Indonesia is a prime example of an emerging market that is going through a rapid industrialization, which has benefited anyone who has invested in the area. You may also gain exposure to the country through two exchange traded funds (ETFs), which we’ll compare below.
In the last five years, Indonesia has worked hard to reform and improve business and investment conditions. It has reaped rewards in the form of growth: 5% in 2009 and 6% this year. The growth rate between 2011 and 2015 could reach 7% to 8%. [Indonesia ETFs: A Paradox of Old and New.]
The Asian Development Bank projects the Indonesia economy to expand by 6.1% for 2010 and by 6.3% in 2011. The President is doing the forecasts one better, estimating 6.6% growth on average through 2014. [Indonesia ETF: A Market to Watch.]
Indonesia’s economy hosts a large working-class population, an expanding manufacturing base, moderate labor costs, healthy financial sector, large reserves of natural resources and a relatively stable political environment. The country is also in the midst of an export boom, aided by reforms and trade agreements with Asian countries.
Roben Farzad in Bloomberg BusinessWeek reports that Russia may no longer deserve a spot in the “BRIC” countries; there are suggestions to drop the “R” and add another “I”; for Indonesia. Indonesia has more going for it than Russia and has the potential to become the key global player. William Edwards of EGS LLC, they do not work in Russia for their U.S. clients they take international because there is “no rule of law; no brand/IP protection from the government or local partner. The foreign company will not win in Russian courts; money source challenges; declining middle class consumer base; and net of oil related investment, the annual GDP growth is mid range.” He does work in Indonesia for his clients though.