Doing Business

5 reasons to do business in Indonesia

Trường Lăng

January 23, 2019

5 Reasons to do Business in Indonesia

1. Indonesia is one of the world’s most populous country

Becoming a country with the 4th highest population in the entire globe is such a stupendous advantage which anybody needs to mark. According to Worldometers statistics, the average of population growth in the largest archipelago goes up by nearly 3 million people every year. It estimates that the total inhabitants will reach 272 million by 2020. This point of fact signifies that there is a large amount of potential for foreigners to set up a company in Indonesia, be it in agriculture realm or fishery affairs.
In addition to the substantial number of people, the island nation lying off the Australian shore boasts demographics exceedingly propitious for the extended term economic growth. This one is consolidated by 50% of Indonesian residents whose age are under 2 years old giving the exceptional demographic dividends in days to come. It doesn’t stop at that; based on the World Factbook, today’s total median age in Indonesia is 30.2 years – the male is 29.6 years whereas the female is 30.8 years.

2. The Indonesian middle classes grow significantly

Not only is the tropical paradise famous for its considerable total of occupants affecting the globe’s market progress but also the local middle class, growing rapidly. Arguably, this awesome verifiable truth lets the group subjected to the economic empowerment. In other words, the category is such a valuable object for worldwide business people when it comes to making an investment in Indonesia. One of the reports says that the country has the fourth biggest middle class in the world coming with millions of households in recent years.
As specified by McKinsey, Indonesia will be crowded with around 90 million of people from the related group namely class of consumers by 2030. Surprisingly with regard to purchasing-power parity, they are capable of earning more than 3,600 USD per year – what a massive income it is! It is pretty obvious that the existence of this prominent class which keeps expanding from time to time will put the poverty down, boost the revenue equality, as well as strengthen the national economic power.

3. Indonesia is a launchpad to the ASEAN region

Indonesia has by far the biggest population in Southeast Asia. It’s also a regional economic powerhouse – it has the biggest total GDP and a rapidly growing GDP per capita that is ahead of most of the frontier and emerging markets in the region. As the largest of the ten-member states of the Association of Southeast Asian Nations (ASEAN), Indonesia provides an ideal launchpad to target the broader ASEAN region. Opportunity in Indonesia therefore extends beyond its large domestic market, to the other nine members of the ASEAN region that benefit from favorable trading terms (Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia).
Due to its size, Indonesia is more insulated from the shocks that other ASEAN markets experience, and is projected to be bigger than all other ASEAN members combined by 2025, economically and in terms of population.

4. Indonesia constitutes a low-cost production base in Southeast Asia

There has recently been a production shift from the traditional North Asian manufacturing powerhouses like China, Taiwan, South Korea and Japan to Southeast Asia, as a result of steadily rising salary and manufacturing costs. For example, unskilled workers in Central Java earn around $120 per month, compared to around $330 in China. This has triggered a range of Asian and Middle Eastern companies to migrate their production facilities to more cost-effective countries like Indonesia, Vietnam, the Philippines and Cambodia.

5. Entry barriers to Indonesia constitute a competitive advantage – Low competition

Entering Indonesia is not as easy as in many of the more developed markets. However, the entry barriers should not be seen as a limitation but rather as an opportunity. It will keep the competition relatively low and the ones willing to face the complexities of will be rewarded for it. Just make sure you take your time to understand the market. Just like 16th century Spanish writer Miguel de Cervantes said – preparation is half the victory.
Although the proper set up may seem a significant investment, the total cost of fulfilling the requirements and acquiring proper licenses since the beginning is in practice smaller compared to the amendments that must be done later.

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