Indonesian businesspeople are among the most confident in the world as foreign trade and domestic consumption continue to increase within the next six months, a report has found.
According to the latest HSBC Trade Confidence Index, the world trade prospect shows a positive outlook for the next six months, with the average confidence index standing at 112, above the neutral mark of 100.
Indonesia scored 127 on the index, making the country’s business players the third-most confident among businesspeople in 20 countries.
India topped the list with 142, while the United Arab Emirates placed second with 132, according to the report, which is based on a survey of 5,800 business people between May and June 2013.
Indonesia’s confidence level climbed three notches from the last survey, which was held in February.
“Indonesia’s thriving domestic consumption continues to be the major factor behind the strong confidence,” HSBC Indonesia head for global trade and receivable finance Nirmala Salli told reporters on Wednesday.
The report finds that emerging Asian countries, excluding China, have huge potential as Indonesia’s major trading partner, followed by countries in Europe, North America, the Middle East, North Africa, and Latin America. It also reveals that mineral fuels, especially coal, are expected to continue dominating the export sector with a predicted contribution of more than 30 percent.
In the long term, between 2013 and 2030, mineral fuels and raw materials are estimated to be the two most developed trading sectors in Indonesia.
The report puts special emphasis on Indonesia’s mega projects under the Masterplan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI). By 2030, more than half of the imports will be related to investment in infrastructure. “China will be the biggest supplier of infrastructure-related imports to Indonesia,” it says.
The report says that Vietnam is expected to be Indonesia’s fastest growing destination for exports and imports in the decade from 2021 to 2030, with the two countries already working together in road and transportation projects.
However, despite the bright prospects, businesspeople find that infrastructure and trade regulations have become the main obstacles. “About 72 percent of the survey respondents cited government trade regulations as the biggest barrier to doing business in Indonesia, with 50 percent seeing logistics as a barrier,” it says.
Nirmala said that she estimated Indonesia’s confidence index would remain stable in the second half of 2014 even though the country was entering the political year with the upcoming general election.
Meanwhile, Ali Setiawan, HSBC Indonesia managing director and head of global market, said the government consistency in upholding its regulations would help maintain investors’ confidence. “It has also introduced several new policies, but so far, we have not seen the results,” he said.
By Tassia Sipahutar (The Jakarta Post)