Over the past few weeks we have discussed the growth potential for the emerging markets and suggested ways for investors to get in on the game.

Recent studies regarding the demographic dividend that may be on offer from Indonesia are well worth investigating. 

Well regarded Research firm 13D noted recently that Indonesia's reliance on domestic consumption (which accounts for roughly 60 per cent of GDP) has served it well during the global financial crisis, as its slowdown in GDP growth this year will be relatively mild compared with other major developing Asian economies, according to the IMF (4.0 per cent growth in 2009 versus 6.1 per cent in 2008). 

Given that the country's export to GDP ratio is the lowest in Southeast Asia at 25.4 per cent (versus Malaysia's 94.3% and Thailand's 61.5 per cent), it is easy to understand why its domestic consumption growth remained fairly steady during the worst period of the crisis; 5.1 per cent in the second half of 2008 and 5.4% in the first half of 2009, which was roughly comparable to the prior two half year periods.

In addition, Indonesia's trade with China is booming, having quadrupled between 2000 and 2008, to $31.5 billion, which far outstripped the growth in exports to the U.S. In fact, Indonesia now exports more to China and India (combined exports equal to 13.7 per cent of its total) than to the U.S. (9.5 per cent of total). 

Indonesia's population, at 240 million, is the world's fourth largest after China, India and the U.S. More importantly, roughly half of Indonesia's population is aged between 20 and 54 years. Despite having a total population less than one-fifth of China's, Indonesia's workforce could increase an estimated 20.5 million between 2010 and 2020, just slightly less than China's projected workforce increase of 22.7 million during the same period. 

Indonesia's literacy rate, in excess of 90%, is one of the highest in emerging Asia (in contrast, India's hovers around 60 per cent). Indonesia's labour costs have already fallen below those in China's coastal regions. 

Indonesia's urban population could exceed its rural population either this year or next, for the first time in its history. Urbanisation is likely to increase further in the coming years as more people seek jobs in major cities, similar to China's experience in recent decades.

Indonesia's infrastructure appears to be a central focus, as roughly 40 per cent of the population does not have access to electricity and 30% lack access to private toilets.  Furthermore, Indonesia's road network is one of Asia's worst, with an average length approximating 0.6 kilometre (km) per square km - roughly half of India's.

Infrastructure spending as a share of GDP amounted to one per cent in 2008, implying considerable room for improvement. 

Indonesia is endowed with natural resources that will be critical to emerging Asia's future growth. According to the World Bank, the total export value of rubber, palm oil, copper and coal, important commodities for countries such as China and India - accounted for nearly 25 per cent of the total value of Indonesia's exports during the first ten months of last year, with oil and gas accounting for another 21.2 per cent of total exports.

According to the Australian Bureau of Agricultural and Resource Economics (ABARE), Indonesia was the largest thermal coal exporter in 2008, with total exports at 198 million tons - almost as much as the combined exports of the second-and-third largest exporters (Australia and Russia). Indonesia's thermal coal exports could grow three per cent year-over-year in 2009, reaching 203 million tons, and another four per cent next year, reaching 212 million tons. 

China, once a big coal exporter, could be forced to rely on imports from Indonesia and other countries in the future. China views coal as a strategic resource that can be store underground for future generations, while the recent consolidation of coal mines appears to be limiting its domestic production growth. 

According to Bloomberg, Indonesia's market cap-to-GDP ratio, at 19% is one of the lowest in the world.