MENU

Indonesia Could Be The Second Fastest Growing Country Globally: What Are The Companies That May Benefit?

A recent report by the Economist Intelligence Unit has come out with forecasts that, if true, augur well for the future of Indonesia.

According to a Wall Street Journal summary of the Economist Intelligence Unit’s report, the research outfit predicts that households in Indonesia with financial assets of US$100,000 to US$2 million will jump by nearly eight-fold from 240,000 in 2014 to 1.9 million by 2020.

Along the way, these households will also see their total financial assets grow from US$42.1 million to US$361.9 million. The Wall Street Journal also reported that “Indonesia will credit most of its economic growth to private consumption, which the [Economist Intelligence Unit] report predicts will expand at 5.6% annually.”

If this is indeed the future of Indonesia, what are some of the Singapore-listed companies which might be well-positioned to benefit? Let’s take a look at three of them.

Here’s a new car for you

With a growing middle class, automotive demand will most likely increase too.

And as the majority shareholder of Indonesia’s largest automotive group, Astra International, Jardine Cycle & Carriage Limited (SGX: C07) might be very well-positioned to capture some of Indonesia’s predicted economic growth.

Life is like a box of chocolates

Do you know that Southeast Asia has actually experienced rapid growth in chocolate sales over the years? Given that, how would you feel if you actually control 50% of the branded chocolate confectionary market in Indonesia?

Well, we could probably ask Petra Foods Limited (SGX: P34) how that would feel – the company actually does have that market position. Being the dominant player in the branded chocolate confectionary market in Indonesia, Petra Foods might just get to enjoy a rising tailwind if Indonesia does become wealthier over the years.

From cooking to bathing and anything in between

The commercial utility of palm oil is astounding. From cooking oil to margarine, and from biofuel to specialty fats that can be added to our soap, palm oil is found in a huge variety of the products we use daily.

And what this means is that the demand for palm oil would have strong links to private consumption trends. So, as one of the major palm oil producers and distributors in Indonesia, Golden Agri-Resources Ltd (SGX: E5H) may just see its business grow if private consumption growth in Indonesia will occur like how the Economist Intelligence Unit sees it.

Foolish Summary

The three companies mentioned above seem to be very well-positioned to benefit from the economic growth that is expected of Indonesia.

However, investors have to understand that just because a company’s riding on a positive macro-trend does not necessarily mean that it will be a great investment for the future.

There are other important aspects of a company that investors should study too, like its valuation, its management team, and the quality of its business operations.

For more investing analyses and important updates about the stock market, sign up to The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.