FEATURED COUNTRY REPORT

INDONESIA

Why should you look to Indonesia when creating your export initiative?

There is buying power

♦ Indonesia is Southeast Asia's largest economy and has delivered consistently high
annual growth exceeding 6% in both 2007 and 2008.

♦ During the difficult global conditions of 2009, Indonesia's economy was among the top
worldwide performers and their economy still saw growth at 4.5 and the stock market
valuation was up 87% with a stable currency and improved sovereign credit status.

♦ The consumer market continues to lead growth in what is now the world's fourth
largest country with 237 million citizens, 50% of whom are under the age of 30.

♦ GDP per person exceeds its ASEAN neighbors such the Philippines and Vietnam.

♦ It is a top-ten market for U.S. agricultural products and within the top 30 overall
markets for U.S. exports.
Economy

Indonesia has a market-based economy in which the government

plays a significant role. There are 139 state-owned enterprises, and the
government administers prices on several basic goods, including fuel,
rice, and electricity. The Indonesian economy remained stable during
the global financial crisis and exports have rebounded to pre-crisis
level and are expected to continue growing. Before and during the
global financial crisis of 2008-2009, Indonesia's economy remained
relatively stable. Exports accelerated 120 percent from 2003 to 2008,
and after a brief interruption during the crisis, exports rebounded to
“near pre-crisis levels” by the end of 2009. Due to improved
macroeconomic and financial stability, the financial system of
Indonesia was not severely impacted during the crisis and was one of
the best performing economies of 2009: the third highest among the
G-20 group of countries. 2010 saw continued growth for Indonesia,
with year on year growth returning to pre-crisis rate levels. Second
quarter rates rose 6.2 percent of GDP, up from 5.7 percent in the first
quarter, and is thus expected to expand at these rates, bringing the
annual growth to 6 percent for 2010 and a predicted 6.2 percent in
2011.

Indonesia GDP
Percent of Change
Percent of
Year Change

2005 5.693
2006 5.501
2007 6.345
2008 6.007
2009 4.546
2010 6.000
2011 6.200
2012 6.500
2013 6.700
Snapshot of Market Opportunities
Aircraft and Parts
The size of Indonesia's total market of aircraft and spare-parts increased
drastically in the last few years due to orders from police, military, and commercial
airlines. The US imports in this sector were valued at $748 million out of the $1 billion
imported. Due to continued airline expansion, additional aircrafts, parts, and
maintenance services will be needed. The strongest areas for US suppliers to grow are
in airplanes and other aircraft, parts, aircraft launch gear and parts, engines, engines
parts, instruments and appliances for aeronautical use, and aircraft electrical wiring
sets. Similarly, US companies can also supply Indonesia with training, engine repairs
and other maintenance services.

Consumer Ready Food Products

Aggressive promotional activities, an increase in modern retail outlets,
customer sophistication, and growing health consciousness have driven the growth of
the food industry in Indonesia. The expansion of modern retail outlets in major urban
areas throughout Indonesia, such as hypermarkets, supermarkets, and mini markets that
have refrigeration and storage facilities provides a market opportunity for imported US
consumer-ready food products. Additionally, the growth of franchise restaurants, fast
food, casual dining cafes, international and family style restaurants specializing in
Western and non-Indonesian foods, food courts, as well as hotels catering to the tourist
industry have increased the demand for imported food products. With the exposure to
western-style foods and an increase in snacking, US food and agriculture product
import demand is expected to continue increasing.

Electrical Power Systems

In September 2009, the Indonesian government enacted an electricity law
which halted the monopoly on supplying and distributing electricity to end customers.
In 2009 the value of imported products was $200 million and will likely account for
over $230 million in 2010. US companies are strong competitors in boilers, parts for
boilers, parts for turbines, electrical generating equipment, transformers, lightning
arresters, junction boxes, panel boards, and electrical conduit. Additionally,
construction of power plants, transmission and distribution lines in Indonesia can
generate significant opportunities for US companies that supply engineering services
and equipment such as turbines, substations, transmission, and distribution equipment.

Environmental Technologies
The US has been the leading supplier of environmental technologies equipment
to Indonesia, with a 31% import market share with prominent imports of water
filtration and purification equipment and water treatment chemicals. There are major
environmental issues in Indonesia creating demand including deforestation, water
pollution, sewage treatment, air pollution, and smoke and haze from forest fires. Also,
Indonesia has a considerable number of companies, especially essential and export
oriented ones, that are in need and financially capable of purchasing environmental
technologies equipment, these include companies from palm oil, plastic materials/
resins, plywood, pulp and paper, fertilizer and industrial chemicals. Pollution control
equipment, water resource equipment, water purification equipment, water supply and
treatment chemicals, waste water and sewage treatment equipment, renewable energy
equipment, and geothermal equipment are some of the best prospects for US
environmental technologies producers.
Medical Equipment and Supplies
As the fourth most populous country in the world, Indonesia relies on imported
medical equipment and supplies, thus it continues to be an excellent market for US
companies. In 2009, medical equipment imports grew by 15% with an expectation for
further increase over the next two years, with the US imports accounting for 15% of
this market. It is also believed that this number is understated due to US medical
equipment being imported through Singapore. In Indonesia, US, European and UK
products are regarded as top quality, and due to favorable Rupiah/Dollar exchange rate,
distributors are increasingly buying US products over their European and UK
counterparts. US companies have opportunities due to import demand of life support
equipment such as ventilators, anesthesia equipment, patient monitoring equipment,
electro-medical equipment, ultrasonic scanning machines, diagnostic equipment, and
disposable products.

Telecommunications
Since 2002, Indonesia's telecommunications sector went through many
regulatory changes, including the termination of the telecommunications monopoly
held by three major companies. The dissolution of this monopoly and a desire for
increased teledensity has created a demand for telecommunications equipment,
services, and infrastructure. This rapid and continuous growth provides an excellent
market for US products such as base transceiver stations, switching, ancillary and
transmission equipment, cellular handsets, content providers, broadband wireless
access, and 3G/UMTS base stations and terminals.

Resources
To continue your research on this exciting market, please click on the links below.

US Commercial Service
"Doing Business in Indonesia: 2010 Country Commercial Guide for US Companies"
http://www.buyusainfo.net/docs/x_2208484.pdf

US Department of State
Bureau of East Asian and Pacific Affairs
"Background Note: Indonesia"
http://www.state.gov/r/pa/ei/bgn/2748.htm

Central Intelligence Agency

The World Factbook: Indonesia
https://www.cia.gov/library/publications/the-world-factbook/geos/id.html