Doing business in Indonesia

Indonesia

Located off the coast of mainland Southeast Asia, between the Indian and Pacific oceans, Indonesia’s land archipelago is vast. Rich in heritage, culturally diverse, innovative and progressive, it provides incredible opportunities for international businesses.

Covid-19 latest information

This guide is an accurate reflection of the pre-Covid-19 business environment in Indonesia. Please note that due to the current situation, some circumstances may have changed in this country. Figures and data in the guide were last updated in August 2020.

 

Welcome to Indonesia

One of the most densely populated countries in the world, Indonesia has a high-performing, fast-growing economy. HSBC has a long and diverse history in the country, with the Hongkong and Shanghai Banking Corporation Limited opening its first branch in Jakarta in 1884.

The extensive footprint of PT Bank HSBC Indonesia in the country has allowed us to contribute directly to the growth of the Indonesian economy, connecting customers to opportunities through our expanded capabilities and geographical reach, both locally and globally.

With award-winning solutions, we believe we have much to offer you and your business to soar and capture every opportunity that Indonesia has to offer.

We look forward to working with you!

François De Maricourt President Director, PT Bank
HSBC Indonesia

Essentials

Population
261.9 million1
Size
1,910,931 sq km
Main languages
Bahasa Indonesian (official language), although English is widely spoken in many major cities
Capital city
Jakarta
Other major cities
Surabaya, Medan, Bandung
Currency
Indonesian Rupiah (IDR)
Dialling code
+62
GDP
USD4,130 per capita2
Top exports
Mineral fuels, animal or vegetable fats (including palm oil), electrical machinery, rubber, and mechanical appliance parts3
Top imports
Mineral fuels, boilers, mechanical appliance parts, electrical machinery, iron and steel, and foodstuffs3
Unemployment rate
4.38%5
Corporation tax
25%4
Typical office hours
08.00am – 5.00pm, Monday to Friday
Time zone
UTC +7
Indonesia spans three time zones:
+7 in the west (including Java and Sumatra)
+8 in the central regions (including Bali, Sulawesi and Lombok)
+9 in the east (Maluku and West Papua)
Emergency numbers
110 (police and general emergencies), 113 (fire), 118/119 (ambulance)

1 World Bank Group, 2019
2 Organisation for Economic Co-operation and Development (OECD), 2019
3 Central Intelligence Agency (CIA), 2019
4 Trading Economics, 2019
5 Statista, 2020

* Map shows cities of economic significance according to the CIA, 2019

Indonesia: The vast archipelago

Ranked

# 73

for ease of doing business (in a survey of 190 measured economies by The World Bank)

  • Immense market

    This is the tenth largest global market. Indonesia is the world’s fourth most populous country, from Aceh in the west to Papua in the east. Consumer sentiment has also been hitting record highs.

  • Innovative, emerging economy

    Indonesia is one of the top innovators among emerging economies. The country ranks 31st and 32nd in innovation and business sophistication respectively.

  • Rich in resources

    Indonesia is rich in natural resources including coal, tin, copper, nickel, bauxite, oil and gas. Above ground, its vast land mass grows palm oil, rubber, coffee, cocoa and rice.

  • Potential for growth

    There’s a reason why Indonesia is one of the emerging CIVETs (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) – it has incredible potential. This economy is projected to be the seventh largest in the world by 2030.

  • Embracing diversity

    This vast archipelago of 17,000 islands is home to at least 300 different ethnic groups. This makes the country culturally diverse, yet with a distinct national identity.

Country profile

Indonesia is the world’s fourth most populated country. It’s a vast patchwork of islands, peoples and economies.

Indonesia, its government, private and public sectors are focusing on the need to boost economic growth, investment and job creation. The administration has also been dismantling barriers that have previously dampened foreign investment. Businesses that align with some of the macro-trends and factors could do well here.

Opportunities in Indonesia also extend beyond its large domestic market. It benefits from favourable trading terms with other members of the ASEAN bloc.

There’s also now a shift in the production and manufacturing of goods from traditional North Asian manufacturing powerhouses, such as China and South Korea, to Southeast Asia, which includes Indonesia.

ASEAN comprises 10 countries including Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia. This is a regional inter-governmental organisation that promotes co-operation and facilitates economic, political, security, military, educational and socio-cultural integration.

Read on to discover more about the dos and don’ts of doing business in Indonesia. Also find out how trading in or with the country could help boost the future growth of your business.

5 reasons to do business in Indonesia1

  1. Largest economy in Southeast Asia
    Indonesia has the largest economy in Southeast Asia and is one of the emerging market economies of the world.
  2. Moving up the competitiveness ladder
    Indonesia has improved its performance on the Global Competitive Index over the last few years, ranking 50th in the 2019 report.
  3. An emerging middle-income country
    This G20 member has been working to reduce poverty and map out impressive economic growth since the Asian financial crisis of the late 1990s.
  4. Reforming investment climate
    The government has been announcing policy reforms, dramatically reducing red tape in an effort to boost economic growth. This has also involved opening sectors for investment and reducing high logistics costs.
  5. A nation with an economic plan
    The RPJMN (Rencana Pembangunan Jangka Menengah Nasional), the latest five-year, medium-term plan, aims to develop infrastructure, education and healthcare. This provides many opportunities for Indonesia, its people and overseas investors.


5 key challenges2

  1. 1

    Developing relationships

    It can take time to build relationships here and become a ‘trusted partner’, so businesses should ensure enough provision for this in their plans.

  2. 2

    Patience and perseverance

    Dealing with government bureaucracy can also take time. The government is preparing to ease restrictions in 11 critical areas, including labour law, capital investment, business licensing, corporate tax and land acquisition.

  3. 3

    Labour market efficiency

    Significant advances are needed in labour market efficiency to minimise redundancy costs and improve flexibility in determining wages. To help address this, the government has prioritised a program to upskill the workforce to improve its competency.

  4. 4

    Infrastructure issues

    Despite investment, there are still some issues with the supply of infrastructure. The country is rated quite poorly in terms of technology readiness.

  5. 5

    Lack of transparency

    Business licensing processes in Indonesia can be opaque, however a number of projects and reforms have been initiated to combat corruption and simplify regulations.

1 World Economic Forum, 2020
2 TMF Group, 2018