Industry Trend Analysis - Steady Improvements Reflect Strong Growth Potential - FEB 2018

BMI View: Indonesia's Infrastructure Risk/Reward Index score has made marked improvements over the past year, reflecting the market's large growth potential and steady progress on government-led development plans. These improvements comes despite the presence of more severe operating risks in the country compared to more-developed markets.

Risk/Reward Snapshot
Risk/Reward Snapshot
Scores out of 100. Higher score = more attractive market. Source: BMI Infrastructure Risk/Reward Index

Regional and Global Ranks

  • Regional rank (out of 21): 12

  • Global rank (out of 105): 33

Key Features and Latest Updates

  • Indonesia's ranking in our Asia-Pacific Infrastructure Risk/Reward Index (RRI) rose from 13th to 12th place between Q2 2017 and Q2 2018, reflecting improvements to its construction industry outlook and project pipeline size. Globally, Indonesia rose from being ranked 38th to 33rd over the same period, making it one of the fastest-improving infrastructure markets in Asia in our index.

  • The greatest improvements in Indonesia's RRI came from the Industry Rewards subcomponent, which rose from 66.9 in Q2 2017 to 74.4 in Q2 2018. Indonesia is forecast to be one of the fastest-growing construction markets in Asia, having recently overtaken Australia as the region's fourth-largest construction market.

Rising Scores
Indonesia - Infrastructure Risk/Reward Index Score
Scores out of 100. Higher score = lower risk. Source: BMI Infrastructure Risk/Reward Index
  • The country's long-term growth potential is buoyed by favorable urbanization and demographic trends, surging investment interest from China and other foreign countries and the government's ambitious IDR5,500trn (USD423bn) infrastructure plan.

  • At the same time, Indonesia's position as a relatively high-risk emerging market is reflected in its subpar - but unchanged - Industry and Country Risk scores. Individual projects frequently encounter financing difficulties or bureaucratic delays, although we note that this situation is no worse than in previous years.

RRI Matrix Breakdown
Indonesia and Asia-Pacific Infrastructure RRI by Component
Scores out of 100. Higher score = more attractive market. Source: BMI Infrastructure Risk/Reward Index