INDONESIA - AN OVERVIEW - Expandera internationellt · INDONESIA - AN OVERVIEW BUSINESS SWEDEN October 2016 . BUSINESS SWEDEN 28 NOVEMBER, 2016 2 INDONESIA – THE LARGEST ECONOMY

CONFIDENTIAL

FOR INTERNAL USE WITHIN CLIENT COMPANY ONLY

INDONESIA - AN OVERVIEW

BUSINESS SWEDEN

October 2016

BUSINESS SWEDEN 28 NOVEMBER, 2016 2

INDONESIA – THE LARGEST ECONOMY IN SOUTHEAST

ASIA

Business Sweden in Indonesia

Anders Wickberg

Trade Commissioner to 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!

INTRODUCTION


THE ASEAN ECONOMIC TRADING BLOC WAS FORMED

1967 TO PROMOTE GROWTH, STABILITY AND PEACE

MYANMAR

Cambodia

THAILAND

MALAYSIA

VIETNAM

LAOS

CAMBODJA

INDONESIA

PHILIPPINES

SINGAPORE

BRUNEI

ASEAN - THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS

ASEAN HAS OVER TIME DEVELOPED TO BECOME A REGIONAL FORCE IN ASIA

INTRODUCTION TO ASEAN

SHARE OF MAJOR TRADE PARTNER WITH ASEAN,

2014

INTRA-ASEAN TRADE

USD BILLION

11 NOVEMBER, 2016 BUSINESS SWEDEN 4

THE OVERALL INTRA-ASEAN TRADE HAS SURGED BY

SEVEN-FOLD OVER THE PAST DECADE

SOURCE: ASEAN STATISTICAL DATABASE

EXTERNAL-ASEAN TRADE

USD BILLION

x5

DURING THE SAME PERIOD EXTERNAL-ASEAN TRADE INCREASED FIVE-FOLD

x7

INTRODUCTION TO ASEAN


DESKTOP RESEARCH

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.

INTRODUCTION TO INDONESIA


INDONESIA IS PROJECTED TO HAVE A SIGNIFICANT

GROWTH FOR THE NEXT 25 YEARS

MCKINSEY (MCKINSEY.COM)

Indonesia Now Indonesia 2030

16th Largest Economy in The

World

45 Million consumer Class

54% populations in the city

producing 74% of the GDP

55 Million skilled workers in

the Indonesian economy

7th Largest Economy in The World

135 Million consumer Class

71% populations in the city

producing 86% of the GDP

113 Million skilled workers in

the Indonesian economy



UNCTAD SURVEY SHOWN THAT INDONESIA IS IN THE

WORLD TOP 3 FOR INVESTMENT DESTINATION

UNCTAD (UNCTAD.ORG)

8

8

8

9

10

10

14

20

23

26

41

44

7

8

12

14

27

0 5 10 15 20 25 30 35 40 45 50

Japan

Mexico

Poland

France

Australia

Russian Federation

United Kingdom

Germany

Brazil

India

United States

China

Singapore

Malaysia

Vietnam

Thailand

Indonesia

Developed Economies

Developing and Transition Economies

TNCs’ top prospective host economies, 2014–2016

(Percentage of respondents selecting economy as a top destination)


TOP 5 ASEAN

COUNTRIES

BUSINESS SWEDEN 11 FEBRUARY, 2016 8

SOURCE: WORLD BANK – EASE OF DOING BUSINESS

Philippines

Vietnam

Thailand

Indonesia

Singapore

Rank 2016

Rank change

2010 - 2016

INDONESIA SIGNIFICANTLY IMPROVED BUSINESS

CLIMATE COMPARED OTHER TO ASEAN COUNTRIES

Improving Can’t keep pace

100

-100

EASE OF DOING BUSINESS INDEX RANKING 2010 VS. 2016

ASEAN6


1

0 50 100

Malaysia

50

-50

Rank 46

(-30)

Rank 82

(+8)

Rank 91

(+35)

Rank 99

(+35)

Rank 23

(+0)

Rank 2

(-1)


INDONESIA FDI HAS BEEN INCREASE FOR MORE THAN

20% FROM YEAR 2014 - 2015

BKPM (BKPM.GO.ID)

0

20

40

60

80

100

120

140

160

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Rp

. (I

n T

rill

ion

)

2013 2014 2015

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

DDI 27 33 33 34 34 38 41 41 42 42 47 46,2

FDI 65 66 67 71 76 78 78 78 82 92 92 99,2

Total 93 99 100 105 106 116 119 120 124 135 140 145



SWEDISH COMPANIES HAVE A BIG OPPORTUNITIES TO

HELP INDONESIA IN MAXIMIZING THEIR POTENTIAL

INDONESIA INVESTMENTS (INDONESIA-INVESTMENTS.COM)

Infrastructure

Infrastructure is the main indicator

for economic growth in Indonesia

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.

Growing Consumer Class

Growing consumer class give a

positive impact for Indonesia

economy.

Indonesia is the country with the

highest population growth in the

consumer class segment.

2010: 45 million of Indonesia

population can be categorize in

consumer class category with

(>$3,600 annual income).

Shift to Manufacturing

Indonesia is currently focus in

increasing the growth of

manufacture in Indonesia

After the 1998 crisis, Indonesia

unable to reach the potential like it

was shown before the crisis.

2014: Manufacturing products only

counted 35% from total Indonesia

export.

KEY INDICATORS IN INDONESIA

GOVERNMENT SUBSIDY

2012 – 2016, TRILLION RUPIAH

KEY POINTS


GOVERNMENT ARE SHIFTING BUDGET FROM VARIOUS

SECTORS TO INCREASE THE INFRASTRUCTURE BUDGET

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).

Swedish companies can provide

adequate resources and

technologies to help Indonesia

government in developing the

infrastructure in Indonesia.

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

Various and

equitable

infrastructure

development

Subsidy for

Infrastructure

will continue

to increase

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

2012 2013 2014 2015 2016

Energy Education Infrastructure Health

INDONESIA INVESTMENTS (INDONESIA-INVESTMENTS.COM)

KEY INDICATORS IN INDONESIA [INFRASTRUCTURE]

CONSUMER CLASS POPULATION IN INDONESIA

2000 – 2015, MILLION PEOPLE

KEY POINTS


INDONESIA IS THE 3RD

LARGEST CONSUMER CLASS

POPULATION IN INDONESIA

Development of most sectors

(property, electronics, automotive,

etc) in Indonesia are depending on

the buying power of consumer

income population.

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.

Total of consumer class population

in Indonesia is more than the total

population of Malaysia and

Singapore combined.

High demand

for product

and services

Positive

impact for

Indonesian

economy

Biggest in

ASEAN

MCKINSEY (MCKINSEY.COM)

KEY INDICATORS IN INDONESIA [GROWING CONSUMER CLASS]

45 Million (19% of

Populations)

85 Million (32%)

135 Million (48%)

170 Million (61%)

0

50

100

150

200

201

0

202

0 F

203

0 F

(1)

203

0 F

(2)

*The consumer class populations defined as individual with annual income above $3,600

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)

GLOBAL MANUFACTURING COMPETITIVENESS INDEX

2016, INDEX SCORE (100=HIGH, 10=LOW)

KEY POINTS


INDONESIA NEED A BIG INVESTMENT TO INCREASE THEIR

COMPETITIVENESS INDEX

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.

Large indirect

cost because

of poor

logistics

Government

aim to

increase the

index

Low wages but

poor unit

labour cost

DELLOITE (DELLOITE.COM)

KEY INDICATORS INDONESIA [SHIFT TO MANUFACTURING]

62,1

63,6

67,2

68,7

69,5

72,9

75,8

76,7

80,4

93,9

99,5

100

55,8

56,5

59

60,4

68,4

0 20 40 60 80 100 120

Sweden (13)

Switzerland (12)

India (11)

Canada (9)

Mexico (8)

Taiwan (7)

United Kingdom (6)

South Korea (5)

Japan (4)

Germany (3)

United States (2)

China (1)

Indonesia (*5) (19)

Vietnam (*4) (18)

Malaysia (*3) (17)

Thailand (*2) (14)

Singapore (*1) (10)

TOP 5 ASEAN

COUNTRIES


SWEDISH COMPANIES ALREADY PROVIDE A SUPPORT IN

ALMOST ALL REGION ACROSS INDONESIA

SOURCE: EMBASSY OF SWEDEN

SWEDEN IN INDONESIA

JAKARTA 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

BANDUNG SAAB and ITB are

working together to

build an innovation

centre at the ITB

Campus

CIBITUNG Gunnebo has one of

their factories here,

employing nearly

300 people to

produce safety

solutions

TANGGERANG The 1st IKEA Store open in 2014

YOGYAKARTA Based for INSISTS,

the Indonesian

Swedish initiative for

sustainable energy

solutions

BANYUWANGI PT. Lundin a Swedish

cutting edge ship wharf

is based in here

MEDAN H&M open it first

store outside

Jakarta in 2015

EAST LOMBOK Creation of sustainable

and self-sufficient eco

tourism hotel and

leisure area

EAST NUSA TENGGARA A pilot micro geothermal off grid energy

project will be set up here by Swedish

Company Energeotek with local partners.

PALU Biogassystem has set

up together with local

municipality

BALIKPAPAN Volvo and Scania have the warehouse and aftersales

service centre in here to serve the whole Kalimantan

island

PAPUA In Pegunungan Bintang, ABB has contributed to

several solar panel installations, providing electricity

in remote area.


TODAY, THERE ARE APPROXIMATELY 70 SWEDISH

COMPANIES IN INDONESIA

SOURCE: BUSINESS SWEDEN AND EMBASSY OF SWEDEN

EXAMPLES OF SWEDISH COMPANIES DOING BUSINESS IN INDONESIA

ABB

Alfa Laval

Atlas Copco

AstraZeneca

Autoliv

Electrolux

Volvo

H&M

Akzo Nobel Coatings

Flexlink

IFS

Oriflame

Securitas

Lundin

Zalora

Luxe Living

SWEDEN IN INDONESIA

Ericsson

IKEA

Saab

Sandvik

Scania

SKF

Tetra Park

EF

Oddbit

Mixon

Eude

Flexlink

Emric

Ecmant

Eco Regions

Axis Communications

BUSINESS SWEDEN 11/28/2016 16

THERE ARE VARIOUS ESTABLISHMENT FORMS,

SUITABILITY DEPENDING ON ACTIVITY TYPE

BUSINESS SWEDEN 28 NOVEMBER, 2016

Export to

Indonesia

Import from

Indonesia

Manufacture in

Indonesia

Agent/Distributor

Representative

Office

Limited Liability

Company (PMA)

Form of establishment

Type of activity

Allowed activities

Sales in

Indonesia

* Only supporting function

FORMS OF ESTABLISHMENT

Le

ve

l of s

take

an

d c

on

trol

WITH 5 OFFICES IN SOUTH EAST ASIA WE ARE AT HOME

ON YOUR FOREIGN MARKETS

BUSINESS SWEDEN’S PRESENCE IN ASEAN BUSINESS SWEDEN’S SERVICE OFFERINGS


MALAYSIA

VIETNAM

THAILAND

SINGAPORE

INDONESIA

EVALUATE OPPORTUNITIES

Business Sweden makes it easier for

Swedish companies to grow internationally

CHOOSE STRATEGY

ESTABLISH PRESENCE

GROW BUSINESS

BUSINESS SWEDEN IN ASEAN

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]

Documents

INDONESIA - AN OVERVIEW - Expandera internationellt · INDONESIA - AN OVERVIEW BUSINESS SWEDEN October 2016 . BUSINESS SWEDEN 28 NOVEMBER, 2016 2 INDONESIA – THE LARGEST ECONOMY