Indonesian companies are among the world’s most optimistic when it comes to their business prospects next year and the medium term, and they have strong confidence in the government’s macroeconomic policy, particularly in boosting investment and domestic consumption, according to the latest survey by multinational bank HSBC.
The report titled “Navigator: Now, Next and How” shows that 54 percent of local businesses expect sales to grow by at least 15 percent next year. The portion of businesses that expressed confidence increased to 61 percent when asked about their projections for the next five years.
“Businesspeople in Indonesia show a great sense of optimism, with a much higher level of confidence compared to other companies around the world, including in the Asian region,” said Anurag Saigal, deputy director of commercial banking at Bank HSBC Indonesia.
HSBC surveyed key decisionmakers at 9,131 companies with annual sales of at least $1.75 million, or $16.5 million for corporations, in 35 countries. The survey polled 150 respondents in Indonesia.
“Nine in 10 firms are more optimistic about growth than they were a year ago. The only countries that come close to that level of optimism are Bangladesh, at 74 percent, and India, at 72 percent,” the report said.
The findings come at a time when the country saw its slowest growth of the past two years in the third quarter, and tapering investment. Imports, which often provide an indication for future economic activities, even shrunk by more than 8 percent.
Many observers, including the World Bank and International Monetary Fund, have warned that Indonesia may miss its 5.3 percent growth target next year, due to an escalating global trade war and a risk of recession in developed economies.
“Fighting global currents seems ambitious, but the future in front of us looks bright,” said Dandy Pandi, country head of global trade and receivable finance at Bank HSBC Indonesia.
Local businesses believe Indonesia would be relatively immune from global turbulence and they expressed confidence that the government would be prudent in its policies to strengthen domestic consumption and investment inflows.
“The main strategy for businesses in Indonesia to deal with business threats that may occur is focused on increasing their portfolios through various means. Nearly half [48 percent] of the companies surveyed said that they improved the quality of products or services. Furthermore, around 26 percent did so through investment in innovation. In addition, the use of raw materials and better-quality suppliers, and the expansion of platforms and digital channels are other key strategies,” Dandy said.
About 30 percent of companies also mentioned that expanding into new markets was key to their expansion strategies.
Almost all businesses (97 percent) had positive expectations of international trade and nearly half (45 percent) said they felt very positive.
“These results are generally higher than global percentages. The expected benefits in Indonesia are varied, ranging from direct benefits, like new business opportunities and efficiency, to benefits for workers in terms of income and job recruitment, as well as benefits for consumers in terms of innovation,” Dandy said.
Indonesian businesses also said they would focus on online platforms for their global sales to circumvent increasing protectionist measures, and reduce their exposure to geopolitical risks.
Still, HSBC said in the report that Indonesian companies needed to invest in new technologies.
“Twenty-three percent of global companies find Indonesia less appealing as a trade partner due to a lack of available technology,” the bank said.