Exporting guide to Indonesia
Consistent economic growth
Indonesia’s GDP has continued to grow consistently each year since 2014, with a growth rate of 5% in 2019 (IMF, 2020). This would lead to an increase of spending power for consumers which UK businesses could benefit from. Despite the COVID-19 pandemic, Indonesia’s economy has rebounded in the second half of 2020 and is expected to accelerate in 2021. Real GDP is projected to expand by 4.8% in 2021. (IMF, 2021)
Large Facebook and Twitter markets
Indonesia has over 100 million internet users. It is the world’s third-largest Facebook market and fifth-largest Twitter market. 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.
Demand of goods and services
In the year to June 2019, the top goods exported from the UK to Indonesia were metal ores and scrap, pulp and waste paper, road vehicles, toilet and cleansing preparations and medicinal and pharmaceutical products (ONS, 2019). The top services imported by Indonesia from the UK were business, insurance and pension, travel, transportation and financial services (ONS, 2019). If you operate in any of these industries, Indonesia could be a good market for you.
Indonesia: at a glance
Currency
Rupiah (also known as IDR)
Business language
Bahasa Indonesian
You’re likely to need a translator
GDP per capita
$3,870.60
UK is $42,560 (IMF, 2018)
Economic growth
5.0%
(IMF, 2018)
Time zone
GMT +7/8/9
Jakarta is GMT +7
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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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Airports
With over 300 airports and ambitious infrastructure plans, there are opportunities for UK companies in the sector.
Strong sectoral growth
With 349 airports as of 2021, 90 million domestic passengers and 11 million international passengers, this sector is set to see strong growth over the next 5 years. A fourth terminal at Jakarta’s Soekarno-Hatta International Airport is planned and expected to be operational by 2024.
Rapid airport development
The Indonesian Government plans to construct 7 new airports and upgrade 46 existing airports. There are also another 7 airports to be developed under a Public Private Partnership scheme, including Labuan Bajo, the first airport to be operated by foreign firms.
Ambitious infrastructure plan
The Government’s ambitious infrastructure plans and ASEAN Open Sky policy offer opportunities in modernising equipment related to communication, navigation surveillance and automation. There is also interest in upgrading airport systems and related human resources training.
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Education
Indonesia has the fourth largest education system in the world, with a wealth opportunities for UK exporters.
Large education market
Indonesia has the fourth largest education system in the world, with a wealth opportunities for UK exporters. (Ministry of Finance, 2020).
Support from central government
The Indonesian Government has allocated £29.9 billion (20% of the state budget) for education in 2020. This budget is decentralised to local governments in over 34 provinces. Human capital development is a focus in the current President Joko Widodo’s second term. (Ministry of Finance, 2020).
Wide range of opportunities
The Government is committed to increase education quality, opening the gateway for UK education providers to establish presence and penetrate the market. Current opportunities range from vocational education and training in various sectors such as engineering, maritime, aerospace, railway and information technology, English language training and teacher training. (Indonesia Matters, 2020).
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Renewable Energy
Indonesia has an abundance and wide variety of renewable energy resources. The government has therefore set ambitious targets for renewable energy as a means to meet its greenhouse gas emissions targets in the energy sector and to increase national energy security.
High value of renewable energy projects
The market value of energy projects is high, with the hydropower market is estimated to be at USD 12.9 billion, the bioenergy market at USD 2.5 billion, the wind power market at USD 1.5 billion, the solar photovoltaics (PV) at USD 769.3 million and the smart grid solutions at USD 433.5 million. (Indonesia Renewable Energy Business Opportunities, 2019)
Renewable energy business opportunities
There opportunities for UK companies are especially rich in consulting and engineering studies, major electro-mechanical equipment supply, and Engineering, Procurement and Construction (EPC) management, especially for projects with a capacity greater than 10 megawatts (MW). (Indonesia Renewable Energy Opportunities, 2019)
Opportunity for ownership
Based on Indonesia’s Negative List of Investment, power projects above 10 MW in generating capacity may have foreign ownership up to 95%. Projects developed under the Public Private Partnership regulations allow up to 100% foreign ownership. (Indonesia Renewable Energy Opportunities, 2019)
Doing business in Indonesia
Preparing to export
VAT
Based on Law Number 8 of 1983 as most recently amended by Law Number 42 of 2009, an Entrepreneur that delivers taxable goods and/or services exceeding a certain amount in one fiscal year is required to register as a VAT-able Entrepreneur. Currently the threshold is Rp 4.8 billion per annum (Deloitte, 2019-2020)
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)
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.
Intellectual property (IP)
Indonesia has enacted laws covering patents, copyright, trademarks, industrial trade secret, plant varieties, integrated circuits and traditional knowledge to implement its obligations under the international treaties. You can find a full list of WIPO (World Intellectual Property Organisation) references to Indonesia.
Operating in Indonesia
Intellectual property (IP)
Indonesia has enacted laws covering patents, copyright, trademarks, industrial trade secret, plant varieties, integrated circuits and traditional knowledge to implement its obligations under the international treaties. You can find a full list of WIPO (World Intellectual Property Organisation) references to Indonesia.
Next steps
DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.
