<\/p>\nTraditionally dependent on hydrocarbons and minerals, Indonesia\u2019s digital economy is now booming thanks to high internet penetration and a tech-savvy population. The country\u2019s tropical climate and enormous geothermal resources also offer compelling opportunities for early investors in carbon-free energy.<\/p>\n
<\/span><\/p>\n
Monopolies \u2018Diminished\u2019<\/h2>\n
Indonesia endured decades of miliary dictatorship following independence from Dutch colonists. And since the fall of strongman President Suharto\u2019s regime in 1998, the country became a democracy. This was \u201cunthinkable in the Suharto era,\u201d Richard Borsuk, co-author of \u201cLiem Sioe Liong\u2019s Salim Group: The Business Pillar of Suharto\u2019s Indonesia,\u201d says.<\/p>\n
\u201cThere\u2019s also good fiscal management, a plus for investors,\u201d he adds. \u201cOverall business competition has increased and monopoly power has diminished.\u201d<\/p>\n
The downside? Investors used to Singapore\u2019s \u201cbenign smoothness\u201d should be patient with the long time it can take to get things done in Indonesia.<\/p>\n
\u201cThe bureaucracy can be daunting,\u201d Borsuk adds, also explaining that\u2014in Indonesia, as in much of Asia\u2014relationships are key. His solution? Choose partners carefully, and build connections with them.<\/p>\n
Recent Election<\/h2>\n
Subianto campaigned by pledging \u201ccontinuity\u201d with the policies of his predecessor, Joko (Jokowi) Widodo. One of Subianto\u2019s programs is to give children from poorer families good nutrition to help them grow up healthy. \u201cThis will be very expensive to provide nationwide, but Prabowo is going to push it hard,\u201d Borsuk says.<\/p>\n
Indonesia\u2019s previous regime also initiated an ambitious and costly plan to move the capital from Jakarta to a new site on Borneo. It remains uncertain whether Prabowo will prioritize this project.<\/p>\n
Shalini Kamal Sharma has been doing business in Indonesia since 2004. \u201cThrough our company Formula One Furniche, we supply customized [furniture, fixtures, and equipment] to hotels, resorts, and service apartments worldwide, with a strong focus on sustainability,\u201d she explains. \u201cIndonesia is a substantial and growing market for us.\u201d<\/p>\n
Indonesia\u2019s hospitality real estate sector is currently $2.1 billion. It\u2019ll get to $3.65 billion by 2030, with a compound annual growth rate exceeding 12%, analysts say.<\/p>\n
Sharma points to the active role of Jakarta in encouraging inward investment. \u201cThe government\u2014through BKPM [the Ministry of Investment\u2019s investment coordinating board]\u2014is highly responsive to the business community. We have been invited by BKPM to look at specific opportunities, which is a major change and very encouraging.\u201d<\/p>\n
BKPM is the primary agency that supports foreign investors and acts as a bridge between investors and the government. \u201cThey engage with foreign investors and, as we have learned, are quite proactive in assisting potential investors,\u201d she says.<\/p>\n
In a country once lambasted for its challenging bureaucracy, she points to major changes here too. \u201cGetting products through customs has become far easier of late,\u201d she notes.<\/p>\n
A Country Of Superlatives<\/h2>\n
Joel Shen, a lawyer based in Jakarta and Singapore, who heads Withersworldwide\u2019s technology practice in Asia, boasts that \u201cIndonesia is a country of superlatives and is an attractive investment destination with a number of very clear advantages.\u201d<\/p>\n
Indonesia, notwithstanding a contraction in its middle class, \u201cis expected to be the third-largest contributor to the global middle class over the next decade, after only India and China,\u201d he says.<\/p>\n
Besides being the largest economy in Southeast Asia, it\u2019s the region\u2019s only country in the G20, making it hard to ignore.<\/p>\n
In 2023, Indonesia joined the Regional Comprehensive Economic Partnership, which includes all 10 ASEAN countries, plus Australia, China, Japan, New Zealand, and South Korea. \u201cRCEP is the world\u2019s largest free trade agreement (FTA), covering about 30% of global GDP and nearly one-third of the global population,\u201d Shen says.<\/p>\n
Indonesia also produces home-grown commodities: from palm oil, an ingredient in many fast-moving consumer goods (i.e., foods, cosmetics, soaps, and biofuels); to nickel, which is essential in the production of electric-vehicle batteries.<\/p>\n
Coupled with its ongoing infrastructure development and reforms to improve business, \u201cIndonesia presents numerous opportunities for investors,\u201d Shen says.<\/p>\n
The Digital Upside<\/h2>\n
Beyond demographics and natural resources, Indonesia\u2019s economy is rapidly transforming digitally, fueled by mobile-first consumers, according to Shen.<\/p>\n
Google, Temasek, and Bain & Company, in their 2024 e-Conomy Southeast Asia report, named Indonesia the fastest-growing large internet market.<\/p>\n
\u201cInvesting in Indonesia has indeed become more accessible due to a combination of regulatory reforms and digitalization,\u201d says Shen. The Omnibus Law on Job Creation, for example, simplifies business licensing, reduces restrictions on foreign ownership, and improves what had been onerous tax and labor regulations.<\/p>\n
There\u2019s also the Risk-Based Online Single Submission system, an online platform that makes it easier for low-risk foreign investors to incorporate Indonesian companies and obtain business licenses.<\/p>\n
Tax holidays, tax allowances, and other benefits are also available to encourage investment in sectors and regions prioritized by the government.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"
Traditionally dependent on hydrocarbons and minerals, Indonesia\u2019s digital economy is now booming thanks to high internet penetration and a tech-savvy population. The country\u2019s tropical climate and enormous geothermal resources also offer compelling opportunities for early investors in carbon-free energy. Monopolies \u2018Diminished\u2019 Indonesia endured decades of miliary dictatorship following independence from Dutch colonists. And since the […]<\/p>\n","protected":false},"author":1,"featured_media":71922,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[6344,2539,2481,28297,12592],"dealstore":[],"offerexpiration":[],"class_list":["post-71921","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-asia","tag-building","tag-future","tag-indonesia","tag-southeast"],"yoast_head":"\n
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