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3 reasons for Indonesia to be your next new market

Indonesia is sometimes overlooked as a market for international businesses. However, it would be a mistake not to look into trading there, particularly in the build and interiors business. Indonesia's construction industry - particularly house building - is rapidly growing, and there are plenty of opportunities for foreign businesses.

Whether you're looking to expand your business into a new region or just keeping yourself aware of potential locations for future investment, here are three reasons why Indonesia should be on your radar:


An expanding housing market

The Indonesian government has taken a number of measures recently that are having major positive effects on house building in the nation. For example, BPJS Ketenagakerjaan - the Indonesian state pension fund - has announced that it is increasing the amount it invests in affordable housing by fivefold.

In 2014, two per cent of the 193 trillion rupiah ($14.7 billion) fund was invested in housing, but this year the fund will increase that amount to ten per cent. "This is a long-term investment because demand for housing is still higher than supply," said the fund's president director Elvyn Masassya.

Meanwhile, the Indonesian government's funding of a number of major infrastructure projects is also boosting the housing industry. A series of new projects, including many roads, are set to increase housing demand in many areas. Consumers can clearly be seen to respond to this.

Karan Khetan, Jakarta-based managing director of global property portal Lamudi, told the Wall Street Journal: “In the quarter before an infrastructure project opens, prices for property go up by around 25 per cent.” The announcement of this infrastructure boost caused construction, property and real estate stocks in the country to rise by 56 percent in 2014.


A growing population

Another benefit the Indonesian market has is that the country's population is growing rapidly, increasing the amount of money in its economy. Indonesia is currently estimated to have a population of 250 million - up from the 237 million recorded in its 2010 census - making it the fourth-largest country in terms of population in the world.

This population is estimated to be growing at a rate of 1.04 per cent per year. This would mean that it will reach 270 million by 2025, 285 million by 2035 and 290 million by 2045. In addition, this growing populace is becoming more and more urbanised. Around 54 per cent of Indonesians lived in urban areas in 2010, and this is expected to reach 66 per cent by 2050.

Furthermore, over half of this population is under the age of 30. A young populace means a growing workforce, which combined with the move to urban areas means more house buying. This indicates Indonesia will be a hotbed of residential construction in the coming years.


A strong economy

The strength of the Indonesian economy is the third reason to become involved in its build and interiors industry. The nation's gross domestic product (GDP) is estimated to have grown by 5.1 per cent in 2014, and is forecast to increase by 5.2 per cent this year. If correct, this will put it at over $960 billion.
This began increasing hugely in 2009-10, when the GDP rose from around $540 billion to almost $710 billion. This strong economy has enabled Indonesia to fund a number of major construction projects - including the infrastructure work mentioned above - and has enabled the housing industry to grow.

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