Doing business in Indonesia

Doing business in Indesia

Here is a very beautiful animation video by the TMF Group that presents the opportunities and challenges of doing business in Indonesia, the world’s fourth most populous country with a strong economic growth.

Highlights of the Indonesian business environment

Key points

  • World’s 4th largest population
  • Economy growing at about 6% per year
  • Young workforce
  • Strong domestic consumption
  • Vast natural resources
  • Tropical climate
  • Bahasa Indonesia is the main language, English widely used in business context

Important cities

  • Jakarta:the capital
  • Surabaya: main seaport and commercial hub in the East
  • Bandung: tourism, manufacturing and education center
  • Medan: capital of the North Sumatra province

Main industries

  1. Manufacturing and processing come up to about 25% of Indonesia’s GDP
  2. Agriculture
  3. Trade
  4. Hospitality

Legal aspects

There are several government agencies and bodies involved in doing business, but foreign investment being a priority, corporate income tax has recently been reduced, licensing processes have been simplified and improved protection of foreign firms.

Challenges of doing business in Indonesia

  • Income and tax fillings required in Bahasa Indonesia and defined in Indonesian Rupiah
  • Starting a Limited Liability Company (LLC) can take up to 45 days, involving multiple filings and costing 4 times more than in Thailand
  • Paying taxes requires multiple payments, and employer are required to retain taxes of employees to be paid
  • Important operational challenges in bureaucratic red tape, corruption, access to capital and infrastructure bottlenecks

Watch the video on Youtube

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