDP Growth

Source : CIA World Factbook

Real GDP Growth Rate (%) 2007 - 2010

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Indonesia’s Economic OverviewStrong Stock Market Performance

Source : UBS, 2009

Regional Indices Performance (2009) JCI Performance (2009)

In 2009, the Jakarta Composite Index performance outperformed those of other regional indices

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Economic ProblemsCurrent Challenges

Human Capital Human Development Index: 111 out of 182 countries (Source: UNDP Human Development Report, 2009)

CorruptionMost corrupted country in the world, corruption level scored 9.1 out of 10 in 2010, up from 7.7 in 2009 (Source: PERC, 2009)

Infrastructure Infrastructure competitiveness ranks 84 out of 133 countries (Source: PERC, 2009)

Ease of Doing Business

Ranks 122 out of 183 countries (Source: Doing Business Report 2009)

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Future Challenges of IndonesiaDeindustrialization in the Globalization Era

…Is this a sign of deindustrialization???

The Growth: Industry vs GDP

Source : BPS, 2009

“Growth is targeted to reach 6.7% to 6.8% in the next five years” (SBY, at APEC CEO Summit, Nov 2009)

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SolutionConsidering SME’s role in the economy

Does SME’s activity lead to economic growth?

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Solution: Bottom Up ApproachSME’s as the Backbone of National Economy

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Solution: Bottom Up ApproachThe Importance of Entrepreneurship

Necessity vs Opportunity

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Great Prospect for IndonesiaInternational Response towards Indonesia

The N-11 Country in 2050

(Goldman Sachs)

Indonesia’s economy will rank 6th in 2050

(PricewaterhouseCoopers)

Indonesia will be a part of “BRIC”

in 2050(Morgan Stanley)

“Chindonesia”(CLSA)

S&P has increased Indonesia’s sovereign debt rating to BB, the

highest level in the past 12 years

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Thank You