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Indonesia Is Not a "BRIC" Country

Morgan Stanley seems to think that Indonesia should be included with Brazil, Russia, India and China as a BRIIC country in an expanded "BRIC." We disagree.

Indonesia, technically fails to meet our definition of a Continental-sized  country (less than 1 million square miles spread out on numerous islands), although it has more than the requisite 100 million people. In this regard, it is similar to Japan, which is similarly contained. But its educational level and overall productivity are far below Japan's, as well as the BRIC countries.

India, Russia and Brazil together have a GDP as large as China's. Meanwhile, Indonesia's is about a third of the smallest (Brazil's). It is also on the edge, rather than center, of Asia, where three of the other countries, (China, India, Russia) meet. Geographically and economically, Indonesia is far less strategic than the others.

Another factor is that the Indonesian stock market is far less transparent than the others. It has far fewer American Depositary Receipts (ADRs), which means that both liquidity and transparency of its markets are decidedly inferior to the others.

It is possible to conceive of any of the four BRIC countries being a world power (under the right circumstances). It is much harder to see Indonesia in such a role.