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One of Facebook’s biggest markets in the ‘hotbed of Islamic extremism’


May 8, 2012
Jakarta, Indonesia

If you swallow the line parroted by the mass media in the West (my adopted country of Australia being the prime offender), you’d think Indonesia was a strict Islamic state where terrorists run around bombing nightclubs frequented by tourists.

And you probably have a mental image of an economic backwater reliant on exports of natural resources such as coal and palm oil to pay its bills.


Toss all your clichéd, preconceived assumptions about Indonesia out of the window immediately.

Jakarta, Indonesia’s capital city, is a modern, sophisticated metropolis populated by friendly, tolerant people of many cultures and religions.

The world’s biggest Buddhist temple is in Indonesia. There are more Christians here (28 million) than the entire populations of Australia and New Zealand combined.

Oh, and there are more registered users of Facebook than in almost every other country in the world! Not exactly the hotbed of ultra-conservative Islam.

More broadly, Indonesia is already the third-biggest market in Asia after China and India, with 240 million people. In seven of the past eight years, its economy has grown by more than 5%. On current growth rates, it’s doubling every 11 or 12 years.

“Growth slows in 1st Quarter,” read the headline in the paper this morning. Yeah. From 6.5% the previous quarter, to 6.3% in the quarter ended March 31st. Boo hoo.

There’s not a single economic policymaker in the West who wouldn’t kill for economic growth like that. But in Indonesia, the figure was mildly disappointing.

As Simon and I frequently point out, though, the official statistics are usually worthless… you have to trust what your eyes and ears tell you on the ground. And the reality certainly backs up the figures—Indonesia is buzzing.

This is clearly a place that’s on the rise.  It’s already almost a trillion-dollar economy.  Fifty percent of the population is under the age of 30 and yet to enter their peak working and consuming years.

Millions of new workers enter the labor force each year.  Yet, unemployment is falling… to 6.3% on the most recent statistics, down from 6.8% 12 months before.

Indonesian wages are lower than they are in China now (US$160 a month is typical), and there are many multinational companies starting to relocate production here.

The engine room of the Indonesian economy is NOT low-value-added exports of natural resources.  It’s domestic consumption demand, which accounts for 53% of the economy; and, investment, which accounts for 32% of GDP.

What’s more, policymakers are cognizant that adding value to the country’s natural resources at home, before exporting them, could be another important driver of growth.

Indeed, Indonesia has just imposed duties on the export of most raw metal ores.  The duties do not apply to refined products, and are designed to encourage investment in domestic treatment and refining facilities.

It may or may not work.  But, let’s face it—there are worse problems to have than figuring out what to do with an abundance of raw materials.

This, combined with a young and growing labor force, as well as room for great improvement in its infrastructure, are all good reasons to be bullish on the long-term economic future of Indonesia.

Moreover, from what I’ve seen so far, the rampant credit creation and likely overbuilding that characterize the sky-lines in places such as Manila and Bangkok right now, are not evident in Jakarta.  At least not yet…

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About the author: Born to a Danish father and British mother, in Dar Es Salaam, Tanzania, Tim Staermose has led an international life since the day he was born. Growing up, he also lived in Egypt, Denmark, and Singapore, before eventually settling in Australia, where he completed his education and took out citizenship. Since then he has also lived and worked in Hong Kong, and Manila, Philippines, in the field of equity research — both for a bulge-bracket Wall Street investment bank, and for an independent investment research firm. Today, when not traveling the globe looking for investment and business opportunities for the Sovereign Man community and catching up with his diverse, multinational group of friends, he divides his time between Hong Kong, and the Philippines.

Comments on this entry are closed.

  • http://justen.us Justen Robertson

    I didn’t realize Indonesia was the new Iran (/Eurasia/Eastasia). I guess I really have got off the boob tube for good if I haven’t even learned what faux news is ranting about via osmosis. Oh, or have I just done exactly that. Damn you, Staermose!

  • Evanj Batam

    An Austrlia based friend has queries about this statement of Tim’s:

    “If you swallow the line parroted by the mass media in the West (my adopted country of Australia being the prime offender), you’d think Indonesia was a strict Islamic state where terrorists run around bombing nightclubs frequented by tourists.” This is ummm…pure fantasy. Maybe I don’t always get the Recommended Daily Intake of MSM output but I don’t recall ever once seeing or reading anything along these lines. But then, a straw man argument is a lot easier prosecute. But what is he actually trying to argue anyway?

  • http://www.rugbyleaguereport.com.au/ Matt John Canty

    Indonesia, (along with China) is one of the last places left on my list that I really want visit in SEA. I bet it is truly an awesome place but your right Australia does have a somewhat negative view on the country and most people would think its a strict Islamic state and would possibly never visit the country for this reason. Sounds like there would be some interesting business opportunities there both online and offline. haha that’s so many dam users on FB lol I thought here in The Philippines they were bad but I guess its worse there. Perhaps Indonesia will become more popular for outsourcing in the future.

  • ash thorneth

    No Islamic extremism in Indonesia, eh? Well would you like to tell us how many churches have been destroyed in recent years, or would you like to tell us how many Christians have been forcibly converted to Islam in eastern Indonesia, women as well as men being forcibly circumcised, or would you like to tell us about the mass rapes of Chinese Christian women by muslims some time ago, or would you like to tell us about the desecration of a Catholic church’s  Blessed Eucharist in Timor,  when that Christian country was subjected to Indonesian oppression? 

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