Why You Should Invest in Indonesia's Beauty Industry

Exploring Opportunities in Indonesia’s Beauty Industry

  • InCorp Editorial Team
  • 26 June 2024
  • 5 minute reading time

​Indonesia’s beauty industry is experiencing significant growth driven by an expanding population, increasing disposable income, and a growing focus on personal care. These factors combine to create a promising environment for business opportunities in the beauty sector.

This article explores the key drivers propelling this sector’s growth and analyzes the potential opportunities within the Indonesian beauty market. It offers valuable insights for investors and entrepreneurs seeking to capitalize on this dynamic market.

What is the Beauty Industry?

The beauty industry has expanded significantly to include various products despite many people associating it with cosmetics. The sector now encompasses cosmetics, perfumes, skin cleansers, various skincare products, and cosmeceuticals.

Moreover, the beauty industry also involves how these products are marketed and sold, including price points and cosmetics packaging. Custom product boxes play a pivotal role in enhancing brand visibility and appeal on store shelves and online platforms alike.

Beauty products are now sold primarily in physical stores with specific locations and can be found online, reaching customers worldwide.

How Big is the Beauty Industry in Indonesia?

Indonesia’s beauty industry has grown significantly recently, offering profitable opportunities for international companies. The sector expanded by five percent in 2023, expecting further growth to reach nine percent by 2026.

Furthermore, the cosmetics and personal care products sector increased 14% in 2022 and is anticipated to sustain an average annual growth rate of 4.5% from 2024 to 2027. 

A key factor driving this expansion is the rising middle-class population in Indonesia, currently estimated at around 54 million people. This demographic is projected to grow to an impressive 135 million by 2030. Consequently, businesses are well-positioned to capitalize on emerging trends catering to this expanding consumer group.

Why You Should Invest in Indonesia's Beauty Industry

Indonesia’s beauty and personal care market is projected to generate USD 9.17 billion in 2024, encompassing various segments such as beauty tech, cosmetics, fragrances, personal care, and skin care.

Regulations in Indonesia’s Beauty Industry

Indonesia’s Government Regulation 39/2021 (GR 39/2021) outlines the requirements for businesses to obtain Halal certification for their goods and services.

According to this regulation, products that enter, circulate, and trade in Indonesia must be halal-certified. The following are goods and services that need to be halal-certified as stipulated under GR 39/2021:

GoodsServices
Food and beverages
Pharmaceuticals
Cosmetics
Chemical products
Genetically modified products
Biological products
Other goods used by people
Processing
Storage
Packaging
Distribution
Animal slaughter
Sales

In 2014, halal cosmetics gained widespread acceptance, although they were initially introduced to the Indonesian market as early as 1995. Wardah, a local cosmetics company, pioneered the popularization of the halal beauty industry in the country.

Halal cosmetics are manufactured by Islamic Sharia principles, ensuring that they are free from any materials that are prohibited under Islamic law, such as alcohol, lard, or blood.

The demand for halal cosmetics has significantly risen in recent years, with particular appeal among millennials, Generation Z, and non-Muslim consumers. This shows that the beauty industry is taking a firm step toward becoming one of the big players supporting Indonesia’s economy.

An excellent example of this growing trend is Base, a local cosmetics company that has expanded its market to include countries with small Muslim populations, such as Australia.

Halal beauty products, often incorporating plant-based materials, cater to the increasing demand for organic, natural, and vegan products in regions with Muslim minority populations.

Challenges Facing the Beauty Industry

Despite Indonesia’s cosmetics industry’s significant growth potential, it faces several key challenges that require careful consideration and strategic planning to overcome. 

Business Competition

Indonesia’s cosmetic industry is experiencing growing competition from local and international beauty companies to capture the expansive market.

Local cosmetic products are gaining popularity by offering affordable alternatives, appealing to the increasing lower middle-class demographic. International cosmetics giants leverage their extensive experience and global networks, giving them a distinct edge in marketing and branding.

However, the influx of Chinese cosmetic products intensifies the competition, presenting another challenge for global market players.

Raw Material Imports

The raw materials for the cosmetic industry in Indonesia are still coming from imports, reaching almost 90%. The main exporting countries are Japan, South Korea, and the U.S.

This reliance on imports raises costs for businesses and complicates the halal certification process for these materials. Verifying the halal status of imported raw materials is challenging, mainly because there is no unified international Halal certification.

In addition, auditors must certify the production facilities from where the raw materials originate, further complicating the process.

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Invest in Indonesia’s beauty industry with InCorp

Considering the potential of Indonesia’s booming cosmetics industry, this translates to a lucrative market brimming with potential for investors and entrepreneurs. InCorp Indonesia offers a comprehensive suite of services to streamline your entry into the Indonesian cosmetics market. 

Our consultant will guide you through the cosmetic registration process, ensuring your business fully complies with all legal and corporate regulations established by the Indonesian authorities. 

Furthermore, recognizing the significance of Halal certification in the Indonesian market, InCorp also provides dedicated Halal certification services. 

We’ll work closely with you to ensure your products meet the stringent requirements of Halal certification bodies, fostering trust and significantly expanding your consumer base.

Unlock the full potential of this flourishing market by filling out the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

You can transfer the license as long as your current local distributor agrees to change the product license holder. The procedure will be different for each product category. We can only recommend you try to prevent these issues by setting cooperation with a trustworthy partner from the beginning

There are plenty of products, but the most common products include food, beverages, traditional medicines, health supplements, cosmetics, chemical products, genetically engineered products, medical devices and household appliances.

According to Indonesian Law No. 6 Year 2023, halal certification is valid if there's no change in the ingredient or process.

Before you can distribute your products in Indonesia, you will have to register your product with the BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). Only an Indonesian legal entity can register the product. If you decide to distribute your product via a local distributor, they will register the product under their entity in Indonesia and become the product license holder. Cekindo can act as your local distributor and register the product under its name.