Indonesia: The newest BRIC?

The BRIC nations may need to add a fifth member: Indonesia. Brazil, Russia, India and China were once considered the hottest emerging markets in the world. But throughout the past year they have been skidding. Indonesia, on the other hand, remains one of the fasting growing economies thanks to a rising middle class and strong domestic consumption. In turn, investors and analysts say they expect it to stay a ripe area for investments over the short and long-term.

"Consumers are heading up the value chain and using more expensive soaps and dishwashing detergents," said Bharat Joshi, assistant investment manager of Indonesian equity funds for money manager Aberdeen, which has roughly $500 million invested there. "We're seeing companies do well that reflect the rising income levels in Indonesia."

While Indonesia's economy took a significant hit during the late 1990s Asian financial crisis, the Southeast Asian country largely evaded the more recent global downturn.
Indonesia's main stock index, the Jakarta Index, has trailed the S&P 500 only slightly over the past two years. It's returned 19%, compared to the S&P 500, which is up 20%.

More importantly, analysts say Indonesia and its growing middle class are buffered from some of the pressures hitting other fast-growing nations. Unlike many of its neighbors, the country's growth isn't solely dictated by exports. Instead its growing middle class is fueling something of a virtuous cycle where more goods and services are produced and purchased in rapidly urbanizing cities throughout the archipelago.

The Indonesian government has tamed inflation even as domestic growth has chugged along at roughly 6% per year over the past few years. That's expected to continue.

McKinsey & Co. predicts that Indonesia will be the 7th largest economy in the world and add 90 million additional members to its middle class by 2030. Right now, there are 45 million middle class Indonesians, and it ranks as the 16th largest economy in the world.

Many of the companies represented in the Jakarta index are commodities companies, as Indonesia is one of the top producers of coal and palm oil in the world. That could make Indonesia's stock market more vulnerable to macroeconomic swings since commodities companies are more dependent on global growth.

After reading the article above I looked into the Indonesian economy and found that Indonesia exports were worth 14116 Million USD in August of 2012. Their major exports are: gas, plywood, textiles, and rubber. They have the world's largest tin market, and are expanding their mineral production from bauxite, silver, and tin, to include more copper, nickel, gold, and coal output for export market. It's main export partners are Japan, the European Union, United States and Singapore. I have to believe that with these numbers that Indonesia should be involved with the BRIC nations they have a growing middle class. My concern is if workers from other countries not so well off as Indonesia is becoming will the transfer of new labor into the current workforce slow down the country's growth? Is it possible for Indonesia to sustain their current growth rate if we see an increase in this labor sector (that is workers coming from neighboring counties to make a "better life")?

http://money.cnn.com/2012/10/15/investing/indonesia-bric/index.html