The Future of Sustainable Electronic Industry in Indonesia

Embracing The Future of Sustainable Electronic Industry in Indonesia

  • InCorp Editorial Team
  • 24 February 2023
  • 5 minute reading time

Indonesia’s future of the electronic industry is moving towards sustainability. Thanks to digitalization, innovations led us to integrate our daily lives with the help of intelligent electronic devices primarily produced of durable materials for extended use.

However, this has been generating a problem. The general population disposes of several years of use, creating significant waste. Electronics make up a great proportion of the waste stream. It reached approximately 54.7 million tonnes in 2021, which is heavier than the Great Wall of China. 

The number of electronic waste is projected to grow by 3-4% each year and anticipates to reach an astounding 74 million tonnes by 2030.  

The Urgency to Create a Sustainable Electronic Industry 

The Future of Sustainable Electronic Industry in Indonesia

Electronic waste or e-waste is treated by burning, dismantling, or melting without prepper equipment or protection. As a result, the process leads to extreme health hazards for individuals who come into contact with it. 

Only about 17.4% of the e-waste generated globally is adequately collected and recycled—the traditional linear economic model employs tactics like planned obsolescence.

The conventional method relies on designing products with short lifespans to encourage repeat purchases. It resulted in large quantities of low-cost, readily available materials and energy, overlooks waste, and lacks consideration of resource efficiency.

Therefore, the electronic industry must shift towards a circular economy that prioritizes sharing, renting, reusing, repairing, refurbishing, and recycling existing materials and products for as long as possible.”

Products that have a longer lifespan will lead to a significant reduction in waste. It is because materials are kept in the economy for as long as possible when goods end their life cycle.

Opportunity to Build Sustainable Electronics Manufacturing

Utilizing fewer resources and prolonging the life of products and their components are two ways that circular business models enable businesses to gain value. 

Innovative business models and more efficient use of raw resources can create new economic opportunities for companies. Adopting a circular business model in electronics is necessary to avoid resource depletion, environmental harm, and adverse health impacts, with urgency growing.

Government regulations and green investment programs are advancing sustainability in the electronics sector. 

Implementing material recycling and recovery programs or adopting low-emission manufacturing processes may be a cost-effective decision, providing the opportunity to reduce expenses related to energy consumption, waste management, and unnecessary procedures.

Prioritizing environmental protection puts the sector ahead of the curve as laws get harsher and position particular businesses well to profit from approved ESG investments. 

By adopting new technology, companies are opening the door for future improvements, such as using additive manufacturing techniques and new materials. 

Read more: Understanding The Environmental Sustainability in Business

Sustainable Electronic Industry in Indonesia

The Future of Sustainable Electronic Industry in Indonesia

The Manufacturing Industry Grew in 2022

Through various efforts and opportunities in opening a manufacturing company in Indonesia, the government has placed the industry in a prominent position. 

The Indonesian government is consistently inviting substantial growth and development — for example, the 31st Manufacturing Expo in early December 2022, which showcased this advancement.

The event was held on an international scale. The theme of this year’s event was “Sustainable Solutions for the Manufacturing Industry,” attracting over 800 participants from 33 countries and regions.

The event was considered a step towards propelling Indonesia into the 4.0 era by providing a good investment climate, improving trade, developing human manufacturing resources, utilization of digital technology (smart manufacturing) to achieve industrial sustainability.

Sustainable Electronic Industry is part of “Making Indonesia 4.0”

The Ministry of Industry has identified several manufacturing sectors on which Indonesia will focus on implementing technological integration. 

The sectors include food and beverage, textile and clothing, automotive, and chemical and electronic. 

These sectors were identified and chosen to be the focus after assessing the economic impact and the feasibility criteria, which covered GDP, size, trade, investment amount, market penetration, and potential impact on other industries. 

The Opportunities to Build Electronic Industry in Indonesia

The Future of Sustainable Electronic Industry in Indonesia

Daikin’s Investment in Indonesia in 2022

Construction on an air conditioner (AC) manufacturing plant costing IDR 3.3 trillion was started by PT Daikin Industries Indonesia to achieve its investment in Indonesia. 

A complete manufacturing capability of up to 1.5 million units per year will eventually be available at this site. 

According to Daikin, Indonesia is progressing toward its goal of ranking fifth in the world in terms of GDP by 2045. The demand for AC for residential use expects to rise due to the forecasted economic expansion brought on by an increase in middle-class populations.

Semiconductor Factory to Be Built in 2023

The Indonesian government is planning to construct a Semiconductor Factory in 2023 in the region of Batam. It aims to bring in Indonesian individuals to contribute to the Indonesian ecosystem. 

Indonesia aims to attract foreign investors by informing investors about the project in greater detail. However, Indonesia has previously lost out on this opportunity to Malaysia due to poor technological infrastructure, and it is not looking to do so again. 

The optimistic view of electronic industries toward the Indonesian economy is shared by many. As the government continues to prioritize the manufacturing sector, new and existing businesses may find it beneficial to invest within it to maximize the incentives and grow their profits. 

To achieve this, a company may need assistance with company registration in Indonesia, as the process can be complex. InCorp Indonesia (formerly Cekindo) is readily available with a professional expert to help with these matters.

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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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

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.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.