What’s in this article
Everyone who chooses to start a business in Indonesia believes that doing so will set them on the path towards corporate success. They might assume that once their company has been officially incorporated, the success of their business will immediately follow.
However, those who make this assumption are incorrect. Like anywhere, Indonesian business owners must take specific actions to ensure their business’s success. Certain actions would set the company up for failure, but others would set it up for success.
Therefore, every business owner in Indonesia needs to understand which actions would cause their business to achieve the best possible results and operate at its optimal level.
Entering an Appropriate Business Field
In every country, certain business fields are more commercially viable options than others. These fields have more investment opportunities, are primed for much future growth, are very open to the entry of new businesses, and may be ready to be enhanced through the innovations of a new business, or a combination of more than one of the preceding factors. Indonesia is no different in this regard.
Although the country’s economy is diverse and readily accepts contributions made by businesses in any field, certain sectors make more significant contributions than others.
One such field is the shipping and maritime industry. The shipping industry is important to Indonesia because the country is comprised of thousands of islands. Therefore, the transportation of goods and other products is often done by sea. Sea transport is cheaper than land or air for shipping goods.
Business Opportunities and Government Support in Indonesia’s Key Sectors
Furthermore, the government of Indonesia provides much support to all who choose to start a business in the shipping and maritime industry. It provides funding for projects such as ocean shipping, the construction of ports and terminals, and shipbuilding. For these reasons, the market for shipping-related activities in Indonesia is always open to further entry of new businesses as well as additional investment. The country benefits and will continue to benefit from the business activities of this crucial industry.
Manufacturing is another business field which is a viable option for those who plan to start a business in Indonesia. It makes a larger contribution to the growth of Indonesia’s gross domestic product (GDP) than any other sector. For almost 50 years, manufacturing has served as one of the key pillars of Indonesia’s impressive economic growth rates.
The revenue which it has brought to the country has in turn been used to invest in mechanisms which further boost the economic development of Indonesia. The Indonesian government also recognizes this fact and therefore has provided support for this sector with licenses, incentives, tax exemptions, and permits. Therefore, those who plan to start a business in Indonesia should consider doing so in the manufacturing sector.
Opportunities and Support in Indonesia’s Mining, Energy, and Manufacturing Sectors
The mining and energy industry is another major contributor to the economic well-being and GDP growth of Indonesia. Indonesia is replete with reserves of minerals and coal. It is the world’s fifth-largest producer of coal. In 2019, it is expected to produce 461 million tons of coal. Energy businesses are also set to be in good shape because the demand for electricity across Indonesia is expected to increase by approximately 8.3% every year until 2026. The government has also relaxed regulations imposed on businesses in this sector. It also has provided mining and energy businesses with certain tax incentives and has also simplified the process of obtaining certain licenses and permits. Thus, the mining and energy industry is also an excellent option for anyone who plans to start a business in Indonesia.
Each of the business fields which have been mentioned benefits from various tax incentives. If you would like to find out more ways by which your corporate tax burden could be eased, we at Paul Hype Page & Co. can be of assistance to you. Our tax specialists will see to it that your tax bill is reduced to as low a level as possible while remaining compliant with the tax laws of Indonesia.
Catering to the Indonesian Market
Business owners who meet their target market’s desires in Indonesia will achieve significant success. One way in which they may do so is through savvy use of social media. There are over 70 million social media users in Indonesia. Therefore, those who can market their business and products optimally via social media will garner many benefits because of the large market to which they will have unlocked.
On a related note, many of Indonesia’s Internet users are impressed by well-crafted and unique videos. The creative use of videos can take a business’s advertising and marketing approach to new heights and thus allow it to draw in many more customers than ever before. 1CAK, one of Indonesia’s leading video websites, receives millions of views every month. Indonesian Internet users are also very active on YouTube. Therefore, the use of videos is one of the best ways by which a business owner could cater to the Indonesian market.
Choosing a suitable agent or distributor is crucial for effectively reaching your target audience in Indonesia. A knowledgeable agent or distributor can tailor your business approach to the local market for better product delivery and project development.
A strong track record of providers, agents, and distributors can convince government authorities to award them a tender. Government tenders can help businesses market themselves and reach more people across Indonesia. Business owners must work with qualified agents and distributors to meet all business needs effectively.
Complying with All Legal Matters
Of course, it should go without saying that legal compliance is crucial to the success of any business in Indonesia. Legal compliance is related to such matters as taxation, licenses, permits, and business laws. Starting a business in Indonesia involves regulations dependent on the chosen business entity.
The Indonesian Investment Coordinating Board (BKPM) and Financial Services Authority (OJK) enforce business-related legislation in Indonesia.
Foreign business owners starting a PMA must comply with stipulations in the Negative Investment List. The Indonesian government created the Negative Investment List to protect the interests of local businesses and owners.
For help with legal compliance matters, contact us at Paul Hype Page & Co. Our team will help you legally and effectively resolve business issues related to licenses, taxation, or other legal matters.
Businesses which are not legally compliant will find themselves subject to various punitive consequences. Punishments for offenses can include fines, imprisonment, removal from position, or forced business closure, depending on severity. Thus, compliance with all legal matters in Indonesia is utterly crucial.
Conclusion
There are many steps which could be taken by business owners in Indonesia to ensure future business success. The large, diverse Indonesian market offers many ways for business owners to achieve success. Prioritizing customer desires and proper management ensures business success in Indonesia.
FAQs
The Financial Services Authority (OJK) is a government agency of Indonesia which was created in 2011. It oversees the financial institutions and capital market of the country. It also protects customers of the financial services industry by investigating financial crimes. There are 22 different banks in Indonesia which are listed by the OJK as registered members.
Two of the sectors which have not been performing well in Indonesia and are therefore not conducive to business success are the oil and gas sector as well as the medical services sector. Oil production in Indonesia has been steadily declining over recent years. Meanwhile, those in the medical services sector will find it difficult to hire employees because of the relative lack of qualified practitioners in the country.
