Indonesia central to ASEAN - High potential for international trade

The three day World Economic Forum (WEF) on East Asia 2014 commenced in Manila yesterday, receiving over 600 leaders, entrepreneurs and thinkers together.

Issues will be discussed, including the optimal way to compose the 10 member Association of South East Asian Nations for the ASEAN Economic Community planned for next year, which is to allow freer flows of capital and lower trade barriers.

Collectively, the ASEAN member states structure one of the largest economies of Asia, with gross domestic product (GDP) at approximately $2trillion and a population of over 600million people.

Indonesia, the largest economy of South East Asia, may benefit from freer trade under the AEC. Its automotive sector rival’s Thailand’s, as it assembles and ships vehicles locally and internationally. Japanese vehicle producers have recently been raising their investments in Indonesia, acknowledging the demand for cars, motorcycles and trucks remains strong. The nation’s youth population, alongside low labour costs makes it an appealing investment location for overseas companies including the Foxconn Technology Group, who produce the iPhones and iPads for Apple.

Next year, Jakarta will host the WEF of East Asia, with business executive Hans-Paul Buerkner, chairman of The Boston Consulting Group, having stated last week that establishing the market in the region may motivate competitiveness for Indonesian companies. He advised Indonesia need to brave competitive challenges and prove their efforts – by constant change to stay unique and different, efficiency improvements, price improvements, supply chain improvements and better training.

Indonesia houses a population of over 250million people, working towards a developed nation status. Recently the World Bank ranked Indonesia as the 10^th largest economy in the world by purchasing power parity (PPP). Increasing amounts of Indonesians are breaking into middle-income status as move to cities from rural areas – changing careers in farming to employment in the services and manufacturing industries.

The companies prepared for the AEC are those that will rise.

The ASEAN must make use of the 600million market to develop the whole region, of which Indonesia takes up half, giving it a substantial role. The more the region opens up, the more everybody can benefit from development.

It has been claimed that Indonesia has what it takes to strive, however it requires effort towards opening its market. This is with investors from other countries arriving, such as from Japan who are also importing as well as selling. With countries working together rather than competing, there is now a larger stretch in the market, with options in China or India as well. Indonesia will always be a central part of ASEAN and this should be utilised.