Demographic Dividends

Currently in Indonesia the child mortality and fertility are declining rapidly and the working age
population is growing at a relatively fast rate while total population is growing at a relatively
slower rate. This has resulted in large population group which is below thirty years of age, which
is potentially productive and is deemed to function as the engine of the national economy.
Indonesia median age is 28.6 years. This young population implies a potentially large workforce,
thus making it of vital importance that they can be educated to obtain higher skills and can be
absorbed by employment opportunities.
The economic growth has resulted in the rising middle class population. According to the World
Bank report in 2010, each year around seven million Indonesians are added to the countrys
middle class. In 2012, the middle class population was 75 million out of 240 million and the
estimates are that this will double by 2020-2030. This will boast the domestic household
consumption which currently accounts to 55 percent of the economic growth. Indonesias heavy
reliance on domestic consumption enabled it to weather the global financial crisis of 2008-2009
relatively smoothly with an average GDP growth of 5.6 percent in 2008-2010.The increase in
consumption has a Keynesian multiplier effect on the future economy as there is a rise in the
income levels.

Indonesian Population by Sex and Age Group

Source: World Bank

Annual Population Growth Rate Population of Indonesia

Abundant Natural Resources

Indonesias abundance and variety of commodities is vital asset to the countrys economy as well
the government revenues as commodities account for around 60 percent of the total exports.
Indonesia is basically a raw material exporting country thus the government is currently
stimulating the establishment of downstream processing industries to deliver value added
products. Indonesia is the one of the leading thermal coal and tin exporter and having large
deposits of gold, silver and copper. Its strategic location in the Asia Pacific and maintaining a 40
percent reserve of geothermal energy resources has enabled it to meet its domestic demand.

Share of Natural Resources Available in Indonesia

Political Stability

Since the upheaval of 1998 crisis which saw the fall of General Suhartos authoritarian rule,
Indonesia has undergone a political transformation . The country now has vibrant democracy
which has strengthened the political structures strengthen. This was seen in the 2009 elections, in
which the incumbent president, Susilo Bambang Yudhoyono became the first president to be re-
elected for two consecutive years ,thus boasting the global investor confidence as it ensured
continuity of investor friendly policies. Government firm stance on terrorism and other political
reforms such as decentralization of political power to provincial and regional leaders has helped
in unleashing Indonesias less developed potential to the national stage. Openness to media has
resulted in providing a space for debates and discussions and also bringing into question the
accepted cultural and political norms. This builds a healthy environment for the future
strengthening of democracy and the gradual weeding out of detrimental and corrupt practices.