CLSA Asia Pacific Markets stated in a report some of the reasons that make Indonesia (IF) (IDX) an attractive investment destination. The important points from this report are listed below: Indonesia is a marginal supplier of natural resources to China and India, two of the world’s fastest growing economies. The country has a large youth population and about 22 million more people are projected to join the workforce in the next decade. The GDP per-capita growth in recent years has been strong. Indonesia is the world’s largest exporter of palm oil and will profit greatly when the demand for palm oil from China and India doubles by 2014. Indonesia is the largest exporter of thermal-coal and China is the world’s largest importer of this type of coal.
Despite the fact that Indonesian manufacturers are being crushed by the weak yuan, the Indonesian government will not attempt to renegotiate a free trade agreement between Southeast Asian nations and China that will go into effect on January 1, but will request a delay in eliminating import tariffs on more than 300 Chinese products, officials said on Tuesday.
The Jakarta government had been under increasing pressure during the past week from domestic industry players who warned that more than a dozen sectors, including steel and textiles, could collapse because they were not ready to compete with low-cost Chinese imports.
Under the free trade agreement between China and the Association of Southeast Asian Nations, Indonesia is required to remove import duties on 6,682 Chinese products. The Indonesian ministry of finance is scheduled to issue regulations to remove all the duties before January 1 despite plans to request a delay on some products, officials said.