Indonesia – East West Markets

Indonesian-US Relations

Relations between Indonesia and America are expanding. Today, according to the International Institute of Education (IIE), over the last decade there has been a substantial increase students from Indonesia (approximately 8,200 from September 2014 to May 2015) attending higher education facilities in America.

And back on the other side, according to a World Education Services (WES) study, Indonesia is building up a positive reputation since it is fast becoming one of the top markets for American global college recruitment. It was also ranked as the third most promising market. it seems that there is an increasing inclination for superior education which is driven by a fast-expanding economy and a large degree of the population in the early 20s demographic.

When it comes to digital advertising, Indonesia is likewise up in front. According to Strategy Analytics, this year Asia Pacific has actually surpassed North America as “the world’s biggest market for digital advertising spend for the first time.” Indeed, the increase in Asia Pacific for expenditure on digital advertising increased 18.2 percent and North America, almost half of that at just 9.6 percent. While it is China driving this increase, according to Digital Landscape, Indonesia is also playing a significant role as a mobile Internet frontier. Plus, according to CEO of AdKnowledge Asia, Matt Sutton, Indonesia “already big in absolute numbers. The economy is growing real quick, the e-commerce market is exciting and social penetration is really high, so it’s a combination of factors.”

So Indonesia is a region with which to be reckoned vis-à-vis education and economics for the west.

Asia’s Economic Success: In Spite of Europe’s Mess

In recent years, although other eastern markets have failed to thrive in debt-ridden European environments, Asia has not been one of them. The region has not encountered nearly as much strife as its neighbors and in fact on the contrary, has enjoyed impressive financial growth. For western businessmen therefore, Asia fares pretty high on the list of possible potential addresses due to less red tape; stable investment opportunities and higher interest rates, especially in countries like Indonesia.

Indeed, Indonesia’s GDP increased by almost 6.50 percent last year which is the highest since the Asian crisis began (and way better than neighboring China and India) and it does not need to depend on global trade flows for success either. Its population is large and growing and its youth has minimal debt and thus greater spending capacity and it offers a huge variety of commodities, being self-sufficient in oil and gas.

Oil Issues

So that’s great for Indonesia. But is this the case throughout the region? Do all eastern markets have so much to offer potential western investors? Perhaps not. Looking at oil prices that are increasing at uncontrollable rapid speeds, Asia’s growth could be shot in the food, making it a rather unattractive place for western businessmen to lay their hats.

In addition, since Asia does not stand alone, both the western world and indeed the global community at large, needs to understand that it will be impacted as well. Should its growth be stumped, this will have a domino effect on Europe and won’t do any favors for America’s recession recovery either. As Tweeter FirstpostMarketsLive noted, “Asia is largest consumer of oil having surpassed North America in 2007 to account for more than 31% of world demand.”

Asia’s economic conglomerates are concerned. Nomura, a multinational conglomerate offering financial services has been taking a stand on the potentially problematic matter. The company’s chief economic advisor, David Resler noted, even though there isn’t as great a threat to a resumption of the financial crisis, this oil price mega increase at the beginning of the year has replaced that threat in as great a severity.

So ultimately there is a lot of optimism out there for potential western investors into Asia. But should the oil price increase crisis not be solved, it could be downhill for not only the entire region, but potentially the whole world. Asia needs to sort this out, and fast.

East-West Car Markets

Since the Indonesian economy is currently growing in leaps and bounds, it seems to be the place to sell cars. Of course, once one has some extra money to play with, a great way of showing it off is via his or her new flashy cars. Auto manufactures around Asia are honing in on this newfound wealth as well. Indeed, in 2011, Indonesians purchased 890,400 cars – a figure – according to Frost and Sullivan, that is set to increase to close to 940,000 this year. As well – perhaps somewhat surprisingly – it seems that now Thailand is lagging behind Indonesia in the region.

Foreign Eastern Automakers

In addition, automakers from out of Indonesia in 2011 promised to put close to $2bn into the country over the next few years, but time will tell if this is actualized. Currently, Japanese manufacturers hold 90 percent of the market with Toyota boasting a second production plant about to launch. As well, Suzuki is planning a third and Nissan is hoping to spend $250m to expand its current facilities. Toyota also aims to boost its production by 70,000 by next year. Both Nissan and Suzuki enjoyed huge increases in sales last year (Nissan by 50 percent and Suzuki by a third).

Foreign Western Automakers

It is not just companies in the east who are trying to make big profits in Indonesia in the car market. Ford and General Motors are also trying to get in on the act. For example, in 2011, Ford sold double the amount of cars it did in 2010; it hopes to repeat this success this year too.