New infrastructure projects are a priority for the Indonesian government
Sumit Dutta, CEO, HSBC Indonesia, recently gave an interview to Oxford Business Group, an economic consultancy. He discussed Indonesia’s economy, the country’s reform plans and its potential for future growth. Below are edited highlights from the interview.
What measures should Indonesia implement to harness its growth potential?
Indonesia is already one of the fastest-growing markets in the world. In terms of GDP growth in the last decade, Indonesia ranked third after China and India. By size of the economy, of the G20 countries Indonesia ranked 16th – with China, Japan, India and South Korea the only Asian countries to rank ahead of it. Indonesia is too big to ignore and too attractive to miss. However, the country has the potential to grow even faster. To do this, Indonesia needs to ensure it remains attractive and competitive for international and domestic investors.
Indonesia is too big to ignore and too attractive to miss
Sumit Dutta, CEO, HSBC Indonesia
Some want to protect domestic enterprise by adopting steps to limit or restrict foreign competition. I would argue that to serve the long-term interests of Indonesia, the country needs to encourage foreign investment and even foreign competition so that its own domestic standards become higher.
The government has been clear that it wants to encourage investment from overseas. It also recognises that Indonesia can benefit from increasing trade with other nations.
How prepared is Indonesia for external shocks?
I believe Indonesia is well prepared for potential shocks. Debt to GDP is very conservative, at about 25 per cent, compared to an Asian average of about 100 per cent. This helps to insulate Indonesia. Additionally, after the 1998 economic crisis, banks are much better prepared to deal with economic shocks.
What can foreign banks do to foster development?
The government is taking steps to drive infrastructure projects to support the economy. Indonesia needs and deserves better infrastructure to realise its potential, and this is a much-needed step in the right direction.
I believe international banks like HSBC can play a role in this drive. They can promote Indonesian infrastructure projects to their customers across the globe – customers who have capabilities in planning and executing these types of projects. International banks can also offer access to global capital markets to improve the commercial viability of the projects.
A number of international banks have been working with the Indonesian government, state-owned entities and private sector on key infrastructure development projects. They have been collaborating since the early stages of these projects to help structure, promote and fund them. I believe that this kind of partnership will continue.
Read the full interview with Mr Dutta at the Oxford Business Group website.