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CONNECT Indonesia a Smart Guide to Shipping CONNECT Indonesia A smart guide to shipping This is your quick guide to help you connect with customers and businesses across Indonesia. It’s here to help you understand the local culture, shipping requirements, regulations and key commercial opportunities to expand your business. united problem solversTM Contents CONNECT Indonesia Visit UPS.com Indonesia Overview 03 > Find out the most important facts about the markets to help you assess the potential for your business. Economic Potential 04 > Learn about what sells where and the most popular exports and imports that may be relevant to your sector. Business Culture 07 > Pointers on how to build successful relationships with local businesses and consumers. Tips and Advice 08 > Useful information and directory to help you ship to and from Indonesia. Connecting with UPS 10 > A quick overview of UPS capabilities and experience and how we can help connect your business with customers across Indonesia. 02 Contents Indonesia Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Indonesia Overview CONNECT Indonesia Visit UPS.com Open your new trade Indonesia is a country with tremendous economic potential. It is the largest economy in the 10-nation ASEAN (Association of Southeast Asian Nations) countries. Indonesia is the world's third most populous democracy, the world's largest archipelagic route to Indonesia. state, and the world's largest Muslim-majority nation. Local government aims to reduce the country’s exports of raw commodities and to diversify into both the manufacturing and service sectors. National facts and figures Indonesia Capital Jakarta Population 261,115,456 (2016) Land Area 1,904,569 sq. km Major Urban Centers Jakarta 8.5 million; Surabaya 2.3 million; Medan & Population 1.7 million; Bandung 1.7 million; Bekasi 1.5 million; Palembang 1.4 million (2017) Language Bahasa Indonesia, English, Dutch, local dialects (e.g. Javanese) One of the most powerful economies Focus on trade Growing economy Ease of doing business by 2030 Indonesia has implemented 10 free trade According to the Bank of Indonesia, GDP growth is The country's ease of doing business index Indonesia is the world's 16th largest economy and agreements and is negotiating for another 7 estimated at 5.05% in 2017. improved significantly from 91st place in 2017 to is projected to rise to 7th position by 2030. agreements in 2018. 72nd position at the start of 2018, according to the In 2018, the economy is expected to continue World Bank. In terms of purchasing power parity, it is ranked Indonesia is a member of G20, an international to grow at a similar rate, which is higher than the 10th in the world. forum for the governments and central bank global economic growth forecasted at the range of Factors that were taken into account when governors, as well as the World Trade Organization 3.6-3.7%. compiling this index include: ease at which (WTO), an intergovernmental organization that businesses can be set up, access to electricity, regulates international trade. registering a property, acquiring finance, paying taxes and engaging in cross-border trade. 03 Contents Indonesia Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT Indonesia Visit UPS.com Unlocking your Indonesia's economy began 2017 on a strong footing and accelerated growth is expected to continue thanks to rising investments, more fiscal stimulus and growing exports on the back of the strengthening global economy. potential. As the largest economy in ASEAN, Indonesia Reforms to promote economic growth has charted good economic growth. The The Indonesian government has taken significant steps to country’s GDP per capita has risen steadily, achieve ambitious development plans in the country. from US$ 857 in 2000 to about US$ 3,570 in There has been a series of economic stimulus packages to 2016. An emerging middle-income country, boost investment through deregulation and fiscal incentives Indonesia has made enormous gains in such as streamlining approval and procurement procedures for poverty reduction. Since 1999, Indonesia has infrastructure projects, a temporary reduction in tax on revalued cut its poverty rate by more than half. In 2016, fixed assets and cuts to energy prices. The 14th economic the poverty rate in Indonesia stands at 10.6%. stimulus package provides incentives to the eCommerce and Currency The Indonesian Rupiah creative industries. From a continental perspective, 67.9% of Indonesian exports GDP (US$) 932.3 billion (2016) In 2016, the Indonesian government opened more lines of by value were delivered to other Asian countries/territories GDP Per 3,570 (2016) while 12.7% were delivered to European countries. Indonesia Capita (US$) business to Foreign Direct Investment (FDI) to streamline the investment process, allowing 100% FDI in the sectors of shipped another 12.3% worth of goods to North America and CPI inflation Rate 3.5% (2016) eCommerce, cold storage, pharmaceuticals manufacturing and 2.9% to Africa. Total Imports (US$) 156.9 billion (2017) the movie industry. The government streamlines investment Key trading partners in 2016 procedures, with 70 industrial zones across 13 provinces Top imports include mechanical machinery Import Top Indonesia or aircraft (US$ 21.8 billion combined) and providing a 3-hour investment express service to facilitate China: US$ 32.1 billion Imports electrical machinery or equipment (US$ 17.9 foreign investors. The service helps speed up licensing billion combined). (2017) Singapore: US$ 25.8 billion procedures that include completion of necessary permits, the Japan: US$ 11.3 billion tax number and a certificate of company registration. Total Exports (US$) 168.7 billion (2017) Infrastructure spending rose to about US$ 30 billion in 2017. Export There are plans to develop 13 industrial estates right across China: US$ 16.8 billion the archipelago in the next five to seven years (until 2022) Top exports include non-oil & gas exports such U.S.: US$ 16.2 billion Top Indonesia to facilitate job creation and boost regional development as fats and vegetable oils (US$ 22.9 billion) and Exports Japan: US$ 16.1 billion mineral fuels (US$ 21.1 billion). (2017) economic growth. 04 Contents Indonesia Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT Indonesia Visit UPS.com Boost for Indonesia’s manufacturing sector has been one of the major pillars of the nation's economy since the 1970s. The Government of Indonesia issued a regulation on December 28th, 2015 to increase investment in developing industrial zones. The purpose of the business. regulation is to attract investors and facilitate the growth of industrial zones across the country. To promote investment in the less developed areas in Indonesia, businesses are granted Expansion of Foreign Direct Investment bigger incentives. For example: tax subsidies and allowances at the national level, in FDI flows into Indonesia have been experiencing a 12.7% growth in the 2nd quarter addition to relief from regional taxes and levies such as land and building acquisition fees, of 2017 as a result of the investment in special economic zones, as well as the law property taxes and street lighting taxes. enforcement, business certainty, interest rate tax cuts for exporters, energy tariff cuts for Kendal Industrial Park in Semarang (Park by the Bay) in Java labor-intensive industries, tax incentives and lower tax rate on property acquired by local real estate investment trusts. A joint Indonesia-Singapore project started in November 2016 and is expected to complete in 2021. The scale of investment in total will be IDR 4.3 trillion (about US$ 450 million). The biggest foreign investor in Indonesia in the 2nd quarter of 2017 was Singapore (US$ 1.6 billion), followed by Japan (US$ 1.4 billion) and China (US$ 1.3 billion). Located between Jakarta and Surabaya – two of Indonesia’s largest domestic markets – Kendal Industrial Park is about 20km from Tanjung Emas Port in Semarang, which is the only The top sectors in foreign investments were metal, machinery and electronic industry port serving Central Java. (US$ 1.1 billion), mining industry (US$ 1.0 billion), and water, power, gas industry (US$ 0.99 billion). As part of the plan to accelerate growth in Central Java, Kendal Industrial Park is set to form the economic engine and create jobs in the region (100,000 employment opportunities). The project will further enhance bilateral trade between Singapore and Indonesia. Industrial estates: Potential estates: Northern Sulawesi, The park is expected to attract manufacturing companies in industries such as furniture, Java Western Kalimantan food processing, building materials and textiles and will serve as an alternative Southern Sulawesi Bali manufacturing location for companies who wish to invest in Indonesia. Eastern Kalimantan Parts of Northern Sumatra Nusa Tenggara Southern Sumatra Papua West Papua Kendal Industrial Park in Semarang 05 Contents Indonesia Overview Economic Potential Business Culture Tips and Advice Connecting with UPS Economic Potential CONNECT Indonesia Visit UPS.com eCommerce hotspot. Indonesia is poised to become the third largest eCommerce market in the world with total spending reaching US$ 14.5 million by 2021. It has the biggest and fastest growing online retail sector in the Southeast Asia region, contributed by the increase in internet penetration, mobile connectivity and online retailing. Social commerce has become increasingly popular among Indonesians with more than 50% of Internet users transacting via Facebook. eCommerce growth potential The 5 top trends in Indonesian eCommerce Indonesians generally access the internet via a mobile device. Online purchases are usually 1. Mobile Optimization made on a smartphone. The number of smartphone users is estimated to have reached 70% of total online traffic comes from mobile devices. 62.69 million in 2017. By 2018, 99% of Facebook users in the country will be using mobile applications to make Google data shows that mobile application platforms are the key for business expansion.
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