UK - Doing Business in Indonesia.

Doing business in Indonesia: Indonesia trade and export guide about:reader?url=https://www.gov.uk/government/publications/exporting-to-indonesia/exporting-to-i...
gov.uk
Doing business in
Indonesia: Indonesia
trade and export guide
21-26 menit
1. Indonesia export overview

Indonesia is currently the world’s 16th
largest economy. It’s projected to be the
fourth largest economy in the world (by PPP)
by 2050.
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.
With 250 million people its the world’s
fourth most populous country and the largest
in south east Asia. It offers opportunities for
UK companies across all sectors.
Benefits for UK businesses exporting to
1 dari 25 08/02/2021 10.37

Indonesia include:
an emerging middle class
strong domestic consumption
the largest economy in south east Asia
Strengths of the Indonesian market include:
population increasing by 4.5 million a year
a high proportion of working age people
an abundance of natural resources
political stability following the transition to
democracy in 1998
2. Challenges doing business in

Indonesia
UK companies must be prepared to
encounter challenges when doing business in
Indonesia. It is the 72nd easiest place to do
business in the world according to the World
Bank.
Businesses should be prepared for:
a complex bureaucracy
an uncertain and unpredictable legal and
regulatory environment
a lack of transparency
high logistics costs
poor infrastructure
2 dari 25 08/02/2021 10.37

a business culture where companies will

rarely respond to emails
a strong business case is less important than
being a trusted partner
Indonesia offers a lot of opportunities for
British companies in a wide range of sectors.
Companies looking for a ‘quick win’ would be
advised to look elsewhere.
The rewards of doing business in Indonesia
can be considerable. However, it can take
time to develop the necessary relationships
before any financial returns materialise.
Companies should recognise this and plan
their business entry strategy accordingly.
You should ensure you take the necessary
steps to comply with the requirements of the
UK Bribery Act.
3. Growth potential in
Indonesia
3.1 Economic growth in Indonesia
Indonesia has the largest economy in south

east Asia with nearly half of the region’s
gross domestic product (GDP). 5.3% GDP
growth is expected in 2018. Indonesia is the
only G20 member from south east Asia.
Indonesia’s economy has grown at a steady
5.4% for over the last 10 years. This is a more
3 dari 25 08/02/2021 10.37

stable rate than any of the Brazil, Russia,

India and China (BRIC) countries or
Organisation for Economic Co-operation and
Development (OECD) countries.
Domestic consumption makes up 55% 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.
3.2 Indonesia’s free trade agreements

(FTAs)
Indonesia is a member of the Association of

Southeast Asian Nations (ASEAN).
The ASEAN free trade area (FTA) is part of
the Asian Economic Community (AEC)
agreement among 10 ASEAN countries
which allows free movement of goods and
services with 0% tax. The country of origin
must be one of the ASEAN countries
The AEC will benefit British companies
4 dari 25 08/02/2021 10.37

operating in the region. The AEC agenda

helps promote reform and raise economic
growth in the region.
Improved trade facilitation, regulatory
reform and financial development will
benefit all domestic and foreign firms.
British firms producing and shipping goods
within the region can also benefit from intra-
ASEAN tariff reduction. There will be some
areas where the AEC gives other ASEAN
countries better market access than UK firms
have, but these are likely to be fairly limited.
Indonesia is also negotiating FTAs with
Australia and the European Free Trade
Association (EFTA). Indonesia started
negotiations with the EU on a
Comprehensive Economic Partnership
Agreement (CEPA) in July 2016.
3.3 Emerging middle class in

Indonesia
Indonesia’s economic growth is driven by an

emerging middle class. International surveys
show that Indonesians are trusting
consumers, highly receptive to advertising
and keen to try new things. Indonesian
consumers are:
young
IT savvy
interested in new international brands
5 dari 25 08/02/2021 10.37

Demand from this emerging new middle

class is increasing for:
modern retail and consumer goods
healthcare
education and professional qualifications
Information and Communications
Technology (ICT)
transport
construction
manufacturing
3.4 Indonesia’s strategic location
60% of global growth is expected to come

from Asia by 2025. Indonesia is part of
ASEAN which has a free trade zone. It is also
strategically placed to do business with
Indonesia, China, Japan and Australia.
4. Top goods and services

imports into Indonesia
UN Comtrade ranks Indonesia’s top goods
imports from the rest of the world during
2016 as:
1. boilers and machinery
2. mineral fuels, oils, distillation products
6 dari 25 08/02/2021 10.37

3. electrical and electronic equipment

4. plastics and plastic products
5. iron and steel
6. vehicles (other than railway or tramway
vehicles)
7. organic chemicals
8. cereals
9. iron or steel products
10. residues, food industry waste, animal fodder
UN Comtrade ranks Indonesia’s top services
imports from the rest of the world during
2015 as:
1. transport
2. other business services, such as consultancy,
technical services and research and
development (R&D)
3. travel
4. royalties and licence fees
5. insurance services
6. construction services
7. government services
8. personal, cultural, and recreational services
7 dari 25 08/02/2021 10.37

4.1 UK and Indonesia trade
UK exports of goods to Indonesia totalled

£559 million in 2016. The UK’s main exports
to Indonesia are:
machinery and transport equipment
chemical and related products
crude materials
An unknown amount of the UK’s exports to
Indonesia go via Singapore.
The UK is Indonesia’s seventh biggest
investor. Major British investors include BP,
Jardine Matheson, Unilever, Shell, Standard
Chartered Bank, HSBC, Prudential, Rolls
Royce and GlaxoSmithKline.
There is also a strong and growing UK retail
presence including Marks & Spencer,
Burberry, Alexander McQueen, Karen
Millen, Coast, New Look, Super Dry, Top
Shop, Ted Baker, Mothercare and Early
Learning Centre.
5. Opportunities for UK
businesses in Indonesia
DIT provides free international export sales
leads from its worldwide network. Search for
export opportunities.
8 dari 25 08/02/2021 10.37

5.1 Airports sector in Indonesia
Indonesia plans to build 15 new airports by

2019, 9 new air cargo facilities, redevelop
100 existing airports, and upgrade 26. A
fourth terminal at Jakarta’s Soekarno-Hatta
International Airport is also planned and
expected to be operational by 2021.
There are opportunities for UK companies in
modernising equipment, such as navigation
surveillance, and facilities for
communication
automating and upgrading airport systems
maintaining devices and upgrading systems
training of human resources
5.2 Aviation sector in Indonesia
Indonesia has ambitions to build itself into a

world-class aviation hub, with fully
modernized capacity and air traffic
management systems.
In 2015, The International Air Transport
Association (IATA) predicted the country
will have 270 million air passengers by 2034.
Any growth will need to supported by the
aviation infrastructure, both on the ground
and in the air.
It’s likely that there will be opportunities for
overseas firms as Indonesia seeks to upgrade
9 dari 25 08/02/2021 10.37

its aviation infrastructure to meet growth

and improve its safety standards, along with
a greater need for aircraft parts and
maintenance services.
Foreign investors may partner with local
firms to establish aircraft maintenance
facilities.
5.3 Defence and security sector in

Indonesia
Indonesia’s annual defence budget is

currently US$8.17 billion. It’s currently
conducting a major overhaul of its military
capabilities.
The country is interested in cooperation with
the UK on counter terrorism, counter
narcotics, humanitarian assistance and
disaster relief, and industrial defence
cooperation. There are opportunities for
supply of:
military equipment
communications system
spare parts
support services.
monitoring and protection of sea-borne
traffic for national security and fisheries
enforcement cyber security and counter-
terrorism
10 dari 25 08/02/2021 10.37

The Export Control Joint Unit (ECJU) issues

licences for the export of strategic goods. You
must check your goods you are meeting legal
requirements for export.
5.4 Education sector in Indonesia
With over 60 million students and almost 4

million teachers in 340,000 educational
institutions, Indonesia is the third largest
education system in the Asian region and the
fourth largest in the world.
The Indonesian government allocated £23.4
billion (20% of the state budget) for
education in 2017 and decentralised to local
government in over 34 provinces nationwide.
The Indonesian government plans to
increase its skilled workers opens up
opportunities for UK education providers to
establish a presence with a focus on:
English Language Training (ELT)
teacher training
continuing professional development
vocational training in sectors such as
engineering, maritime, aerospace, railway,
information technology
5.5 Marine sector in Indonesia
Indonesia has more than 240 active
11 dari 25 08/02/2021 10.37

shipyards supporting the development of the

maritime sector and 1700 ports. Of these, 111
are commercial ports while only 11 are
container ports. According to the Investment
Coordinating Board of the Republic of
Indonesia, 24 new ports are to be developed
by 2019.
In 2015, the Ministry of Industry announced
plans to increase the national shipping
industry ability from 85,000 deadweight
tonnage (DWT) to 300,000 DWT by 2025.
As the government is aiming to improve
infrastructure, maritime connectivity
development and maritime power, there are
opportunities for:
development of roads
shipbuilding, including tankers, freighters,
patrol vessels, warships and submarines
seaport construction and revitalisation
5.6 Oil and gas in Indonesia
Indonesia has proven gas reserves of 102

trillion cubic feet (TCF) in 2016. On a reserve
basis, according to PWC in 2017, Indonesia
ranks 15th in the world and the third in the
Asia-Pacific region (following Australia and
China).
Deep water exploration and production in
Indonesia is still ongoing to cope with the
increasing domestic demand. There will be
12 dari 25 08/02/2021 10.37

significant opportunities for drilling and

completion, equipment, pipelines and
control lines. Other opportunities exist in:
enhanced oil recovery technology to extend
oil production
supply of subsea equipment and services
liquefied natural gas receiving terminals and
regas facilities
education and training
coalbed methane and, potentially, shale gas
5.7 Rail in Indonesia
The Indonesian government has set a target

of adding over 3,000 km to the existing
railway network. £5.7 billion allocated for
urban transport is aimed at constructing
railway in 6 metropolitan cities and 17 large
cities across Indonesia.
There are opportunities in:
planning and development (master planning,
environmental consultancy, financial and
legal planning)
architectural and engineering design services
project and commercial management, rail
technologies including product supply,
rolling stock components, operations and
maintenance
13 dari 25 08/02/2021 10.37

5.8 Sports and sports infrastructure in

Indonesia
Interest in sports in Indonesia is high, as the

country has been selected to host several
international sporting events such as Asian
Games 2018 and Asian Paralympic Games
2018.
There are opportunities for UK firms to
capitalise on this interest and help Indonesia
create a national sport legacy, especially in
the areas of:
event promotion
coaching
talent development
training
Contact DITJakarta.Enquiries@fco.gov.uk
for more information on opportunities in the
sports and sports infrastructure sectors in
Indonesia.
5.9 Smart cities in Indonesia
The government initiated the 100 Smart City

project in 2015, starting with 25 cities and
regions.
At present, Indonesia has 10 pilot smart
cities - Jakarta, Makassar, Surabaya,
Bandung, Medan, Palembang, Yogyakarta,
14 dari 25 08/02/2021 10.37

Semarang, Surakarta, and Denpasar. Jakarta

and Makassar, for example, will adopt smart
cards to distribute social assistance and
provide integrated services.
As the government progresses towards its
goal, there are opportunities in:
the development and improvement of
existing and new urban townships
infrastructures and buildings
research and development
innovative and inclusive urban development
innovative technologies, including use of
open data and information and
communications technology
5.10 Waste disposal and treatment in

Indonesia
Indonesia’s rapid economic growth and

improvements in living standards are
generating increasing levels of municipal
solid waste. Final disposal sites with sanitary
landfill technologies make up only a small
percentage of the total number of the
country’s sites.
There are opportunities for:
waste handling and processing
waste-related design and engineering
15 dari 25 08/02/2021 10.37

operation and maintenance of waste disposal

processes and sites
incinerators/thermal converters
boilers, steam turbines, generators, gas
engines, segregators, dryers, conveyors
project financing
Other opportunities exist in off-grid waste to
energy systems.
Contact DITJakarta.Enquiries@fco.gov.uk
for more information on opportunities in the
waste disposal and treatment sector in
Indonesia.
6. Start-up considerations in
Indonesia
There are various ways to operate a business
in Indonesia including:
setting up a joint venture company
establishing a representative office
appointing an agent, distributor or importer
6.1 Joint ventures in Indonesia
The ‘Penanaman Modal Asing’ (PMA) is the

corporate entity required for foreign
investors under the terms of the foreign
investment law. It takes the form of
16 dari 25 08/02/2021 10.37

‘Perseroan Terbatas’ (PT), a limited liability

company, with the joint ventures as
shareholders. PMA companies:
may be either publicly listed on the stock
exchange or privately owned
must have 2 parties holding shares either a
legal entity or an individual
The foreign investor’s shareholding
percentage must meet requirements under
the Indonesia Investment Coordinating
Board’s Negative Investment List (DNI).
6.2 Representative offices in Indonesia
Foreign companies may open and maintain a

representative office. The representative may
be foreign or local. Such offices:
are not permitted to carry out any profit
making business activities
can undertake sales promotion, market
research and assistance to local agents and
distributors
You should appoint third party advisers to
assist with documentation as dealing with
government ministries can be challenging.
Lack of transparency can make the process
last longer than expected.
The third party adviser needs to be reliable,
experienced and most importantly have close
connections with the relevant authorities.
17 dari 25 08/02/2021 10.37

Contact DIT Indonesia for information about

third party advisors.
6.3 Agents, distributors or importers

in Indonesia
A foreign company will usually appoint one

or more agents or distributors. They can
keep track of market regulations, which can
change at short notice.
You should spend time taking local advice
and assessing a range of potential agents
before making a choice. Beware of agents
promoting similar or identical products.
DIT Indonesia can help you identify and
meet potential agents and distributors.
7. Legal considerations in
Indonesia
Foreign and domestic investment is
administered by the Investment
Coordinating Board (BKPM). BKPM
regulates the Company Law and the Foreign
Investment Law.
Investors must apply for approval from
BKPM. BKPM does not issue licences for
investments in banking, financial
institutions, insurance, and oil and gas.
These are issued by industry specific
18 dari 25 08/02/2021 10.37

regulating bodies.
Import licences and permits to employ non-
Indonesian workers are issued by the
Ministry of Manpower. You should take
advice on your legal obligations which can
vary depending on your business.
Contact DIT Indonesia to help find tax and
legal advisers before entering into
agreements.
7.1 Standards and technical

regulations in Indonesia
Indonesia requires most products to be

registered through governmental authorities
and undergo technical testing before they
can enter Indonesian market.
Persistence and a reliable local partner
makes big difference in helping with import
authorisation procedures.
Some mandatory certifications for product
registration at national level include:
SNI (Indonesian National Standard)
certification for toys, tyres, cement, single
inorganic fertiliser, bottled drinking water,
helmets, low-pressure regulators for
liquefied petroleum gas (LPG) steel tubes
Ministry of Health certification for medical
related products
Contact DIT Indonesia for more information
19 dari 25 08/02/2021 10.37

on registration requirements specific to your

products or service.
7.2 Intellectual property rights (IPR)

in Indonesia
The Directorate General of Intellectual

Property Rights of the Ministry of Law and
Human Rights is responsible for
administering IPR in Indonesia.
Indonesia is a World Trade Organization
(WTO) member and has comprehensive
intellectual property protection regulation.
However enforcement can be extremely
difficult.
You should register your intellectual
property, a process which can take 2 to 3
years. The EU ASEAN IPR helpdesk offers
tools and advice to help you manage your
intellectual property in Indonesia.
8. Tax and customs

considerations in Indonesia
Indonesia and the UK have signed a double
taxation agreement.
8.1 Sales tax in Indonesia
Value Added Tax (VAT) and Goods and
20 dari 25 08/02/2021 10.37

Services Tax (GST) are applied to most goods

and services in Indonesia. Imports are
subject to VAT and GST.
VAT and GST taxes are called Pertambahan
Pajak Nilai (PPN). PPN is a 10% point-of-
sale tax.
PPnBM (Pajak Pertambahan Nilai dan Pajak
Penjualan atas Barang Mewah) is a sales tax
on luxury goods. It is levied in addition to
PPN and is imposed on luxury goods which
are both manufactured in and imported into
Indonesia. Rates range from 10 to 50%.
Some items can be taxed at 75%.
8.2 Corporate tax in Indonesia
A foreign company with a permanent

establishment in Indonesia will have to the
same tax obligations as a resident taxpayer.
Foreign companies without a permanent
establishment will settle tax liabilities
through withholding of the tax by the
Indonesian party paying the income.
Corporate income is taxed at 25%.
8.3 Income tax in Indonesia
Taxpayers are obliged to make a prepayment

of their annual tax obligation by a
withholding of 2.5% (7.5% if the company
does not possess an import permit) of cost,
21 dari 25 08/02/2021 10.37

insurance and freight (CIF) value of imports.
8.4 Customs in Indonesia
Import duty is payable at the rates from 0%

to 150% on the customs value of imported
goods.
Customs value is calculated on the CIF level.
It is possible to apply for an exemption,
deferment or restitution of import duties
where the import meets criteria, such as:
imports used in production of exports
capital goods, spares and raw materials by
manufacturers and certain other sectors
equipment and materials imported for use in
a foreign aid funded project
8.5 Documentation in Indonesia
Correct paperwork is crucial. Check with

your importer or agent on the
documentation required when exporting
products to Indonesia. Different products
will require different documents due to rules
set by government authorities.
You will need a commercial invoice which
must be signed by the manufacturer and
contain the:
name and address of the shipper
place and date of the shipment
22 dari 25 08/02/2021 10.37

name and address of the consignee

number and kind of packages
content and weight of each package
tariff number, marks and numbers
A pro-forma invoice is not compulsory, but
will be needed by importers for quoting
price.
9. Business behaviour in
Indonesia
The official language is Bahasa Indonesia.
English is widely spoken by young people,
but interpretation may be required for
business meetings, particularly outside
Jakarta and other major cities in Indonesia.
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
23 dari 25 08/02/2021 10.37

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.
10. Entry requirements for

Indonesia
You need a visa to enter Indonesia.
British citizens visiting Indonesia are able to
buy a 30 day visa upon arrival by following
the ‘Visa on Arrival’ sign. Visas of this kind
can be extended once for a maximum of 30
days by applying to immigration offices
within Indonesia.
10.1 Travel advice for Indonesia
If you’re travelling to Indonesia for business,

check the Foreign and Commonwealth Office
(FCO) travel advice page first.
Contact a local DIT trade adviser in the UK if
24 dari 25 08/02/2021 10.37

you are interested in finding out more about

doing business in Indonesia.
Contact the DIT team in Indonesia for more
information and advice on opportunities for
doing business in Indonesia.
The UK-ASEAN Business Council (UKABC)
provides practical advice and guidance on
how to do business in all ASEAN markets.
Contact UKABC’s team to discuss your
ASEAN export strategy.
25 dari 25 08/02/2021 10.37

UK - Doing Business in Indonesia.

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

UK - Doing Business in Indonesia.

Uploaded by

Copyright:

Available Formats

Doing business in Indonesia: Indonesia trade and export guide about:reader?url=https://www.gov.uk/government/publications/exporting-to-indonesia/exporting-to-i...

1. Indonesia export overview

1 dari 25 08/02/2021 10.37

2. Challenges doing business in

2 dari 25 08/02/2021 10.37

a business culture where companies will

3.1 Economic growth in Indonesia

Indonesia has the largest economy in south

3 dari 25 08/02/2021 10.37

stable rate than any of the Brazil, Russia,

3.2 Indonesia’s free trade agreements

Indonesia is a member of the Association of

4 dari 25 08/02/2021 10.37

operating in the region. The AEC agenda

3.3 Emerging middle class in

Indonesia’s economic growth is driven by an

5 dari 25 08/02/2021 10.37

Demand from this emerging new middle

3.4 Indonesia’s strategic location

60% of global growth is expected to come

4. Top goods and services

6 dari 25 08/02/2021 10.37

3. electrical and electronic equipment

7 dari 25 08/02/2021 10.37

4.1 UK and Indonesia trade

UK exports of goods to Indonesia totalled

8 dari 25 08/02/2021 10.37

5.1 Airports sector in Indonesia

Indonesia plans to build 15 new airports by

5.2 Aviation sector in Indonesia

Indonesia has ambitions to build itself into a

9 dari 25 08/02/2021 10.37

its aviation infrastructure to meet growth

5.3 Defence and security sector in

Indonesia’s annual defence budget is

10 dari 25 08/02/2021 10.37

The Export Control Joint Unit (ECJU) issues

5.4 Education sector in Indonesia

With over 60 million students and almost 4

5.5 Marine sector in Indonesia

Indonesia has more than 240 active

11 dari 25 08/02/2021 10.37

shipyards supporting the development of the

5.6 Oil and gas in Indonesia

Indonesia has proven gas reserves of 102

12 dari 25 08/02/2021 10.37

significant opportunities for drilling and

5.7 Rail in Indonesia

The Indonesian government has set a target

13 dari 25 08/02/2021 10.37

5.8 Sports and sports infrastructure in

Interest in sports in Indonesia is high, as the

5.9 Smart cities in Indonesia

The government initiated the 100 Smart City

14 dari 25 08/02/2021 10.37

Semarang, Surakarta, and Denpasar. Jakarta

5.10 Waste disposal and treatment in

Indonesia’s rapid economic growth and

15 dari 25 08/02/2021 10.37

operation and maintenance of waste disposal

6.1 Joint ventures in Indonesia

The ‘Penanaman Modal Asing’ (PMA) is the