In 2004, Indonesia’s economy performed well, as GDP grew   5% compared to the 3% of 2003. A peaceful and democratic election increased investor confidence in the government’s ability to maintain political stability and internal security. Due to the improvements, the rating agency Standard & Poor’s upgraded Indonesia’s Long Term Sovereign Credit rating from B to B+. These conditions also were the basis for another strong year on the Indonesian capital market.

In 2004, the composite index of the Jakarta Stock Exchange reached an all time high of 1004.43 and was one of the best performing stock markets in Asia. The JSX gained 44.6% in Rupiah terms (37.5% in US$ terms). Foreign capital inflows increased with foreign investor transactions amounting to 41% of total trading compared to 28%. In 2004, market capitalization of JSX increased by 48% compared to 2003.

Morgan Stanley has predicted the Indonesian economy will grow 4.5% in 2005. The government has targeted growth of 5.5 %, on the back of increased direct investment.