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Chapter | Fintech from The Report: Indonesia 2019

An increasingly prominent and disruptive force in the financial services sector, financial technology (fintech) comprises any innovative or technology-based financial service offered to consumers or businesses. Often viewed as a competitor to traditional financial service providers, fintech fills gaps left by the formal sector, offering an important avenue to boost financial inclusion in a country where smartphone and internet penetration rates are rising quickly, even as much of the population remains unbanked. Supported by rapid expansion of e-payment platforms and peer-to-peer (P2P) lending activities, Indonesia’s fintech industry is in the midst of a period of significant growth. P2P lending recorded a triple-digit increase in 2018, while e-payment services have grown more than six-fold since 2012, prompting a surge of new foreign investment into a vibrant and increasingly diverse start-up community. This chapter also contains interviews with Aldi Haryopratomo, CEO, GO-PAY, and Jason Thompson, CEO, OVO.

Chapter | Banking from The Report: Indonesia 2019

Twenty years on from a severe financial crisis the effects of which still define the industry, the banking sector in Indonesia is crowded but rich in opportunity. A diverse array of banks and non-bank financial institutions vie for existing customers and work to attract new ones, in what remains a lightly penetrated market. With the world’s fourth-largest population, Indonesia is seen as having great potential, and continues to attract foreign investment. Market strategies, however, are in a state of flux. A handful of major lenders, some of them state-owned, have built national branch networks and constitute formidable competition for any lender following a nationwide universal banking model. Lenders are increasingly looking at financial technologies, in particular those that reach consumers via their mobile phones, as a way to scale up without investing time and money building a physical presence. This chapter also contains interviews with Kartika Wirjoatmodjo, President Director and CEO, Bank Mandiri; Achmad Baiquni, President Director, Bank Negara Indonesia; and Batara Sianturi, CEO, Citi Indonesia, and Chairperson, International Banks Association of Indonesia.

Chapter | Economy from The Report: Indonesia 2019

Indonesia is one of the world’s richest countries in terms of natural resources. With extensive oil, gas and solid mineral deposits, it is also one of the largest global economies. In 2017 the economy passed the $1trn mark, making it the 16th largest in the world. Its growing middle class, emphasis on industrialisation and services, and drive to improve infrastructure are laying the foundations for continued economic growth. Indonesia is also now home to four unicorns – start-ups valued at $1bn or above – highlighting its potential to develop the entrepreneurial and creative industries. The country is also working to attract both foreign and domestic funding by opening up and incentivising investment in additional sectors, as well as the development of infrastructure. This chapter also contains interviews with Perry Warjiyo, Governor, Bank Indonesia; Triawan Munaf, Chairman, Creative Economy Agency; and Wimboh Santoso, Chairman, Financial Services Authority.

Chapter | Table of Contents from The Report: Indonesia 2019

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Chapter | Trade & Investment from The Report: Indonesia 2019

Although Indonesia’s export receipts hit a five-year high in 2018, imports surged as the country moved to deliver a massive infrastructure development programme, bringing the trade deficit to an all-time high after three years of surplus. The country remains dependent on raw commodities for much of its export revenues; global commodity price volatility has weighed on the trade balance in recent years, while lower demand for Indonesian exports has further dampened the outlook. Foreign direct investment (FDI) inflows also slumped in 2018 after recording five years of consecutive growth, with global emerging market jitters and Indonesia’s upcoming presidential elections affecting investor sentiment. Recent reforms to prevent capital outflow from China have further weighed on FDI growth, highlighting the importance of fostering stronger trade and investment ties with smaller partners, as well as leveraging economic strength in major multilateral free-trade agreement negotiations. This chapter also contains interviews with Enggartiasto Lukita, Minister of Trade, and Thomas Lembong, Chairman, Indonesia Investment Coordinating Board.

Chapter | Country Profile from The Report: Indonesia 2019

While the Republic of Indonesia is just over seven decades old in its current form, the South-east Asian nation of more than 17,000 islands has a much longer history. The name Indonesia was first used in 1850 by British anthropologist James Richardson Logan in reference to the extensive group of islands that was known at the time as the Indian or Malay Archipelago. Archaeological analysis indicates that the ancestors of modern humans lived on the archipelago as far back as 1.9m years ago, while evidence of modern humans goes back 40,000 years. By 2000 BCE the islands were inhabited by a diverse group known as the Austronesians. These people exhibited impressive maritime skills and took full advantage of the archipelago’s location, engaging in extensive inter-island trading. This chapter contains an interview with President Joko Widodo, and a viewpoint from Narendra Modi, Prime Minister of India.