SWOT Analysis of Indonesia

Swot analysis of Indonesia. Indonesia or the Republic of Indonesia is situated in Southeast Asia. It consists of more than 17000 islands between the Indian and Pacific oceans. The capital of Indonesia is Jakarta.

Indonesia is the world’s largest island country with a total area of 735,358 square miles and it’s the world’s 14th largest country in terms of size and area. Her neighboring countries are Australia, Malaysia, the Philippines, Palau, Vietnam, Papua New Guinea, Vietnam, India, and Singapore.

Indonesia has a long history dating back to the 7th century. Various traders from India, China, and the Middle East have visited the island and they influenced the local inhabitants with Hinduism, Buddhism, and Islam. The Dutch colonists brought Christianity and they colonized the island for over 350 years. The Indonesian freedom movements finally achieved independence in 1945 with the assistance of Japanese forces in WWII.

According to an estimate, Indonesia is home to the world’s largest Muslim population country comprising 12.7% of the world’s population. Approximately 86.70% of her population follows Islam; Christianity, Hinduism, and others are some of the other major religions consisting of 10.72%, 1.74%, and 1%.

Today, we’ll study the swot analysis of Indonesia. It would help us to examine the growth and productivity of the world’s largest island country. For macro-environmental factors, check out the pestle analysis of Indonesia. Here’s the swot analysis of Indonesia as follows;

Strengths of Indonesia 

Large Consumer Market

Approximately more than 270,203,917 people are populating Indonesia. It makes her the world’s 4th largest consumer market country. The figure 270 million consumers attracts the attention of many local and foreign investors.

Low Interesting Rate

Their interest rate in Indonesia is 3.60% and 3.91% for 2021 and 2022. The purpose of reducing the interest rate is to attract foreign investment and recover the country’s economy.

Diversity

Indonesia has a motto of “Unity in Diversity” and the country is well-diverse in terms of natural resources, population, culture, ethnicity, and languages. According to an estimate, she has more than 600 ethnic groups and they speak over 700 languages.

The vast wilderness and landscape of the country maintain the biodiversity of various species of the world. Most importantly, the country provides a cheap labor force to businesses and companies in agriculture, mining, energy, and other fields.

ASEAN Membership

Indonesia is not only a member of the ASEAN (Association of South East Asian Nations) organization, but she’s also the regional power in the region in terms of population and resources. It gives the country a strong competitive edge in the Southeast Asian region.

High GDP

According to an estimate, the annual GDP (gross domestic product) of Indonesia was 1.38 trillion dollars and it’s the 17th world’s highest. The per capita earnings of the country in 2022 was 5005 dollars and it’s 113th world’s highest. Indonesia’s strong financial position puts the country in a decisive position in global politics. Her revenue has dropped slightly because of the global economic crisis.

Weaknesses of Indonesia 

 Poverty Level

Even though Indonesia has made strong financial progress in recent years, but the country is still facing the issue of the poverty level. According to a study by World Bank, the poverty level in Indonesia in 2020 was 9.78%. It has dropped significantly for the past few years and the reduction has helped the country to move up to the upper-middle countries.

It’s admirable that the country has been decreasing the poverty level, but she still has a lot of work to do. It’s because approximately more than 26.42 million people are living below the poverty line and it’s a very high figure.

Relying on FDI

The Indonesian government is running a lot of businesses in the country. But the overall country is dependent on foreign investors. If incidents and political conflicts happen again, it would compel foreign investors to pull out their resources. The country’s economy would fall when they do. Therefore, the government should promote local businesses to diversify their earnings.

Low Infrastructure

Indonesia is facing the issue of lower quality of the country’s infrastructure. It’s because she has to face natural disasters like earthquakes, heavy rainfalls, and Tsunamis. Many far off villages are dealing with severe energy crisis and blackouts. Her government has a long way to achieve the social welfare goals like improving healthcare and the education system.

Account Deficit

According to an estimate by the Central Bank of Indonesia, the country’s trade deficit in 2020 was 2.9 billion dollars. The country has reduced it to some extent to roundabout 1.2%, but the deficit is still high. However, account deficit is when imports of the country are higher than exports.

Relying on Chinese Market

China is one of the major exporting markets of Indonesian products. In fact, the country is relying on the Chinese market to consume Indonesian products. According to an estimate, China invested approximately 2.4 billion dollars in 2020.

Opportunities available to Indonesia 

Expanding Internet Access

Internet and digital technology are the future of the global economy and businesses. It has proven it during the pandemic of covid-19. Only the world’s leading online and tech companies remained profitable. All other businesses have faced serve losses. Indonesia should increase its investment in digital technology, and it would only be possible through the internet.

FDI Expansion

The increasing number of foreign businesses in Indonesia are positive signs that they trust the country’s economy. The government should exploit this opportunity and increase the foreign direct investment rate. It would help the country to solve many financial issues.

Neighboring Countries

Indonesia has very powerful neighboring countries Australia, Malaysia, Singapore, and India. The country should try to develop a free educational and technological relationship with them. It would help Indonesia to learn technology from them and implement it in the home country.

Increased Consumer Market

Indonesia should consider her over 270 million population as a consumer market and cheap labor. She should attract foreign companies to establish their manufacturing units in the country.

Threats Indonesia has to face 

Educated Class

The literacy rate in Indonesia is approximately 95%, but the number of higher educated people in the country is very. The unemployment rate is also higher among the educated people. According to an estimate, only 9% of the Indonesian people have bachelor’s degrees that are above 25 years old. It’s very low compared to other Southeast Asian countries.

Terrorist Threat

Indonesia has faced many terrorist threats and attracts since 9/11. The country has signed many treaties with world organizations to fight against terrorism. They’re very harmful to her economy and they would push away investors.

Poverty Level

According to an estimate, roundabout 26.42 million Indonesian people are far below the poverty line. Her economic progress would go in vain if her millions of people are poor. However, it doesn’t remain in poverty. It causes many other social evils like robbery, kidnapping, murder, corruption, etc.

Conclusion: Indonesia SWOT Analysis Example Country

After an in-depth study of the swot analysis of Indonesia, we’ve concluded that Indonesia is indeed the world’s leading developing economy with a plethora of potential. The increasing poverty level, terrorist threats, low-quality infrastructure, and lower educated people are some of the main weaknesses and threats of the country. Indonesia should utilize the influence of the neighboring countries and proliferate its economy.