The world’s 10th biggest economy
Indonesia is currently the world's 10th biggest economy in terms of purchasing power parity (PPP). It keeps on growing and is projected to be the fourth biggest by 2050 (The World in 2050 report).
Strong UK trade links
UK companies are already flourishing in Indonesia, some with a presence that stretches back over 100 years.
Major UK companies operating in Indonesia include Standard Chartered Bank, HSBC, Mott Macdonald, Arup, Prudential, BP, Unilever, Shell, Rolls Royce, AstraZeneca and GSK.
Demographic dividend
Indonesia’s economic growth is driven by an emerging middle class.
Demand from the new middle class is increasing for modern retail and consumer goods, healthcare, education and professional qualifications, information and communications technology (ICT), transport, construction, and manufacturing.
Indonesian consumers are typically young, IT savvy, highly receptive to advertising and interested in new international brands.
Top five UK goods exported to Indonesia , in the four quarters to the end of Q2 2024
Goods | Value (£ million ) |
---|---|
Cars | |
Ships | |
Medicinal & pharmaceutical products | |
General industrial machinery (capital) | |
Road vehicles other than cars (capital) |
Source:
ONS Trade in goods: country-by-commodity exports
Last updated: September 2024
Download the latest trade and investment factsheet for Indonesia.
Top five UK services exported to Indonesia , in the four quarters to the end of Q1 2024
Service | Value (£ million ) |
---|---|
Travel | |
Other Business Services | |
Insurance and Pension | |
Telecommunications, computer and information services | |
Financial |
Source:
ONS UK trade in services: service type by partner country, non-seasonally adjusted
Last updated: July 2024
Download the latest trade and investment factsheet for Indonesia.
Total import value (into the UK from Indonesia) and export value (from the UK into Indonesia) over time
Year | Imports (£ billion ) | Exports (£ billion ) | Total trade (£ billion ) |
---|---|---|---|
2016 | 1.6 | 1.1 | 2.7 |
2017 | 1.4 | 1.6 | 3.0 |
2018 | 1.5 | 1.5 | 3.0 |
2019 | 1.5 | 1.5 | 3.0 |
2020 | 1.2 | 1.4 | 2.6 |
2021 | 1.4 | 1.4 | 2.7 |
2022 | 2.0 | 1.6 | 3.6 |
2023 | 1.6 | 1.7 | 3.3 |
Source:
ONS UK total trade: all countries, seasonally adjusted
Last updated: October 2024
Total trade is the sum of all exports and imports over the same time period.
Download the latest trade and investment factsheet for Indonesia.
Indonesia: at a glance
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Opportunities for exporters
UK companies are already flourishing in Indonesia, some with a presence that stretches back over 100 years. Major UK companies operating in Indonesia include BP, Unilever, Shell, Standard Chartered Bank, Prudential, Rolls Royce and GlaxoSmithKline (Indonesia Matters, 2020).
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Opportunities for UK companies to support Indonesia’s ambitious transport plans.
Continuous railway growth
Indonesia plans to expand its network by reaching 10,524 km by 2030. After the success of operating Jakarta’s first metro system in 2019, Indonesia is now developing more intermodal connectivity of mass rapid transit (MRT) and light rail transit (LRT) in major cities including for Surabaya, Bali and Nusantara.
Rapid airport development
Indonesia, the world’s 10th largest aviation market, currently has more than 471 airports. Indonesia's domestic flight figures are projected to recover by 2024, with international flights recovering fully in 2026. This will present opportunities for refurbishing existing airports, developing new airports in tourist destinations, and improving infrastructure and runways.
Promising plans for electric vehicles (EVs)
Indonesia is aiming for 2 million EV passenger cars and 13 million EV motorcycles on its roads by 2030, and has plans to become a hub for EV batteries. Transjakarta (Jakarta’s bus operator) aims to electrify their entire 4,500 bus fleet by 2030 and other cities are exploring EV bus ambitions too.
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Opportunities for UK companies to support Indonesia in strengthening education quality.
K-12 Schools and Technical and Vocational Education and Training (TVET)
British-style curriculums have long been adopted by national private schools. There is a growing demand for international schools to enter the market as parents become more aware of the strength of international education. Meanwhile, the Indonesian government in putting more focus on vocational education, opening opportunities to collaborate in skills and innovation.
Potential of education technology (EdTech)
Indonesia’s EdTech startup ecosystem has witnessed significant development in recent years. Most EdTech companies offer online courses and interactive e-learning platforms among others. There are opportunities for UK EdTech firms to partner with Indonesian start-ups and companies to access Indonesia’s large population of students.
Growing interest in transnational education (TNE)
The Indonesian government is keen to make greater use of TNE as a mechanism to improve educational quality and provide more options to students. UK universities are already opening campuses in Indonesia, and new UK-Indonesia partnerships on dual degrees, student exchange and broader cross-border higher education delivery are being explored.
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Indonesia has significant renewable energy potential and aims to reach Net Zero by 2060. The Indonesian Just Energy Transition Partnership (JETP), an agreement to mobilise $20 billion in public and private financing to support decarbonisation of the coal-powered economy and a just energy transition, also presents significant opportunities for renewable energy development.
Grid and electrical networks
Indonesia’s Utility Company (PLN) launched the Accelerated Renewable Energy Development (ARED) programme to prepare future market conditions by accelerating the addition of renewable energy on Indonesia’s grid to up to 75% (61.5 GW) by 2040. This programme introduces a green enabling super grid, equipped with smart grid and flexible generation.
Decommissioning of Coal Fired Power Plant (CFPP) assets
Decommissioning of coal fired power plant allows increased penetration of renewable energy and enables CFPP operational flexibility. Repurposing CFPP infrastructure can facilitate new RE generation, storage, and other benefits for the community.
Marine energy and geothermal
Indonesia is estimated to have more than 60 GW of marine energy potential (wave and tidal) and the second largest geothermal energy resources in the world after the USA. Geothermal energy will play pivotal role as based-load power energy sources that can replace its dependence on fossil fuels.
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Indonesia’s food and drink market was valued over £200 billion in 2024, with an expected annual growth rate of around 6% from 2024 to 2028. This provides greater demand for higher value and more diverse food and drink; including meat & seafood, dairy, fruits and vegetables, presenting major opportunities for UK exporters.
Consumer growth
Indonesia’s population is young, growing and rapidly urbanising, making it one of the fastest-growing consumer markets in the world. Consumers are becoming increasingly sophisticated in spending habits and product choices. The demand for high-quality international food and drink products has steadily increased in response to the growth of the middle-class population, with preferences towards healthier products, in line with government initiatives on food and nutrition.
Fast-Moving Consumer Goods (FMCG) development
FMCG industries have contributed to 18% of total GDP and this is expected to rise to 30% in 2030. The expansion of modern retail channels has increased accessibility to the products, 18 new UK brands launched in the market in 2023.
Healthier food opportunities
Indonesian consumers are becoming increasingly health-conscious, impacting their food preferences. There are emerging food trends in sustainable, organic, healthier food products, and vegan or vegetarian dietary products, reflecting a rising trend of reduced meat consumption, which is projected to achieve a value over £230 million by 2024.
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Indonesia is undertaking transformation of the healthcare system to improve patient outcomes, amplify digital innovations, and develop self-resillience. There is a major focus on building capacity within the healthcare system, notably training more doctors and developing speciality physicians, as well as partnering with international institutions on primary care development.
Education and training
Indonesia is undertaking transformation of the healthcare system to improve patient outcomes, amplify digital innovations, and develop self-resillience. There is a major focus on building capacity within the healthcare system, notably training more doctors and developing speciality physicians, as well as partnering with international institutions on primary care development.
Primary care and genomics
Improvement of primary care is a major aim for both public and private sectors, and there are plans to develop medical tourism facilities in major cities. Second opinion services, primary care consultancy, and capacity building are focus areas. Indonesia also began its flagship Biomedical and Genome Science Initiative in 2021 focussing on areas such as neurology and rare diseases.
Digital health, medtech and medical equipment
There is a move to invest in digital health and cutting-edge medical technology to support ambitions to innovate healthcare delivery. A large number of new hospitals are being developed throughout the country, requiring modern hospital equipment and devices. Consumer health products and wearables are also increasingly popular.
Check for trade barriers
Trade barriers, such as tariffs or taxes, can raise costs, cause delays, or even stop you from exporting. Check for any issues that may impact your business when exporting.
Check duties and customs
Find information on how to export goods from the UK. View the duties, rules, restrictions, and the documents you need for your products.
Doing business in Indonesia
Preparing to export
VAT
The Harmonized Tax Law (HTL) or Law No. 7/2021 introduced major changes to Indonesia’s tax structure including corporate taxation and value-added tax (VAT).
Corporate income tax (CIT) is set at a basic rate of 22%. Several benefits are provided if a business fulfil the following conditions:
- listed on the stock exchange that offer the minimum requirement of 40% of total share capital are subject to a 3% tax reduction
- annual turnover of 50 billion rupiah (US $3.5million) are eligible for a 50% tax reduction, imposed proportionally on the part of the gross turnover of up to 4.8 billion rupiah (US $336,000)
- annual turnover below 4.8 billion rupiah (US $336,000) are subject to a 0.5% tax of total turnover
VAT is imposed on the provision of services or the transfer of taxable goods. The rates are set out below:
- most manufacturers, retailers, wholesalers, and importers have 11% VAT imposed. The rate will be increased to 12% by 2025
- export of tangible and intangible goods are subject to 0% VAT
- export of services is subject to 0% VAT
Import duties
Any goods coming from overseas into the Indonesian customs territory are treated as “import” and are generally subject to import duty.
Importation of goods into Indonesia is subject to Customs verification. Importer must register with the Investment Coordinating Board (BKPM) to obtain a Business Registration Number (NIB) (Deloitte, 2019)
Regulations
In 2021, the government issued Government Regulation No. 29 concerning Organization of the Trade Sector (“GR 29”), changing the rules for distribution of goods, exports and imports.
Following GR 29, the Ministry of Trade (MOT) introduced a series of technical implementing regulations, notably MOT Regulation No. 20/2021 concerning Import Policies and Procedures
The Omnibus Law
The Omnibus Law on Job Creation intended to stimulate domestic and foreign investment by removing bureaucratic red tape.
It was passed in October 2020 and aimed at addressing issues such as ease of obtaining business permits, land acquisition for business purposes, tax and labour.
Trade barriers
Report any trade barriers that are affecting your business so we can help fix them.
Operating in Indonesia
Intellectual property (IP)
Intellectual property (IP) rights are territorial.
Rights granted in the UK do not provide protection elsewhere. You should consider getting IP protection abroad if you want to trade overseas or sell to overseas customers via the internet.
The Intellectual Property Office’s International IP Service provides practical information to help you protect, manage and enforce your IP in Indonesia and in ASEAN.
British Businesses looking for IP support can also contact the South East Asia IP Attaché team.
Indonesian National Standard (SNI)
SNI is the only standard that is applied to products and services nationally in Indonesia.
SNI is mandatory for products related to the safety, security, public health or environmental functions and/or economic considerations. Some mandatory standard applied for products that often the international standard has not been recognised.
Indonesian government provides technical information and guideline of the implementation of SNI on SNI Certification.
Working culture
Face-to-face meetings are preferred in Indonesia, with phone calls and emails sometimes seen as impersonal. However, WhatsApp is used heavily as a means of communication. LinkedIn, X and Instagram are also becoming more popular and are used for the promotion of business.
The working week in Indonesia is Monday to Friday, with Fridays considered half days.
Doing business in Indonesia takes patience and perseverance. Companies should be prepared to invest time and resources in regular visits over a period of months, sometimes years, before seeing returns. Relationship building is key to successful engagements.
UKEF
If you have any concerns about getting paid for your export, speak to UK Export Finance (UKEF) about insurance against buyer default.
Overseas business risk
In Indonesia, there are various potential risks for UK Company doing business in this country including political and economic risk, human rights, bribery, and corruption, intellectual property and crime.
For more information check Overseas business risk: Indonesia.
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