Keywords: Automation in Indonesia Market Research Study, Southeast Asia, Market Shares, Market Forecast
Increasing demands for energy, infrastructure, and manufactured goods will drive the automation technology market in Indonesia as Southeast Asia’s largest economy continues to expand. The automation products, systems and services market is expected to grow strongly over the forecast period (2013-2018), according to a new ARC Advisory Group study.
Aside from 250 million people, Indonesia’s favorable demographics include a young and still-growing population and a rapidly rising middle class. The country also has an abundance of natural resources, including coal, copper, gold, nickel, tin, oil, gas, and palm oil. GDP is predicted to increase by a factor of 10 over the next 15 years to exceed $9 tillion, making Indonesia one of the world’s biggest economies come 2030.
“Consumer-based manufacturing industries such as automotive, food & beverage, and household and personal care are all investing heavily to boost production capacity and meet demands for products previously out of reach of most Indonesians,” said ARC Southeast Asia General Manager Bob Gill, co-author of ARC’s new “Automation Systems Market Outlook for Indonesia” “The new and upgraded plants require modern automation technology to ensure reliable, productive, safe, and secure manufacturing.”
Indonesia, which seeks to rectify its considerable deficits in energy and shortcomings in infrastructure, offers lucrative opportunities for automation suppliers serving industries such as oil & gas, power, cement, and water & wastewater.
Attracting Automation Suppliers
With an eye toward this increasingly attractive market, automation suppliers are ramping up resources in Indonesia. A third of suppliers surveyed opened offices in the last five years, while those with a longer history are moving beyond Jakarta and Java, notably to Kalimantan and Sumatra. While suppliers with manufacturing plants and engineering centers are currently in the minority; this is likely to change as product demand accelerates and user needs evolve over the next few years.
Investing in Oil and Gas
Due to rising domestic demand and previous lackluster investment, this one-time OPEC member now spends billions on imported crude oil, gas, and petrochemicals. However, with active upstream participation by the world’s oil majors, Indonesia is looking to initiate and increase production from a number of recent finds, as well as uncover new sources of oil and gas in remoter areas of the archipelago. Downstream, a slew of multi-billion dollar investment plans have been announced to upgrade refineries and construct several new petrochemical plants over the next several years.
Revitalizing Infrastructure
Determined to improve Indonesia’s notoriously low-quality infrastructure to developed-world standards, newly elected president Joko Widodo, announced ambitious plans to build 15 airports, 24 seaports 3,600 km of new roads, and an extra 35,000 MW of installed electricity capacity by 2019.
“For many, the new business-friendly president passed his first test by executing a campaign promise of lowering the level of fuel subsidies, which have long been decried as a huge misallocation of public funds. The billions of dollars in savings are being diverted to infrastructure, education, and health, all which stand to enhance the economy,” notes Bob Gill.
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