3 of Indonesia’s most promising sectors to invest in

Indonesia is sometimes referred to as the sleeping giant of Southeast Asia. While it might not seem as mature as places like Singapore, all signs point to a future economic boom. Boston Consulting Group claims there are roughly 74 million middle-class affluent consumers in Indonesia, and it estimates this number will double within the next six years.

Indonesians are extremely optimistic about their financial futures, more so than people in any other nation. There are now 25 places in Indonesia where the middle-class population is in excess of half a million people. By 2020, BGC claims there will be 54 of these areas.

What does this mean for investors? As Indonesia’s consumption-driven growth ropes in opportunity-seeking venture capitalists, we want to take a moment and suggest three promising sectors to look at in the archipelago. Factoring in market opportunity and local competition, here are our picks in no particular order.

Fintech

There is an iceberg of financial technology in this world, and Indonesia has only seen the tip of it. Accenture says Indonesian financial service customers are growing savvier, industry oversight is getting tighter, and competition is intensifying.

A wealth boom has caused Indonesian citizens and businesses to start looking for 21st-century ways to protect assets and manage finances. Words like mutual funds and estate planning are beginning to earn relevance. Consumers are naturally turning to the internet for counsel. Investors can expect to see many more financial advice and comparison tech startups in Indonesia, but should also choose their founders wisely, as not every entrepreneur can create a top-notch fintech product.

See: Nova Founders Capital receives $50M from Hong Kong’s Pacific Century Group to boost fintech in Asia

Leisure

According to the BGC, as wealth rises and living standards increase, not only do consumers’ savings and purchasing powers increase, their needs follow a natural progression from products that address basic needs to those that offer greater convenience – and finally to those that offer comfort.

Market intelligence firm Euromonitor International says with growing internet penetration, Indonesians are making more and more online purchases for leisure activities. Locals are now booking online for items ranging from plane tickets and hotel vouchers to car rentals and day trip excursions.

The leisure sector is a good space for investors to look at in Indonesia because locals are becoming increasingly inclined toward purchases in luxury, adventure, and entertainment. McKinsey and Co claims the country’s leisure sector will reach US$105 billion in Indonesia by 2030.

Healthcare

In the past, most affluent Indonesians flew to Singapore only for serious surgery or other health concerns. But in recent years, companies like Sinar Mas, Mayapada, Ciputra, Kalbe Farma, Omni Group, and Lippo have begun paying attention to the healthcare business in an effort to meet the demands of a growing middle class.

Frost & Sullivan forecasts healthcare expenditures in Indonesia will reach US$59.1 billion in 2018 (public and private spending at US$24 billion and US$35.1 billion respectively), a 14 percent increase from two years ago. Investors can also expect to see more healthcare oriented venture capital firms, like US-based Sovereign’s Capital, eye Jakarta.

Image of Jakarta via Flickr user kaybee07; image of healthcare via MilitaryHealth.

3 of Indonesia’s most promising sectors to invest in