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INDONESIA - AN OVERVIEW
BUSINESS SWEDEN
October 2016
INTRODUCTION
INDONESIA – THE LARGEST ECONOMY IN SOUTHEAST
ASIA
Business Sweden in Indonesia
Business Sweden supports with several services on the Indonesian market such as market analyses, partner
selection, and counselling and strategy development for entering the market. In order to facilitate establishment
we also offer turn-key solutions such as office space, assistance with recruiting, accounting and administration.
Indonesian business culture is relationship oriented and the contact network is crucial to build trust and do
business here. Business Sweden staff has far-reaching connections both within the public and private sector. In
parallel, the Team Sweden brand and Swedish Embassy connections play an important role and open many
doors in our daily work. The bureaucracy is one of the main challenges that Swedish companies face in
Indonesia and many of the administrative processes are more time consumer than in other countries. With our
experience on the market, we’re able to facilitate many of these thresholds.
Do not hesitate to contact us to talk about Indonesia as a potential market for your
company and how Business Sweden can assist you to further investigate the market
potential, entry strategies and/or how to develop existing business.
Welcome to Indonesia!
Anders Wickberg
Trade Commissioner to Indonesia
BUSINESS SWEDEN
28 NOVEMBER, 2016
2
INTRODUCTION TO ASEAN
THE ASEAN ECONOMIC TRADING BLOC WAS FORMED
1967 TO PROMOTE GROWTH, STABILITY AND PEACE
ASEAN - THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS
MYANMAR
VIETNAM
LAOS
THAILAND
PHILIPPINES
Cambodia
CAMBODJA
MALAYSIA
BRUNEI
INDONESIA
SINGAPORE
ASEAN HAS OVER TIME DEVELOPED TO BECOME A REGIONAL FORCE IN ASIA
BUSINESS SWEDEN
28 NOVEMBER, 2016
3
INTRODUCTION TO ASEAN
THE OVERALL INTRA-ASEAN TRADE HAS SURGED BY
SEVEN-FOLD OVER THE PAST DECADE
EXTERNAL-ASEAN TRADE
USD BILLION
SHARE OF MAJOR TRADE PARTNER WITH ASEAN,
2014
INTRA-ASEAN TRADE
USD BILLION
x5
x7
DURING THE SAME PERIOD EXTERNAL-ASEAN TRADE INCREASED FIVE-FOLD
SOURCE: ASEAN STATISTICAL DATABASE
BUSINESS SWEDEN
11 NOVEMBER, 2016
4
INTRODUCTION TO INDONESIA
INDONESIA IS PREDICTED TO BE THE WORLD TOP 10
LARGEST ECONOMY IN THE NEXT 20 YEARS
FACTS ABOUT INDONESIA
 Indonesia is the 4th largest country in the world, with a population of around 250 million
 In 2015, Indonesia made a total of $2.84 trillion of PPP (Purchasing Power Parity) GDP. This makes it the world’s 8th best in terms of
GDP (PPP).
 Indonesia will be the world's seventh largest economy In 2030.
 Indonesia is the largest archipelago in the world with more than 18,000 islands.
 Jakarta is the 13th largest city in the world with a population of around 11.3 million people.
DESKTOP RESEARCH
BUSINESS SWEDEN
28 NOVEMBER, 2016
5
INTRODUCTION TO INDONESIA
INDONESIA IS PROJECTED TO HAVE A SIGNIFICANT
GROWTH FOR THE NEXT 25 YEARS
Indonesia Now
 16th Largest Economy in The
World
 45 Million consumer Class
 54%
Indonesia 2030
 7th Largest Economy in The World
 135 Million consumer Class
 71%
populations in the city
populations in the city
producing
74% of the GDP
 55 Million skilled workers in
producing
86% of the GDP
 113 Million skilled workers in
the Indonesian economy
the Indonesian economy
MCKINSEY (MCKINSEY.COM)
BUSINESS SWEDEN
28 NOVEMBER, 2016
6
INTRODUCTION TO INDONESIA
UNCTAD SURVEY SHOWN THAT INDONESIA IS IN THE
WORLD TOP 3 FOR INVESTMENT DESTINATION
TNCs’ top prospective host economies, 2014–2016
(Percentage of respondents selecting economy as a top destination)
Indonesia
Thailand
Vietnam
Malaysia
Singapore
27
TOP 5 ASEAN
COUNTRIES
14
12
8
7
China
United States
India
Brazil
Germany
United Kingdom
Russian Federation
Australia
France
Poland
Mexico
Japan
44
41
26
23
20
14
10
10
Developed Economies
Developing and Transition Economies
9
8
8
8
0
5
10
15
20
25
30
35
40
45
50
UNCTAD (UNCTAD.ORG)
BUSINESS SWEDEN
28 NOVEMBER, 2016
7
INTRODUCTION TO INDONESIA
INDONESIA SIGNIFICANTLY IMPROVED BUSINESS
CLIMATE COMPARED OTHER TO ASEAN COUNTRIES
EASE OF DOING BUSINESS INDEX RANKING 2010 VS. 2016
ASEAN6
Rank 2016
-50
-100
100
50
0
1
Singapore
Rank 2
(-1)
Rank 23
(+0)
Malaysia
50
Thailand
Rank 46
(-30)
Vietnam
Rank 82
(+8)
100
Can’t keep pace
Indonesia
Rank 91
(+35)
Philippines
Rank 99
(+35)
Improving
Rank change
2010 - 2016
SOURCE: WORLD BANK – EASE OF DOING BUSINESS
BUSINESS SWEDEN
11 FEBRUARY, 2016
8
INTRODUCTION TO INDONESIA
INDONESIA FDI HAS BEEN INCREASE FOR MORE THAN
20% FROM YEAR 2014 - 2015
160
140
Rp. (In Trillion)
120
100
80
60
40
20
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2013
DDI
FDI
Total
Q1
27
65
93
Q2
33
66
99
Q4
Q1
Q2
Q3
2014
Q3
33
67
100
Q4
34
71
105
Q1
34
76
106
Q2
38
78
116
Q4
2015
Q3
41
78
119
Q4
41
78
120
Q1
42
82
124
Q2
42
92
135
Q3
47
92
140
Q4
46,2
99,2
145
BKPM (BKPM.GO.ID)
BUSINESS SWEDEN
28 NOVEMBER, 2016
9
KEY INDICATORS IN INDONESIA
SWEDISH COMPANIES HAVE A BIG OPPORTUNITIES TO
HELP INDONESIA IN MAXIMIZING THEIR POTENTIAL
Infrastructure
Growing Consumer Class
Shift to Manufacturing
Infrastructure is the main indicator
for economic growth in Indonesia
Growing consumer class give a
positive impact for Indonesia
economy.
Indonesia is currently focus in
increasing the growth of
manufacture in Indonesia
Indonesia is the country with the
highest population growth in the
consumer class segment.
After the 1998 crisis, Indonesia
unable to reach the potential like it
was shown before the crisis.
2010: 45 million of Indonesia
population can be categorize in
consumer class category with
(>$3,600 annual income).
2014: Manufacturing products only
counted 35% from total Indonesia
export.
Indonesia infrastructure
development is still experiencing
issues in finance and legal aspect.
2016: Rp.213 trillion is the budget
allocated by Indonesia government
for infrastructure development.
INDONESIA INVESTMENTS (INDONESIA-INVESTMENTS.COM)
BUSINESS SWEDEN
28 NOVEMBER, 2016
10
KEY INDICATORS IN INDONESIA
[INFRASTRUCTURE]
GOVERNMENT ARE SHIFTING BUDGET FROM VARIOUS
SECTORS TO INCREASE THE INFRASTRUCTURE BUDGET
GOVERNMENT SUBSIDY
2012 – 2016, TRILLION RUPIAH
KEY POINTS
450,0
400,0
350,0
Subsidy for
Infrastructure
will continue
to increase
Significant increase on government
subsidy for infrastructure has
become one of the evidences that
the government is really serious in
developing the infrastructure in
Indonesia.
Swedish
knowledge and
technologies
Swedish companies can provide
adequate resources and
technologies to help Indonesia
government in developing the
infrastructure in Indonesia.
Various and
equitable
infrastructure
development
Swedish companies can provide a
support in many different sectors of
infrastructure as the government
are intended to have an equitable
development in various sectors
(agriculture, marine, etc).
300,0
250,0
200,0
150,0
100,0
50,0
0,0
2012
Energy
2013
Education
2014
2015
Infrastructure
2016
Health
INDONESIA INVESTMENTS (INDONESIA-INVESTMENTS.COM)
BUSINESS SWEDEN
28 NOVEMBER, 2016
11
KEY INDICATORS IN INDONESIA
[GROWING CONSUMER CLASS]
INDONESIA IS THE 3RD LARGEST CONSUMER CLASS
POPULATION IN INDONESIA
CONSUMER CLASS POPULATION IN INDONESIA
2000 – 2015, MILLION PEOPLE
200
170 Million
(61%)
135 Million
(48%)
150
Positive
impact for
Indonesian
economy
85 Million
(32%)
100
50
KEY POINTS
45 Million
(19% of
Populations)
High demand
for product
and services
Providing products and services
from various sectors with better
quality can become the biggest
opportunity as the demand will
increase in line with the growing
consumer class population.
Biggest in
ASEAN
Total of consumer class population
in Indonesia is more than the total
population of Malaysia and
Singapore combined.
2030 F (2)
2030 F (1)
2020 F
2010
0
2030 F (1) with 5-6% GDP Scenario
2030 F (2) with 7% GDP Scenario
CAGR 2010 – 2030 F(1)
CAGR 2010 – 2030 F (2)
Development of most sectors
(property, electronics, automotive,
etc) in Indonesia are depending on
the buying power of consumer
income population.
*The consumer class populations defined as individual with annual income above $3,600
MCKINSEY (MCKINSEY.COM)
BUSINESS SWEDEN
28 NOVEMBER, 2016
12
KEY INDICATORS INDONESIA
[SHIFT TO MANUFACTURING]
INDONESIA NEED A BIG INVESTMENT TO INCREASE THEIR
COMPETITIVENESS INDEX
GLOBAL MANUFACTURING COMPETITIVENESS INDEX
2016, INDEX SCORE (100=HIGH, 10=LOW)
Singapore (*1) (10)
68,4
Thailand (*2) (14)
60,4
Malaysia (*3) (17)
59
Vietnam (*4) (18)
56,5
Indonesia (*5) (19)
55,8
TOP 5 ASEAN
COUNTRIES
China (1)
100
United States (2)
99,5
Germany (3)
80,4
South Korea (5)
76,7
United Kingdom (6)
75,8
Taiwan (7)
Government
aim to
increase the
index
Large indirect
cost because
of poor
logistics
93,9
Japan (4)
KEY POINTS
72,9
Mexico (8)
69,5
Canada (9)
68,7
India (11)
Low wages but
poor unit
labour cost
67,2
Switzerland (12)
With the potential that Indonesia
have, Swedish companies can
support the manufacturing sector
to increase their competitiveness
index.
Swedish support to develop a
better logistics (transportation,
container handling, etc) in
Indonesia will help the companies
to reduce their indirect costs.
Indonesia currently need a
technologies and knowledges that
can help them to increase their unit
labour cost.
63,6
Sweden (13)
62,1
0
20
40
60
80
100
120
DELLOITE (DELLOITE.COM)
BUSINESS SWEDEN
28 NOVEMBER, 2016
13
SWEDEN IN INDONESIA
SWEDISH COMPANIES ALREADY PROVIDE A SUPPORT IN
ALMOST ALL REGION ACROSS INDONESIA
BALIKPAPAN
MEDAN
Volvo and Scania have the warehouse and aftersales
service centre in here to serve the whole Kalimantan
island
H&M open it first
store outside
Jakarta in 2015
PALU
Biogassystem has set
up together with local
municipality
PAPUA
In Pegunungan Bintang, ABB has contributed to
several solar panel installations, providing electricity
in remote area.
EAST NUSA TENGGARA
A pilot micro geothermal off grid energy
project will be set up here by Swedish
Company Energeotek with local partners.
TANGGERANG
BANDUNG
The 1st IKEA Store open in 2014
SAAB and ITB are
working together to
build an innovation
centre at the ITB
Campus
EAST LOMBOK
Creation of sustainable
and self-sufficient eco
tourism hotel and
leisure area
JAKARTA
CIBITUNG
YOGYAKARTA
Most of Swedish Companies
have their offices in here such as
Atlas Copco, Astra Zeneca, and
Volvo Group. Furthermore it is
also the home for Embassy of
Sweden and Business Sweden
Gunnebo has one of
their factories here,
employing nearly
300 people to
produce safety
solutions
Based for INSISTS,
the Indonesian
Swedish initiative for
sustainable energy
solutions
BANYUWANGI
PT. Lundin a Swedish
cutting edge ship wharf
is based in here
SOURCE: EMBASSY OF SWEDEN
BUSINESS SWEDEN
28 NOVEMBER, 2016
14
SWEDEN IN INDONESIA
TODAY, THERE ARE APPROXIMATELY 70 SWEDISH
COMPANIES IN INDONESIA
EXAMPLES OF SWEDISH COMPANIES DOING BUSINESS IN INDONESIA








ABB
Alfa Laval
Atlas Copco
AstraZeneca
Autoliv
Electrolux
Volvo
H&M








Ericsson
IKEA
Saab
Sandvik
Scania
SKF
Tetra Park
EF








Akzo Nobel Coatings
Flexlink
IFS
Oriflame
Securitas
Lundin
Zalora
Luxe Living








Oddbit
Mixon
Eude
Flexlink
Emric
Ecmant
Eco Regions
Axis Communications
SOURCE: BUSINESS SWEDEN AND EMBASSY OF SWEDEN
BUSINESS SWEDEN
28 NOVEMBER, 2016
15
FORMS OF ESTABLISHMENT
THERE ARE VARIOUS ESTABLISHMENT FORMS,
SUITABILITY DEPENDING ON ACTIVITY TYPE
 Allowed activities
Type of activity
Form of establishment
Agent/Distributor
Export to
Indonesia
Import from
Indonesia

Sales in
Indonesia
Manufacture in
Indonesia

Limited Liability
Company (PMA)

* Only supporting function



Level of stake
and control
Representative
Office
BUSINESS SWEDEN
28 NOVEMBER, 2016
BUSINESS SWEDEN
11/28/2016
16
BUSINESS SWEDEN IN ASEAN
WITH 5 OFFICES IN SOUTH EAST ASIA WE ARE AT HOME
ON YOUR FOREIGN MARKETS
BUSINESS SWEDEN’S PRESENCE IN ASEAN
VIETNAM
BUSINESS SWEDEN’S SERVICE OFFERINGS
Business Sweden makes it easier for
Swedish companies to grow internationally
EVALUATE OPPORTUNITIES
THAILAND
CHOOSE STRATEGY
ESTABLISH PRESENCE
MALAYSIA
SINGAPORE
GROW BUSINESS
INDONESIA
BUSINESS SWEDEN
28 NOVEMBER, 2016
17
CONTACT US
BUSINESS SWEDEN IN INDONESIA
WISMA METROPOLITAN I (WTC5), 9TH FLOOR JL. JEND. SUDIRMAN.
KAV.29, 12920 JAKARTA , INDONESIA
P +62 (0)21 570 6000
F +62 (0)21 570 5268
[email protected]