Doing Business in Indonesia: Determining Market Opportunities

Nowadays, companies and investors look for Indonesian market for the brightest and the best. In a recent report commissioned by Euromonitor International, Indonesia has 17.3 million middle-class households; a nation with the world’s fourth largest middle class.

The middle class is the most powerful consumer force leading the growth in Indonesia with consumer-related marketopportunities. The Indonesian consumers are claimed to be one of the most confident. 50% of the whole population (255 million) is under the age of 30.

These consumer-related market opportunities comprise cosmetics, food and beverages, handicrafts and furniture, and stationery. Indonesian market opportunities that allow foreign companies to strive and further expand into retail, healthcare, telecommunications and financial services, and education.

Best Indonesian Market Opportunities Elaborated

Aviation and Aerospace

With the expansion of budget in airport infrastructure, aviation and aerospace markets have crucial importance for domestic and international transportation. This importance is underpinned by Indonesia’s fundamentals as the largest economy hub in South East Asia with booming middle class, and also the world’s largest archipelago with over 17, 000 islands—making air travel a necessity and doing business in Indonesia a breeze.

Aviation and aerospace Indonesian market is growing at 20% per year with its sub-sectors—engine and aircraft replacement parts, and services—remain valuable. The growth of these markets is also heavily influenced by the demand air traffic control and airport logistics services, and group support equipment.

Banking and Financial

More than 80% of Indonesia’s citizens are Muslim. As a result, it provides potential market growth and opportunities for the Islamic banking and financial sector. One thing leads to another, other markets such as IT and banking equipment, software and technology providers, underwent rapid changes and flourished into significant opportunities. This particular competitive sector has benefited Indonesia’s tenacity to attract foreign investors in setting up a company in Indonesia.

Infrastructure

Immature public infrastructure and logistics continue to be the challenge for doing business in Indonesia. This has been the key priority for the nation and there has been real progress, as the government’s infrastructure budget has doubled since 2014. Ministry of Finance in Indonesia comes out with a list of key infrastructure projects encompassing sea ports, toll roads, airports, water supply, wastewater systems and power project. Then, over a five-year period, these projects will bring in an investment of 400 billion (USD).

Energy and Electricity

There are significant investment opportunities outside of Jakarta, particularly in the energy and the electricity transmission services. By 2019, the government plans to increase the electricity generation to 35GW. There is a recognition that energy-related sectors—both renewable and conventional energy generations, is in need for substantial improvement for the next 10 years to come.

Telecommunications and Information Technology

Services and products of telecommunications, information technology, and satellites, unleash the next economic evolution in Indonesia. With the advancement of technology and by going digital, Indonesia welcomes a 150 billion (USD) annual economic impact by 2025.

Defense and Security

Lastly, investors identify defense and security markets are right for both their commercial and investment mandate. The expansion in budget under Indonesia’s reform packages boost defense manufacturer’s sales; the U.S., of a range of products and services, for instance. These new opportunities include military aircraft, vehicles, communications systems, spare parts, maintenance services, sea-borne traffic, and fisheries enforcement.

Products and services for education and training, medical and healthcare have improved greatly in quality at all levels. Despite their premium prices, these Indonesian markets still abide to its exceptional demands and competitive edge.

Other emerging opportunities that are worth the investor’s capital for starting a business in Indonesia are palm oil, biofuel processing, clean energy and technology, cold storage, and fish processing equipment and services.