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InCorp offers a comprehensive range of solutions to ease the company registration process and help you create a viable roadmap for your business.
Get assistance from experts with a decade of experience in assisting international business owners expanding into Indonesia.
Avoid any bureaucratic complexity when closing your company by engaging with our experienced legal advisors.
What type of legal entities should you choose to register a company in Indonesia? We can assist you in choosing which is the best one to grow your business.
To help businesses survive during this unfortunate time, InCorp provides corporate recovery in Indonesia and insolvency services.
Granting an environmental permit in Indonesia needs an Environmental Impact Analysis (AMDAL) in advance.
Obtaining property & land ownership in Indonesia offers some challenges for foreigners. However, buying property in Indonesia is attainable with specific resources and documents.
Recent regulatory changes have a knock-on effect on Indonesia's Merger & Acquisition landscape. Check on how we can navigate you through your M&A in Indonesia.
InCorp provides Virtual Office services Indonesia in various locations: Jakarta, Bali, Semarang, Surabaya, and Batam.
Business process outsourcing in Indonesia is a viable option to streamline bureaucratic complexities that hurdle your business expansion objectives.
InCorp offers a complete range of accounting service Indonesia, from tax reporting to auditing.
With professional financial audit services from InCorp, you can ensure all accounting activities are accurately recorded and compliant with Indonesian regulations.
Using an Employer of Record service to set your roots in Indonesia opens the doors to new opportunities in the country.
Financial and Operational Resilience services from InCorp are developed to support businesses and help them survive during this difficult time.
Payroll services in Indonesia are a practical solution to avoid unnecessary complexities while you focus on growing your business.
Using a recruitment agency in Indonesia will help you hire the best candidates for your company, saving you time and money.
Tax consulting in Indonesia are the shortcuts to fulfill the administrative obligations with high accuracy and in a timely manner.
The Indonesian government promotes tax holidays as one of the fiscal incentives to attract major foreign direct investment in Indonesia.
Operating businesses in Indonesia, entrepreneurs must comply with the regulations accordingly, especially concerning taxes.
Immigration in Indonesia is one of the strictest and most complex processes due to its ever-changing regulations. InCorp provides a seamless experience in obtaining your stay and work permits.
Avoid any hassles by engaging with an experienced visa agent in Indonesia.
A dependent visa Indonesia is a document that allows foreigners to bring their family while settling down in the country.
Investor KITAS Indonesia is a stay permit that offers many benefits to investors that invest in the country.
Overseas Visas are required for Indonesians who are planning to stay abroad for an extended period of time.
KITAP is a permanent stay visa for foreigners who have intentions to stay in Indonesia.
Foreign retirees often find their plans stuck due to the complex visa application process. InCorp helps expedite the process.
Obtaining a social visa is daunting if you are not familiar with the country’s complex bureaucratic processes. Consult with us for a seamless Indonesian visa application experience.
Foreigners married to an Indonesian citizen are eligible for a spouse-sponsored KITAS.
Learn how to obtain an Indonesian tourist visa seamlessly and securely, directly from a trusted visa and travel agent.
Get assistance from a trusted visa agent in Indonesia to make your traveling plan to Indonesia even more convenient.
Expedite your Indonesian work permit application process by engaging with a trusted visa agent.
All imported goods must obtain permission granted by specific governing bodies prior to entering the local market.
Learn more about the cosmetic product registration services in Indonesia.
Learn more about exporting goods to Indonesia.
Learn more about the food & beverage product registration services in Indonesia
Learn how to go through halal certification in Indonesia directly from experts successfully.
Learn more about the health supplement product registration services in Indonesia.
Learn more about the household product registration services in Indonesia.
Learn more about importing goods from Indonesia
An Importer of Record in Indonesia is a legal service that enables companies to import products into Indonesia, through an import partner.
Learn more about the medical device registration services in Indonesia.
Register a trademark is necessary to avoid legal issues in the future. InCorp can help you with Trademark Registration services in Indonesia.
Compliance is one of the most challenging parts of business overseas, especially in a country packed with complex bureaucratic processes such as Indonesia.
Updating business documents to align with your company’s growth can be a hassle.
Due Diligence services are needed to assess the credibility of the company or partner you wish to work with or acquire in Indonesia
From Company Regulations to Employment Agreement Drafting, Employment law services from InCorp will help you to compliance with employment policy in Indonesia.
InCorp’s legal consultation services in Indonesia are crafted to help your business settle and fully comply with the latest regulations.
Organizations must continuously evolve and transform to remain competitive and relevant in todays global environment ...
Companies face many opportunities and challenges as a result of a changing market and regulatory landscape ...
Adopting Environmental, Social, and Corporate Governance (ESG) practices can improve your company’s value ...
Risk Management services from InCorp Indonesia can assist companies in building confidence when making future business decisions ...
Transfer Pricing in Indonesia occurs when a company performs an internal transaction within the same business group or its subsidiaries
InCorp's transfer pricing advisory services in Indonesia are marked by the objective to support our clients' business needs.
Our transfer pricing services provide you with a hassle-free experience while still complying with the legal aspects of transfer pricing in Indonesia.
As the market-entry consulting firm in Indonesia, InCorp provides a wide range of customized solutions to ease the business incorporation process.
Both natural and legal persons are entitled to open a bank account in Indonesia. Find out how to open a bank account in Indonesia, here.
InCorp can help you find a trusted Buying Agent Indonesia for product sourcing in Indonesia. Contact us now for a free consultation.
InCorp can help foreigners to get the driving license in Indonesia, whether SIM A or SIM C. Check out the requirements and the procedure, here.
IMEI Registration in Indonesia is necessary to ensure telecommunication devices from abroad can function properly in Indonesia.
With offices in Jakarta, Bali, Semarang, SUrabaya, and Batam, InCorp is ready to assist you as a local partner and distributor in Indonesia.
InCorp can help you to select the trusted local partners to import and distribute your products in Indonesia.
Improve your business by knowing the market conditions in Indonesia through market research services in Indonesia.
InCorp can help you gain information about your competitor's product through mystery shopping.
As Indonesia stands at the crossroads of economic dynamism and global financial interplay, the imminent shifts in US interest rates cast a substantial shadow of anticipation. The intricate interplay between Indonesia’s economic landscape and the fluctuations in US interest rates has become a topic of keen interest and intense scrutiny.
This article will delve into Indonesia’s economic outlook within the context of these impending US interest rate changes. By exploring the potential ramifications, challenges, and opportunities that lie ahead, we aim to shed light on the path that Indonesia’s economy may traverse in the wake of these significant global financial shifts.
In July 2023, the US Federal Reserve (The Fed) implemented another increment of 25 basis points, elevating its benchmark interest rates to a range spanning from 5.25% to 5.55%.
According to Forbes’s report, this move by the Fed brings the interest rates to their highest since February 2001, marking the highest level in the last 22 years. The decision to implement this policy is driven by the ongoing need for the US to combat inflation.
However, in June, annual US inflation increased at its slowest pace in over two years, accompanied by diminishing underlying price pressures. This trend could bring the Federal Reserve closer to concluding its most rapid interest rate hiking cycle since the 1980s.
The US wields significant influence over global financial markets. The Fed’s decision to change interest rates could have economic consequences beyond its borders.
According to the World Bank, the rapid implementation of tighter monetary policy in the US will have a pronounced effect on emerging markets and developing economies, commonly referred to as EMDEs.
EMDEs with financial vulnerabilities and macroeconomic imbalances may be particularly exposed to the economic and financial challenges of US interest rate hikes. Moreover, following a series of bank failures this spring, turbulence in the US financial system could also threaten EMDEs.
The strain on the US banking sector, which has led to a slower-than-expected path of interest rate adjustments, could result in reduced exports and disruptions in financial markets, impacting their growth prospects.
Since late 2021, many EMDEs have experienced difficulties accessing the market and face an increased risk of default. With the potential economic risk, the question remains on how the hike of US interest rate can affect Indonesia.
The Fed’s increase in the US interest rate could influence Indonesia’s central bank (Bank Indonesia) to raise its benchmark interest rate. However, if the rupiah remains stable, Bank Indonesia will likely maintain its current interest rate.
Furthermore, the Fed’s interest rate increase can impact investments in Indonesia, as reflected in the value of the Indonesian rupiah. Foreign investors will hold US dollars as their main currency, leading to an appreciation of the dollar and a decline in the rupiah’s value.
Yet, the impact of the US interest rate hike on the Indonesian bond and stock markets is relatively insignificant for the time being. This anticipation stems from the fact that the Indonesian market has already factored in two rate hikes by the Federal Reserve in the second half of 2023.
The subsequent increment, predicted for September, is projected to be a 25 basis points elevation. This aligns with Bank Indonesia’s prediction of a US interest rate hike in September.
This prediction finds support in the most recent United States Gross Domestic Product (GDP) data, revealing a growth of 2.4% in the second quarter of 2023. This figure surpasses the previous quarter’s 2% and the anticipated 1.8%.
While the US interest rate can affect Indonesia’s macro economy, businesses should also examine how the interest rate increase affects business operations.
Read more: Can Indonesia Overcome Stagnant Foreign Direct Investment?
The increase in interest rate can present businesses with advantages and disadvantages, as described below comparison:
The rise in interest rates can bring about a range of drawbacks for businesses, including:
1. Difficulty in servicing debt
When interest rates rise, a company may experience a reduced capacity to service its debt, as it incurs higher costs without a corresponding revenue increase to balance them.
2. Stagnant growth
When interest rates increase, businesses frequently experience slower growth rates due to challenges in accessing loans and the elevated costs associated with borrowing.
Read more: Addressing Business Challenges in the Indonesian Market
While the hike of interest rate, in general, can affect the overall cost of doing business, some types of business may reap advantages instead, with the following circumstances:
1. Business-owning floats
As interest rates rise, banks and institutions also witness a rise in interest income. Consequently, having a giant float can result in higher returns when interest rates increase.
2. Those with negative working capital
Businesses with negative working capital usually gain from rising interest rates because the excess cash on their balance sheet starts earning a return. This gives these businesses more resources for internal investments and other operational goals.
3. Company with good cash flow
Companies experiencing positive cash flow have the potential to gain from increasing interest rates as they can use their surplus funds to invest in higher-yielding securities.
Amid the increasing trend of interest rates, companies should consider the right strategy to ensure business stability and stay ahead of the curve.
Variable-rate loans can quickly adjust in response to market rate increases, posing a risk to the available cash flow. It is prudent to take action to avoid potential costs that could impact a company’s financial stability.
To enhance the business’s financial standing, consider refinancing or consolidating high-interest debts, including loans expected to face rate hikes.
If your business aims to find new financing, it might be best to act promptly before the rates continue to rise.
To mitigate the financial impact of the rate hike on your business, contemplate implementing cost-cutting measures. Explore opportunities to reduce expenses related to supplies and production, thus maintaining a better financial balance.
To conclude, the ripple effects of the US interest rate hike extend across the global economy, impacting nations like Indonesia. Within this complex scenario, businesses face a dual prospect of challenges and opportunities.
Amidst the backdrop of economic unpredictability, prioritizing the stability of your business takes center stage. InCorp Indonesia emerges as a valuable ally, offering a reliable resource to turn to by providing an extensive range of financial & operational resilience services alongside specialized accounting solutions.
By engaging with InCorp Indonesia’s expertise, you can fortify your business in advance against the unpredictable tides of the economy, safeguarding its operational continuity and financial prosperity. Don’t hesitate to contact our consultants by filling out the form below.
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.