BRICS Indonesia: What It Means for Trade and Economy

How BRICS Membership Can Supercharge Investments in Indonesia

  • InCorp Editorial Team
  • 4 February 2025
  • 6 minutes reading time

In a world where global economic power is shifting, emerging markets play a more significant role in shaping financial and trade policies. One important group making changes is BRICS. This group includes major developing countries and offers an alternative to financial institutions led by Western countries.  

Indonesia has decided to join BRICS, a group of influential emerging markets. This choice marks a big change in its economy and global position. This move is of immense strategic importance to Indonesia’s future. 

What is the Main Aim of BRICS Indonesia? 

BRICS Indonesia: What It Means for Trade and Economy

Indonesia officially became a member of BRICS in January 2025, marking a significant milestone in its global economic journey. With this move, BRICS Indonesia strengthens the bloc’s presence in Southeast Asia, adding the region’s largest economy and most populous nation. 

BRICS was founded in 2009 by Brazil, Russia, India, and China. South Africa joined in 2010, and in 2024, the group expanded further to include: 

  • Egypt 
  • Iran 
  • Ethiopia 
  • United Arab Emirates 

With its growing membership, BRICS is not just a counterweight to the G7, but a potential game-changer in global economic governance, aiming to reshape the existing structures. 

What Are the Benefits of Joining BRICS for Indonesia? 

Indonesia’s decision to join BRICS is a strategic move that unlocks new economic, trade, and diplomatic opportunities. Indonesia stands to gain significantly from this membership, strengthening its financial position, trade partnerships, and geopolitical influence. 

Strengthening Economic Partnerships 

President Prabowo’s administration recognizes that sustained economic growth requires diversified trade partnerships and increased foreign investment. BRICS provides access to markets in Asia, Africa, and Latin America, aligning with Indonesia’s strategy to expand non-traditional trade relationships. 

Infrastructure and Financing Opportunities 

Massive infrastructure investment is critical to Indonesia’s growth targets. BRICS opens avenues for low-cost financing through the New Development Bank (NDB), a financial institution established by BRICS member countries to fund infrastructure and sustainable development projects. This funding supports key projects in transportation, energy, and digital connectivity, significantly boosting Indonesia’s development. 

Advocating for the Global South 

BRICS serves as a platform for championing the interests of developing nations. By collaborating with other emerging economies, Jakarta aims to influence global policies that promote: 

  • Sustainable growth 
  • Fairtrade practices 
  • Greater access to technology 

Attracting Investment 

With BRICS representing nearly a third of global GDP, Indonesia’s membership enhances its appeal as an investment destination. The country can leverage BRICS partnerships to stimulate growth in key sectors such as: 

  • Energy: Renewable energy and oil projects 
  • Manufacturing: Expanding industrial production 
  • Technology: Advancements in digital and AI industries 

Indonesia’s Trade Relations with BRICS Countries 

In 2024, Indonesia’s trade with BRICS nations reached approximately $150 billion, highlighting the bloc’s importance as a key trading partner. Expanding this trade is crucial for Indonesia to achieve its 8% GDP growth target. 

Key Exports 

Indonesia’s primary exports to BRICS countries include: 

  • Palm Oil: A major commodity for markets like India and China 
  • Coal and Natural Gas: Supporting energy security in BRICS economies 
  • Rubber: Essential for industrial and automotive applications 

Key Imports 

Indonesia relies on BRICS for: 

  • Machinery and Electronics: To support industrialization and manufacturing 
  • Chemicals: Essential for agriculture and industrial growth 

How Does BRICS Support Indonesia’s Economy? 

Indonesia’s economic growth strategy depends on infrastructure expansion, technological progress, and trade diversification. As the country targets 8% GDP growth, BRICS membership provides crucial support in these areas. 

Infrastructure Development 

Indonesia invests heavily in roads, ports, and railways, but these projects require massive funding. BRICS membership grants access to low-cost financing from the New Development Bank (NDB), reducing dependence on Western lenders. Additionally, China’s expertise in infrastructure strengthens Indonesia’s ability to complete significant projects efficiently. 

Technology Transfer and Industrial Growth 

Joining BRICS enhances Indonesia’s access to advanced technologies in renewable energy, artificial intelligence, and digitalization. Collaboration with countries like China, Russia, and India supports industrial modernization, improving productivity and competitiveness. 

Trade Diversification 

Indonesia’s economy has traditionally relied on U.S. and EU markets, making it vulnerable to global fluctuations. BRICS membership expands trade opportunities with Brazil, South Africa, and the UAE, ensuring a more resilient and diverse economy. 

Challenges for Investors as Indonesia Joins BRICS 

While BRICS presents exciting opportunities for investors, it also comes with risks that businesses must carefully assess before committing capital. Understanding these challenges is essential for making investment decisions. 

Market Competition and Trade Barriers 

Indonesia’s integration into BRICS opens access to new markets, but investors should be aware of intensified competition from China and India in key sectors like manufacturing, energy, and technology. Additionally, trade agreements within BRICS are still evolving, meaning businesses may face tariff uncertainties and regulatory differences when expanding operations. 

Geopolitical Considerations and Policy Stability 

Indonesia’s non-aligned foreign policy must balance relations between BRICS, the U.S., and the EU. Shifts in global politics could impact investment regulations, trade policies, and foreign direct investment (FDI) incentives. Investors should closely monitor Indonesia’s trade policies to mitigate potential risks. 

Regulatory and Financial Risks 

While BRICS’ New Development Bank (NDB) offers alternative financing, investors must evaluate how monetary policies and financial regulations within BRICS impact currency stability, interest rates, and capital flows. Companies investing in infrastructure, energy, and digital industries should assess funding accessibility and risk exposure. 

China’s Influence on BRICS Indonesia 

China’s dominance in BRICS raises concerns about market dependency and economic influence. For long-term growth in Indonesia, investors must ensure diversified partnerships and not rely solely on China-backed projects. 

Businesses looking to invest in BRICS Indonesia have vast opportunities due to growing trade, infrastructure development, and financing alternatives. However, market competition, geopolitical shifts, and regulatory risks require careful planning.  

Investors should conduct thorough risk assessments and establish diversified investment strategies to maximize success in Indonesia’s evolving economic landscape.

Guide to Doing Business in Jakarta

Mailchimp Free eBook Indonesia Business Insight

 

Take Advantage of Indonesia’s BRICS Membership with InCorp 

With access to BRICS financing and expanded trade networks, businesses can position themselves for long-term success. Establishing the appropriate business structure and ensuring legal compliance is essential for companies looking to expand into Indonesia.  

InCorp Indonesia (an Ascentium Company) can assist you with this process. 

  • Company Registration: Register your business in Indonesia hassle-free. 
  • Business License: Obtain the necessary business licenses to operate legally and fully utilize Indonesia’s BRICS membership. 

Complete the form below to capitalize on Indonesia’s growing role in BRICS and establish a strong foothold in this expanding market. 

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

Lead Form

Frequent Asked Questions

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.