2 Population: 241 million Land area: 1.9 million square kilometers (the size of Mexico, almost 2/3 of India) 17,500 islands 300 ethnic groups

Population: 140 million, thereof approx. 90 million ethnic Javanese (largest ethnic group in Southeast Asia). Size: km2 (almost 1/2 the size of New Zealand) km northern route (great post road/ groote postweg ) constructed by Governor General Herman Daendels in 1808 – 1810 in the service of France the island’s main artery to date. Center of power and economy since colonial times. Javanese culture dominant, and pre-eminently dominant during President Soeharto’s 32-year reign. Population: 140 million, thereof approx. 90 million ethnic Javanese (largest ethnic group in Southeast Asia). Size: km2 (almost 1/2 the size of New Zealand) km northern route (great post road/ groote postweg ) constructed by Governor General Herman Daendels in 1808 – 1810 in the service of France the island’s main artery to date. Center of power and economy since colonial times. Javanese culture dominant, and pre-eminently dominant during President Soeharto’s 32-year reign. 3

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“Ask anyone in Indonesia about the country’s future and most likely you will get an optimistic answer. This is no surprise. The third largest democracy and fourth most populous country in the world has transformed itself from a low- income country in the 1960s into a fast- growing emerging market.” “Doing Business in Indonesia 2010” – The World Bank and IMF 6

Governments Political Attitude POLITICAL WILL GOAL: GOOD OF COMMUNITY Policies and Strategies 7 (“Negotiating Mining Agreements: Past, Present and Future Trends,” Danièle Barberis, 1998 )

YearEraEconomy Revolution (War against the Dutch) Non-existent Proto-democracy In shambles Guided Democracy (Revolution Ch. 2) In ruins – inflation 650% New Order Excellent: 7- 8% growth Reformation – seeds of democracy In the Doldrums now Nascent Democracy Respectable: 6% + growth 8

1. The economy shall be organized as a common endeavor based upon the principles of the family system 2. Sectors of production that are important for the country and affect the life of the People shall be controlled by the State 3. The land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest benefit of the people 9

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BANKING ANZ, HSBC, CIMB, Commonwealth INSURANCE CIGNA, Prudential, Manulife, Allianz FMCG Unilever, Arnott’s, Phillip Morris, BAT LOGISTICS Schenker, DHL, Maersk TECHNOLOGY Axiata, RIM, Siemens, GE TRAVEL Air Asia, Accor Group AUTOMOTIVE Toyota (market share > 50%), Honda, Mercedes

It definitely is, but you can do (good) business in Indonesia without promoting and resorting to bribery or being otherwise involved in corruption. 12

Middle class group: 50 million +27 th biggest exporter in 2010Inflation 5.4% (2011) Economic growth in % revised downward to 6.3% Size of economy : US$ 846 billion in 2011, projected to be a trillion dollar economy in th largest economy in the world 13

Growth of air travel in % National flag carrier Garuda flew 4.6 million passengers in Q1/2012 (up 25% YOY) Jakarta Airport served 52.4 million passengers in 2011 New car sales in 2012 projected at 1 million units Mobile telephone subscriptions in Q1/ million numbers Accor to double number of hotels to 100 by end air traffic controllers needed Aston Hotels to add 73 new hotels (20 thereof this year) to existing new pilots needed annually US$ 2 billion commuter line from airport – Jakarta operational 2014

Indonesians don’t know much about New Zealand Kiwis don’t know much about Indonesia Ergo – stereotypes prevail 15

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Cooperation exists in all sectors and areas: economy, security, education, counter-terrorism Negotiations on Indonesia – Australia Comprehensive Economic Partnership Agreement (IA-CEPA) commenced in September 2012 May be turned into an advantage if linked to Australia – New Zealand Closer Economic Relations (CER) 17

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19 (“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012) 16 th -largest economy in the world 45 million members of the consuming class 53% of the population in cities producing 74% of GDP 55 million skilled workers in the Indonesian Economy $0.5 trillion market opportunity in consumer services, agriculture and fisheries, resources, and education 16 th -largest economy in the world 45 million members of the consuming class 53% of the population in cities producing 74% of GDP 55 million skilled workers in the Indonesian Economy $0.5 trillion market opportunity in consumer services, agriculture and fisheries, resources, and education 7 th -largest economy in the world 135 million members of the consuming class 71% of the population in cities producing 86% of GDP 113 million skilled workers needed $1.8 trillion market opportunity in consumer services, agriculture and fisheries, resources, and education 7 th -largest economy in the world 135 million members of the consuming class 71% of the population in cities producing 86% of GDP 113 million skilled workers needed $1.8 trillion market opportunity in consumer services, agriculture and fisheries, resources, and education

20 (“The archipelago economy: Unleashing Indonesia’s Potential – Executive Summary” – McKinsey Global Institute, September 2012) The Indonesian economy has performed strongly over the past decade and is more diverse and stable than many realize. Indonesia had the lowest volatility in economic growth compar- ed to OECD and BRIC countries. Another mis- perception is that Indonesia’s economic growth centers on Jakarta. The fastest growing urban centers are large and mid-sized cities with more than 2 million people, incl. Medan, Bandung, Bogor and Surabaya. Indonesia is not an Asian manufacturing exporter driven by its growing workforce or a commodity exporter driven by its natural resources. The main drivers of growth are domestic consumption and services. The majority of Indonesia’s productivity gain has come not from a shift of workers from lower- productivity agriculture into more productive sectors, but from product- ivity improve- ment within sectors and not at the expense of employment.

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