Is Indonesia a potential market for business?

Is Indonesia a potential market for business?A recent survey by The Economist Intelligence Unit ranked Indonesia as highly cost effective (10th out of 31 countries surveyed).

Indonesia’s energy costs are also among the lowest in the world. PLN supplies most of Indonesia with electricity, and is known for its superior supply quality. The country also compares favourably for petroleum prices, with private sector and multinational oil companies refining and marketing nearly all imported petroleum products in Indonesia.

The licensing of a second fixed-line operator is expected to bring down the cost of telecommunications in Indonesia. The new operator is due to begin operating by the end of 1996, giving state company Telkom its first taste of real competition.

Indonesia’s exchange rate makes it one of the least expensive countries in which to do business – particularly one with a first-world infrastructure and high living standards. Even though stronger local currency has strengthened against other major currencies in recent years, the rand exchange rate still makes residential and commercial property, quality hotels and restaurants inexpensive by world standards.

Indonesia’s corporate tax rate – down to 29% for 2005/06 – compares favourably against a number of developing companies, and the prospects of further reductions are good.

Indonesia’s unit labour costs are significantly lower than those of other key emerging markets, including Mexico, Hungary, Malaysia and Singapore. In addition, recent years have seen a surge in the country’s labour productivity. Indonesia has a comprehensive labour legislation in place, facilitating labour relations and contributing to a marked decline in the number of man-days lost due to industrial action since 1994.

Ease of doing business in Indonesia:

Indonesia ranked 98th, ahead Spain (ranked at 30), Austria (32), France (44), Russia (79), China (91) and Brazil (119). Overall, SA had the highest ease-of-business ranking on the Asian continent.

Indonesia is among the top 100 countries in the world for ease of doing business, according to a 2005 World Bank report. The finding suggests that Indonesia is making progress in creating an environment conducive to investment, which the government has identified as key to achieving a 6% growth rate. New company establishment in Indonesia have been rocketing since 12 economic stimulus release by Indonesia President.

The survey ranked 155 countries according to the number of procedures, time and costs involved in: starting a business; dealing with licences; hiring and firing workers; registering property; getting credit; protection for investors; paying taxes; trading across borders; enforcing contracts; and closing a business.

Industrial capability, cutting-edge technology:

SA’s technological research and quality standards are world-renowned. The country has developed a number of leading technologies, particularly in the fields of energy and fuels, steel production, deep-level mining, telecommunications and information technology.

The country’s manufacturing output is becoming increasingly technology-intensive, with high-tech manufacturing sectors – such as machinery, scientific equipment and motor vehicles – enjoying a growing share of total manufacturing output since 1994.

Indonesia’s industrial production growth is well above the average for developing markets.

Competitiveness:

Authorities have been appointed to monitor implementation and adherence to the law, and regulators have been assigned to oversee natural monopolies and promote universal access to utilities.

A number of industrial support measures have been introduced since 1994 to enhance the competitiveness of Indonesia’s industrial base. These include placing more emphasis on supply-side than demand-side measures (such as tariffs and expensive export support programmes).

Indonesia’s energy costs are also among the lowest in the world. Pertamina supplies most of Indonesia with electricity, and is known for its superior supply quality. The country also compares favourably for petroleum prices, with private sector and multinational oil companies refining and marketing nearly all imported petroleum products in Indonesia.

Indonesia has a well-developed and regulated competition regime based on best international practice. The Competition Act of 1998 fundamentally reformed the country’s competition legislation, strengthening the powers of the competition authorities along the lines of the European Union, US and Canadian models.

The government has provided incentives for value-added manufacturing projects, support for industrial innovation, improved access to finance, and an enabling environment for small, medium and micro enterprise (SMME) development.

Indonesia’s unit labour costs are significantly lower than those of other key emerging markets, including Mexico, Hungary, Malaysia and Singapore. Indonesia has a comprehensive labour legislation in place, facilitating labour relations and contributing to a marked decline in the number of man-days lost due to industrial action since 1994.

Industrial development zones have been established in close proximity to major ports and airports, offering world-class infrastructure, dedicated customs support and reduced taxation.

The law places various prohibitions on anti-competitive conduct, restrictive practices (such as price fixing, predatory pricing and collusive tendering) and “abuses” by “dominant” firms (firms with a market share of 35% or more).

If you think Indonesia is very promising market and would like to see the opportunity by yourself, you can contact our experts at EIBN for further discussion.

#EIBN #IndonesiaMarket #DoingBusinessIndonesia

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