6th Astana Economic Forum 22 – 24 May 2013 Indonesia-Kazakhstan: Economic and Trade Cooperation Dr.Rizal-Affandi Lukman Deputy Minister for International Economic Cooperation Coordinating Ministry for Economic Affairs, Indonesia Presentation Guidelines Overview of Indonesian Economy Summary of Indonesian Development: “Remarkable Indonesia” Indonesia – Kazakhstan Bilateral Cooperation Comparative Basic Data Countries Land Size (sq km) Popu lation (milli on) Exports (as of 2012 est.)-in US$ Imports (as of 2012 est.)-in US$ Size of Economy as of 2012 (millions of US$) GDP/C apita as of 2012 (US$) Public Debt as of 2012 (% of GDP) GDP Growt h as of 2012 (%) Inflat ion as of 2012 (%) Labor Force Indonesia 1,904,569 245 $188.7 billion $179 billion 879 mil 1.2 bil (PPP) 3,495 5,000 (PPP) 24.8 6 4.5 118 million Brazil 8,514,877 201 $242 billion $238.8 billion 2,395,968 12,594 43.3 1.3 5.5 107 million Kazakhstan 2,724,900 17,8 $88.61 billion $42.82 billion 196,419 11,357 12 5 5.2 8.54 million South Africa 1,219,090 49 $101.2 billion $106.8 billion 384,315 8,070 43.3 2.6 5.2 17.89 million Source: various Sound Economy: Maintaining the pace of growth. Indonesia - Stable and Growing Economy GDP growth rates (%) Real GDP per capita (1996=100) GDP growth rates (%) Indonesia Korea Malaysia Thailand 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1992 -15 1996 2010 2008 2006 2004 2002 2000 1998 1996 1994 -10 Source: CEIC -5 1992 0 1995 5 1994 10 180 160 140 120 100 80 60 40 20 0 1993 15 Real GDP Per Capita (1996 = 100) Philippines CEIC Public Debt and Budget Source: Deficit (% of GDP) 120 Public debt and Budget Deficit (% of GDP) 10 9 100 8 7 80 6 60 Inflation (2012) Indonesian economy grew by 6.5% in 2011, and 6.2% in 2012. It is currently the second fastest growing economy among G20 members. 5 3 2 20 1 0 Source: inflation.eu 4 40 Indonesia is fiscally and monetarily more sound compared to some European countries 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Public Debt (% of GDP) (LHS) Budget Deficit (% of GDP) (RHS) The Investment Coordinating Board of the Republic of Indonesia Source: IMF Source: CEIC Investment and consumption drive GDP growth Growing Middle Class Private Consumption remains robust Source: BKPM Investment performance: Strong Result in 2012 Government Target 2009-2014 Mobilization of Financial Resources: • Growth = 7.6% • Incremental CapitalOutput Ratio = 5.2 • Investment/GDP = 40% • Saving = Investment • Current Saving/GDP = 33% • Need Foreign Investment Source: BKPM Summary of Indonesian Development: “Remarkable Indonesia” Stable and growing economy Growth is more widespread Role of natural resources Rising importance of domestic economy Demographic “dividend” Indonesia – Kazakhstan Economic and Trade Cooperation Indonesia recognized the sovereignty of Kazakhstan in December 1991, established formal diplomatic relations on 2 June 1993 and opened its Embassy in Astana on December 2010. Diplomatic and economic relation has a long established history with reciprocal presidential visits in 1995. In the same year, the Agreement on Economic and Technical Cooperation, Banking Agreement between Bank Indonesia and Central Bank of Kazakhstan and the Memorandum of Understanding on Health and Medicines Cooperation were signed. President Nursultan Nazarbayev visited Indonesia in April 2012 and agreed with Indonesia President Susilo Bambang Yudhoyono to establish Indonesia-Kazakhstan Joint Economic Commission and set a bilateral trade target of USD100 million in five years. Indonesia – Kazakhstan Economic and Trade Cooperation (cont’d) In May 2012, Coordinating Minister for Economic Affairs visited Astana to establish the Joint Economic Commission and set up five (5) Working Groups to intensify cooperation –On investment and trade, Industry and Agriculture, Oil, Gas and Energy, Health and Pharmaceutical Industry and Infrastructure and Logistics. The first Joint Commission Meeting took place in Indonesia in November 2012. Trade Between Indonesia and Kazakhstan Trade Between Indonesia and Kazakhstan Market share of Indonesian products only made 0,1% of the total trade of Kazakhstan. Meanwhile, Indonesia’s export share to Kazakhstan reached the value of 0,13%. Indonesia’s export commodities to Kazakhstan include, among others, palm oil and its fractions, tea, parts of cassette player, tape recorder or image reproduction device, primary cell and primary battery, wood, tobacco, cocoa oil, household appliances and its spare parts, processed food, and automatic data processor. Trade volume between the two countries is relatively small. There are opportunities to explore economic potentials of both countries following through the existing bilateral agreements. Both countries need to work more intensively in opening up communication, transportation and information constraints and improve interaction among the economic actors of both countries. The setting up of Indonesia-Kazakhstan Business Council is a step in the right direction. Indonesia – Kazakhstan Bilateral Cooperation During the 5th Astana Economic Forum and RI-Kazakhstan Business Forum, 7 MoUs were signed:: Oil and gas cooperation between PT. Pertamina and KazMunayGas; Cooperation in the pharmaceutical industry and medicine between the Indo Farma with Interek Group; Instant noodle plant between PT. Indo Food Success Makmur with Interek Grop; Direct purchase of grain and the formation of joint venture between PT. Nidas and Bereket Group; Traditional therapy center development between PT Bali Spa. Locus with Interek Group; Cooperation in the post sphere between the PT. Heading to KazPost; and Cooperation in the logistic field between Indonesia-South Asia and Central Asia Logistics Association with National Logistic of Kazakhstan. Thank You