Although AirAsia’s official headquarters remains in Malaysia, Fernandes, 49, says his relocation with a team of executives will help him focus on a market that’s eight times the size of his homeland.
“Indonesia is the jewel in our crown,” says Fernandes, whose airline connects some 20 other countries, including Australia, China, India and Japan. “It’s a booming, vibrant, young economy. The opportunities are enormous.”
Just how enormous is evident from the wealth being created in this nation of 249 million people, where a newly enriched middle class is taking to the skies.
After contracting 13 percent during the late-1990s Asian financial crash, Indonesia’s consumption-driven, resource-rich economy has enjoyed 13 years of uninterrupted growth — even during the global banking crisis — surging an average of 6.3 percent annually since 2010. The country’s stock market has performed even more spectacularly.
As of June 12, the benchmark Jakarta Composite Index had leapt almost 350 percent from its October 2008 nadir, making it the second-best performer during that period out of 94 markets tracked by Bloomberg.
In 2011, Indonesia overtook its former colonial master, the Netherlands, to become the world’s 16th-largest economy. In 2012, output rose another 6.23 percent to almost $900 billion and foreign direct investment jumped 26 percent to a record $23 billion.
And if it maintains a growth rate of about 6 percent, by 2030 it will have leapfrogged Germany and Britain to rank seventh, the consulting firm McKinsey predicts. Much sooner than that, by 2020, the number of middle-class and affluent Indonesians may double to more than 141 million, Boston Consulting Group said in a March report.
Betting on that growth isn’t for the fainthearted. Foreign investors are spooked by a combination of falling commodities prices and an outpouring of nationalist sentiment in the run-up to next year’s presidential election.
Indonesia is the world’s biggest exporter of power-station coal, nickel, tin and palm oil. It ranks No. 3 in liquefied natural gas and boasts the world’s largest gold mine and single biggest recoverable copper reserve.
Lower earnings from those exports resulted in a $1.6 billion trade deficit in April, which in turn helped drag the currency, the rupiah, to a three-year low.
Inflation rose 5.5 percent in May from a year earlier, putting pressure on the central bank to raise the benchmark interest rate, which it has held steady for 15 months.