Muhamad Al Azhari
Dismissing the findings of a global conference that Turkey would be the next to join the rising economic powers of Brazil, Russia, India and China, analysts said Indonesia had far more potential given its resources and population but needed reforms to stay in the running.
According to a vote of about 100 investors at a conference in London hosted by Royal Bank of Scotland, Turkey at 35 percent would be the next to join the BRIC gang, followed by Indonesia (23 percent) and Mexico (16 percent). The poll results were forwarded to Bloomberg on Monday night.
Some of Turkey’s backers cited its “strong growth and its geo-strategic importance at the crossroads of Europe and Asia.” Others said the nation could replace Russia, which was called a “one-trick pony” that had little to offer except its oil and mineral wealth.
Fauzi Ichsan, a senior economist at Standard Chartered, said Indonesia was a far better fit than Turkey. “Where else do global investors put their money in Asia after China and India? Indonesia has a domestic market power of [237 million]. It is a net commodity exporter,” he said.
Turkey, a nation of 70 million, has many similarities with Indonesia. Both are moderate Muslim majority states that escaped the global economic downturn. Both are oil and gas producers, although neither is self-sufficient. Turkey is expecting 4.5 percent growth this year, while Indonesia is eyeing a 6.5 percent expansion.
In an unrelated Standard Chartered Bank report this week, it said it was crucial for Indonesia to resolve obstacles to infrastructure development.
“The lack of trans-Java and trans-Sumatra highways, inadequate power supply and insufficient seaport facilities in the world’s biggest archipelago, has become the biggest impediment to foreign direct investment,” the report said, adding that these problems limited the nation’s growth to an average 5.1 percent over the last nine years.
Peter Fanning, the chairman of the International Business Chamber, said Indonesia’s political stability and strong economic fundamental made Indonesia an attractive investment destination. But he said complex bureaucracy was still the major complaint from investors
“Indonesia is going to progress. It is a relatively save place to invest. Growth could be so much better if [bureaucracy] did not stand in the way,” he said.
Indonesia moved a step closer to investment grade last month when Moody’s upgraded it sovereign debt rating to Ba1, within one notch of investment grade, with its Mediterranean rival one step behind at Ba2.