Indonesia More Tiger than Skunk

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"Natural resource-rich nation receives considerable overseas attention."

HSBC Chief Michael Geoghegan's new acronym is CIVET, covering Cambodia, Indonesia, Vietnam, Egypt, Turkey and South Africa—his suggestion for the next tier of emerging countries. The members of the Civet club do have much in their favor in terms of growth prospects this decade.

Indonesia in particular finds itself both the object of considerable overseas attention largely as a result of its wealth of natural resources. That attention and those resources though also bring their own responsibilities. A Reuters report advised major mining companies are lining up to develop major deposits of thermal coal, iron ore, copper, zinc, nickel and gold, in addition to Indonesia's established position as a major tin producer. But at the same time, as an increasingly responsible member of the world community, the government enacted a two-year ban on permits for forest clearing. The clearing of carbon-rich natural and peat-land forests caused the vast majority of Indonesia's emissions so curbing deforestation is seen as a quick fix. The magnificently named Susilo Bambang Yudhoyono, president of Indonesia, has vowed to cut greenhouse gas emissions by as much as 41% by 2020. Meanwhile $14bn of mining investments are being held up pending clarification on how the ban will be implemented.

Indonesia's prospects look good nevertheless, with growth of 6%+, a low cost labor force and improving political stability, the world's fourth most populous country is attracting downstream investment too. Indeed that will be Indonesia's challenge, to attract investors keen to build downstream value add production facilities not simply extract raw materials for processing overseas.

In a world short of natural resources and with the Chinese market metaphorically on their doorstep, Indonesia holds considerable promise to lead the pack of new emerging market economies.

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