Our guide to doing business in Indonesia
Situated on the equator Indonesia is a collection of magnificent islands all waiting to be explored. Amazing wildlife, fascinating culture and beautiful, harsh landscapes it's a country not to be ignored.
Indonesia is the world's fourth most populous country with 252 million inhabitants, making it the largest country in South East Asia. It has 18,307 islands with over 742 languages spoken and a middle class larger than the population of Australia making market research vital. Currently it is the 16th largest economy in the world, this is projected to rise to 7th by the year 2030.
Doing business in Indonesia will take patience and perseverance. When planning to enter the market you should be prepared to invest time and resources in regular visits over a period of months, sometimes years, before seeing returns.
Benefits for UK businesses exporting to Indonesia include:
- growing middle class
- strong domestic consumption
- largest economy in south east Asia
Strengths of the Indonesian market include:
- population increasing by 4.5 million a year
- high proportion of working age people
- abundance of natural resources
- political stability following transition to democracy in 1998
Indonesia’s economy has grown at a steady rate of 5.8% for over 10 years. Domestic consumption makes up 55.8% of Indonesia’s GDP. This helped to protect Indonesia from the global economic crisis.
Indonesia is the:
- world’s largest producer and exporter of crude palm oil
- second largest exporter of coal
- second largest producer of cocoa and tin
- fourth largest exporter of natural gas
Indonesia also has abundant resources such as nickel, gold, coffee and other forest and marine resources.
The growing middle class
A middle class of 74 million more than the entire population of the UK drives it's economic growth, this is projected to double by 2020.
Indonesian consumers are:
- young, with 60% under 30 years of age
- tech savvy
- open and interested in new international brands, products and services
International surveys have shown that Indonesians are trusting consumers, who are highly receptive to advertising and keen to try new things. Indonesia has 72 million people online using the internet, this is forecasted to be 102 million by 2016. It's the world’s third largest Facebook market and fifth largest Twitter market, this makes it a great place to sell through eCommerce.
Demand from the new middle class is increasing for:
- modern retail and consumer goods
- education and professional qualifications
- Information and Communications Technology (ICT)
UK and Indonesia trade
The UK’s main exports to Indonesia are:
- machinery and transport equipment
- chemical and related products
- manufactured goods
- crude materials
Major British investors include BP, Unilever, Shell, Standard Chartered Bank, HSBC, Premier Oil, BAT, Prudential, Rolls Royce and GlaxoSmithKline. As well as investors there is also a strong and growing UK retail presence including Marks & Spencer, Next, Debenhams, Top Shop, Ted Baker and Mothercare.
Language and culture
The official language is Bahasa Indonesia. English is widely spoken by young people, but interpretation may be required for business meetings, particularly outside the major cities.During meetings you should:
- exchange business cards immediately after introductions presenting with both hands or with the right
- not offer anything with your left hand, nor receive anything with your left hand
- keep cards on the table, not put them away immediately
- not start drinking when offered a drink until formally invited to do so by the host
- not to cross your legs when sitting as showing the soles of your feet is considered highly discourteous in Indonesia
- not stand with your hands on your hips or with your arms folded as this is regarded as aggressive and rude
- Email is treated as an optional form of communication and rarely gets responses.
After a meeting send a formal letter setting out what you discussed. Company literature will be well received. Then follow this up with a phone call to confirm the letter has been received. Do not expect progress until your next face to face meeting.
Are you interested in entering the ASEAN market?
Our locally based market specialists can offer you support ensuring that you tick every box before you take the plunge.
Give us a call today on 01275 370 944