Traditionally dependent on hydrocarbons and minerals, the digital economy of Indonesia is now booming thanks to high internet penetration and an informed population of technology. The country’s tropical climate and the huge geothermal resources also offer convincing opportunities for the first investors in carbon -free energy.
The monopolies have “decreased”
Indonesia endured decades of military dictatorship following the independence of the Dutch colonists. And since the fall of the regime of the President of the Fort Suharto man in 1998, the country has become a democracy. It was “unthinkable in the suharto era”, Richard Borsuk, co-author of “Liem Sioe Liong’s Salim Group: The Business Pillar of Indonesia of Suharto”, said.
“There is also good tax management, a plus for investors,” he adds. “Global business competition has increased and monopoly power has decreased.”
The drawback? Investors used to “benign sweetness” of Singapore should be patient with time to get things in Indonesia.
“Bureaucracy can be intimidating,” adds Borsuk, also explaining that – in Indonesia, as in a large part of Asia – relationships are essential. His solution? Choose the partners carefully and establish connections with them.
Recent election
SUBIANTO campaigned by promising a “continuity” with the policies of his predecessor, Joko (Jokowi) Widodo. One of the Sui -iento programs is to give children poorer families good nutrition to help them grow healthy. “It will be very expensive to provide nationally, but Prabowo will push hard,” explains Borsuk.
The previous regime of Indonesia also launched an ambitious and expensive plan to move the capital of Jakarta to a new site on Borneo. He remains uncertain if Prabowo prioritizes this project.
Shalini Kamal Sharma has been doing business in Indonesia since 2004. “Thanks to our Formula 1 company, we provide personalized [furniture, fixtures, and equipment] To hotels, complexes and service apartments in the world, with a strong accent on sustainability, ”she explains. “Indonesia is a substantial and growing market for us.”
The real estate sector of hospitality in Indonesia is currently $ 2.1 billion. It will reach $ 3.65 billion by 2030, an annual growth rate composed exceeding 12%, according to analysts.
Sharma underlines Jakarta’s active role in the encouragement of interior investments. “The government – through the BKPM [the Ministry of Investment’s investment coordinating board]- is very sensitive to the business world. We were invited by BKPM to examine specific opportunities, which is a major and very encouraging change. »»
BKPM is the main agency that supports foreign investors and acts as a bridge between investors and the government. “They engage with foreign investors and, as we have learned, are proactive enough to help potential investors,” she said.
In a country formerly castigated for its difficult bureaucracy, it also highlights major changes. “Obtaining products through customs has become much easier,” she notes.
A country of superlatives
Joel Shen, a lawyer based in Jakarta and Singapore, who directs the technological practice of Withersworldid in Asia, has that “Indonesia is a country of superlatives and is an attractive investment destination with a number of very clear advantages ».
Indonesia, despite a contraction in its middle class, “should be the third contributor to the world middle class during the next decade, after only India and China,” he said.
In addition to being the largest economy in Southeast Asia, it is the only country in the G20 region, which makes it difficult to ignore it.
In 2023, Indonesia joined the complete regional economic partnership, which included the 10 countries in the Anase, as well as Australia, China, Japan, New Zealand and South Korea. “RCEP is the largest free trade agreement in the world (ALE), covering around 30% of world GDP and almost a third of the world’s population,” said Shen.
Indonesia also produces local raw materials: palm oil, an ingredient in many consumer goods with rapid evolution (i.e. food, cosmetics, soaps and biofuels); In nickel, which is essential in the production of electric-developer batteries.
Associated with its development of infrastructure and ongoing reforms to improve business, “Indonesia presents many opportunities for investors”, explains Shen.
The digital advantage
Beyond demography and natural resources, the Indonesian economy quickly transforms, fueled by mobile consumers, according to Shen.
Google, Temasek and Bain & Company, in their report in Southeast Asia in 2024, have appointed Indonesia the large Internet market which is rapidly growing.
“Investing in Indonesia has indeed become more accessible due to a combination of regulatory reforms and digitization,” explains Shen. The omnibus law on job creation, for example, simplifies commercial licenses, reduces restrictions on foreign property and improves expensive tax and labor regulations.
There is also the unique online-based submission system, an online platform that facilitates foreign investors at low risk of incorporating Indonesian companies and obtaining commercial licenses.
Fiscal days, tax allowances and other advantages are also available to encourage investments in the government’s priority sectors and regions.