A conference was held yesterday in Vicenza, at the headquarters of Confindustria, which was entitled, taking up a report by the Economist, "Indonesia: the golden chance". The conference, organized by Confindustria Vicenza, Banca Popolare di Vicenza and ISPI and which also saw the presence of SACE and MDA Consulting, was attended by among others, Professor Romeo Orlandi, Vice-President of Osservatorio Asia, and in liaison Federico Failla, Ambassador of Italy in Jakarta.
Indonesia is the fourth most populous country in the world with about 240 million inhabitants and has a gross domestic product that places it within the G-20, precisely as 17a economy worldwide. Due to its geographical conformation (it is an archipelago of about 17 islands) and due to lack of programmatic interventions, it has considerable problems in the infrastructural field, especially compared to its regional competitors (for example Singapore). Looking at the economic fundamentals, Indonesia's performance is very interesting. Following the Asian financial crisis, a process of rigor in public finances began which led to a debt level of less than 30% of GDP and to stabilize the inflation rate at around 5%-6%. As regards the change in GDP, the data show that there is a stable and fixed growth of around 6%, which is affected only to a small extent by the global economic crisis due to the country's lack of openness to international trade (70% of GDP is made up of domestic consumption).
Economic performance is facilitated by Indonesia's natural endowment. In fact, the country appears to be the first producer of palm oil (from which biodiesel is derived), the second producer of rubber and the third of cocoa. The agro-industry sector contributes to 15,3% of the country's gross domestic product followed by the energy sector with 11% which exploits the enormous endowment of coal (first country by quantity), oil, and, in the field of energy renewable, geothermal and hydroelectric.
All of these data make clear the potential of this country and the advantages for its commercial partners. From this point of view there are painful notes for our country. In fact, even if exports to Indonesia from Italy have grown, they have done so to a lesser extent than other European and global competitors. To date, Italy represents only 0,67% of total Indonesian imports against double the level of France and 2,2% of Germany. One of the reasons for the growth gap between Italy and other countries, such as Germany for example, can also be found in this, i.e. our country remains tied to outlet markets that grow little and which therefore drive exports less compared to other regions of the world.
From a territorial point of view, in the Vicenza area and more generally in the Veneto region, the data provided by the Vice-President of Confindustria Vicenza, Dr. Roberto Ditri, is decidedly positive. In fact, the volume of Veneto exports amounted to over 100 million euros in 2010 with a constantly growing trend and a 16% increase on an annual basis driven above all by the mechatronics and tanning products sectors.
During his speech, the new Ambassador Federico Failla drew attention to the need for the Italian authorities to be more present in the area and to start relations with the local government after more than a decade of absence. From the point of view of individual companies and internationalization strategies, however, Professor Orlandi underlined how in Indonesia, and more generally in South-East Asia, there is an interest on the part of local players aimed more at the "Style in Italy ” and “Made in Italy”. That is, Indonesian entrepreneurs seem to be more interested in acquiring the know-how to produce goods similar to Italian excellence rather than marketing or buying the actual goods. This is understandable if one looks at the size and type of the Indonesian domestic market which appears to be made up, as previously mentioned, of 240 million people but with a fairly differentiated income distribution. Therefore, in order to fully exploit the potential of the market it is necessary to produce goods of relatively lower quality in order to reduce their price and increase market shares. In this regard, we enclose the SWOT analysis (analysis of strengths, weaknesses, opportunities and threats) by prof. Orlando.
As regards the evaluation of the country risk, in its file country SACE places Indonesia in the M2 risk category with a positive outlook above all for the economic trend and for the stabilization of political risk. For the rating agencies, the rating appears to straddle the levels of speculative and investment grade, with a marked improvement in recent years.
From the data presented, the validity of the definition given by the Economist for Indonesia is evident: a systemic action is therefore necessary, by the Government on the one hand and by the trade associations on the other, to allow Italy to exploit this " golden chances".
Attachments: Indonesia – SWOT analysis prof. Romeo Orlandi.pdf
