Insights

Indonesia a market not to be ignored!

Indonesia is in south East Asia. An archipelago comprising of thousand islands with a population of over 225 million, making it the 4th most populous country in the world, and on route to become the 4th largest economy in the world 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, it’s the world’s fourth most populous country and the largest in south east Asia. It offers opportunities for UK companies across all sectors. Being such a large market, Indonesia offers some benefits that UK companies should be attracted to. Indonesia has an emerging middle class with a strong domestic consumption, and it is the largest economy in south east Asia.

With a population increasing by 4.5 million a year, high proportion of working age people and its political stability makes Indonesia a great market to export.

However, with all its benefits, Indonesia also has its difficulties such as:

  • a complex bureaucracy
  • an uncertain and unpredictable legal and regulatory environment
  • a lack of transparency
  • high logistics costs
  • poor infrastructure
  • a business culture where companies will rarely respond to emails

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 operating in the region. The AEC agenda helps promote reform and raise economic growth in the region.

The Education system is under the Ministry of Education, MoE, (Kementerian Pendidikan dan Kebudayaan or Kemdikbud) and the Ministry of Religious Affairs, MRA, (Kementerian Agama or Kemenag), all citizens must undertake twelve years of compulsory education (primary to High School), which consists of six years at elementary level and three in secondary level. Islamic schools are under the responsibility of the Ministry of Religious Affairs. Indonesian education system is the third largest education system in Asia

Private schools play an important role making up: 7% of primary schools, 56% of junior secondary and 67% of senior secondary.

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.