Indonesia, the archipelago that combines growth and consumption

ACTIVITY IN BRIEF

On May 25, the World Trade Centre Montreal is holding a seminar with guest experts who will address several aspects of doing business in Indonesia. You will be able to focus on the specific sectors of the speakers and entrepreneurs in attendance, and benefit from their advice on the best business development strategies to adopt. Come assess the potential of this market for your business.

A UNIQUE OPPORTUNITY TO…

• Learn about business prospects and the business environment in Indonesia
• Assess your development strategy for the Indonesian market
• Hear Quebec companies discuss their experience on the market
• Evaluate the market’s potential for your firm
• Understand the challenges and issues for Quebec companies

WHY INDONESIA?

Indonesia is recognized for its strong economy and stable growth. It is currently the world’s 9^th largest economy, behind that of Brazil and ahead of the United Kingdom. Open to trade, its commercial exchanges represent 48.2% of its GDP. Indonesia is an importer of oil, machinery, chemical products, aerospace components, and automobiles.

A member of the G20, the Association of Southeast Asian Nations, and the World Trade Organization, Indonesia has stood alongside Canada as a partner in international economic bodies for several years. In this region, Indonesia is Canada’s principal trade partner and the leading destination for Canadian investment. In 2015, Canadian and Quebec exports to Indonesia amounted to $1.81 billion and $175 million respectively, more than 75% of which represented grains, fertilizer, and pulp and paper products.

In addition to its remarkable economy, Indonesia’s population density is also a great strength. With some 253 million inhabitants, Indonesia is the world’s 5^th most populous country, after the United States and ahead of Brazil. Indonesia also ranks 5^th for its labour pool, made up of 122.4 million individuals, a number that once again compares to those of the United States and Brazil.

Alongside the size of the market, there has also been a significant increase in domestic consumption over the last few years. As a result of an increase in purchasing power in recent years, over 60 million individuals are expected to join the Indonesian middle class by 2025. The Indonesian consumer is characterized by a high degree of confidence, one of the highest in the world.

Indonesia has proven to be a strategic corridor for its access to the Strait of Malacca, which links the Indian Ocean and the South China Sea to the Pacific Ocean, thereby facilitating transportation in the region and elsewhere. As a member of ASEAN, Indonesia opens a door to several other Southeast Asian nations, with which it benefits from preferential customs tariffs of between 0% and 5%. As for doing business in the country, one should concentrate on the cities of Jakarta, the national capital, and Surabaya, the industrial and port centre.

The business environment in Indonesia can prove difficult to navigate. Complex bureaucratic and regulatory requirements tend to slow down the process of entering the market. However, since coming into office at the end of 2014, Indonesian president Joko Widodo has made the lowering of barriers to trade a priority, which seems to be bearing fruit. In 2016, the World’s Bank’s report on the ease of doing business ranked Indonesia in 109^th position, an improvement of 11 points compared to the previous year. Several are also expecting the “Jokowi” government to minimize bureaucracy and improve public transparency.

Export Development Canada considers Indonesia to be a prime market, while Global Affairs Canada also considers it to be of interest.

Aerospace Sector

The Indonesian aviation market is growing at a rate of 20% per year. We are seeing significant demand for spare parts and aviation services. There are also business opportunities in the areas of air traffic logistics services and ground support equipment.

Infrastructures

The government has made the improvement of infrastructures one of its priority sectors. Investment plans in the order of $440 billion USD have been announced for the 2011-2025 period. We are seeing an immediate need for the development of public infrastructures, including a high demand in the air, rail, port, and ground transportation sectors. At the municipal level, water supply and wastewater filtration projects are also imminent.

Banking Sector

The market is booming and there are several business opportunities in various sub-sectors, such as information technology and software supply. As Indonesia is a predominantly Muslim country, stakeholders in the banking sector should first adapt their products to the principles of the Sharia.

Information and Communications Technology

Indonesia is the world’s 4^th largest mobile telephony consumer, with a ratio of 1.26 cellphones per inhabitant, totalling 319 million lines. This exceeds total consumption in the United States, which is estimated to be 317.4 million. Indonesians also represent Facebook’s 4^th largest user base, with a total of 60.3 million users. The usage rate for Twitter is also the highest in the Asia-Pacific region, with 84% of the online population having an account. Consequently, there are excellent business opportunities to be had for suppliers of telecommunications equipment and satellite services, among others.

Sustainable Technology

Indonesia has set a goal of significantly increasing its production of electricity by 2019, thereby creating business opportunities for Quebec suppliers. The country has also shown an interest in developing teaching and professional training specific to this sector.

Indonesia, facts and figures:

• A population of 253.29 million inhabitants
• The world’s 9th largest economy, behind Brazil and ahead of the United Kingdom
• A GDP of $980.5 billion CND
• A GDP growth rate of 5% in 2014
• Canadian exports amounting to $1.81 billion in 2015
• Quebec exports amounting to $175 million in 2015

WHO SHOULD ATTEND?

Entrepreneurs who are seeking to enter the Indonesian market or who are already present on the market but want to learn more.

The activity will be of particular interest to companies in the following sectors:

• Aerospace
• Agriculture and processed foods
• Automobiles and trucks
• Construction and infrastructure
• Education
• Environmental infrastructures and wastewater
• Oil and natural gas
• Banking
• Advanced security
• Information and communication technology
• Sustainable technology