Insurance Industry in Indonesia

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The Rise of Indonesian Economics & Business:

Opportunities and Challenges of
Insurance Industry

1. Summary

This report will provide an overview of the Indonesian economy and society, detailed insight on opportunities and challenges in the Indonesian insurance industry information. We introduced the industry’s history with great development, and it main challenges will face in Indonesia. Regulations and capital requirements are challenges. Life sector and growing GDP provide tremendous potential. Other prosperous sectors such as trade and manufacturing also indirectly help.

It is clear. With Indonesia’s enormous natural resources, cheap labor and growing middle class, the potential is exceptional. If the challenges can be handled, the opportunities are too big to neglect. Indonesia and its insurance industry is absolutely attractive and I would recommend for future investments.

The report has limitations. This provides general overview of Indonesia based on limited data. Other challenges found but not discuss here are corruption, infrastructure and the legal system. All these are critical to Indonesian development. Indonesia seems to be slowly improving on all these issues. Anti-Corruption in Indonesia are rapidly increasing in range and intensity with more democratic society.

2. Introduction of Indonesia

The country of Indonesia stretches across more than 13,000 islands between the Indian Ocean and the Pacific Ocean. With more than 220 million people, Indonesia has the fourth largest population in the world, behind China, India, and the United States. The islands of Indonesia were formed along a line where two continental plates meet on the ocean floor. The islands are highly volcanic. The soil around the volcanoes is rich in nutrients, and the rainy, tropical climate along the equator is ideal for farming. Indonesia’s rice paddies produce crops year-round, and other crops include soybeans, sugarcane, and peanuts as well as rubber, coffee, tea, and tobacco. Many of the islands are covered in tropical rainforest, with a rich diversity of plants and animals.

Throughout its history, Indonesia has been a center for trade and exchange of ideas, and the islands still have a mix of traditions today. The Buddhist and Hindu religions traveled to Indonesia from 600 to 1500 CE. In the 1200s, Muslim traders brought Islam, and the religion spread throughout Indonesia, except for the island of Bali, which remained predominantly Hindu. European explorers arrived in the early 1500s, and by the end of the 1600s, the Netherlands (also known as “Holland”) in Europe controlled most of the islands. The Netherlands ruled the islands of Indonesia for nearly 350 years, until Indonesia declared its independence in 1945 after World War.

In recent decades, Indonesia has been viewed as one of Southeast Asia’s most successful highly performing and newly industrializing economies. It is the largest economy in Southeast Asia and a member of the G-20 major economies. It features a developing market economy, with strong influence from the government. The government plays a vital role by owning more than 164 enterprises. The government controls the prices of many basic products, such as rice, electricity and fuel. Domestic consumption is one of the major driving forces behind the country’s economic growth. Although Indonesia’s economy grew surprisingly fast during the 1980s and 1990s, it experienced considerable trouble after the Asian financial Crisis of 1997, which led to political reforms.

The global financial crisis in 2008- 2009 had a relatively small impact on Indonesia because of its heavy reliance on domestic consumption as the driver of economic growth. Although the economy slowed from the 6 percent growth rate recorded in 2007 and 2008, they managed to withhold a 4 percent growth rate in 2009.

Indonesia outperformed its regional neighbors and joined China and India as the only G-20 members posting...
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