This is one of a series of Global Business Guides designed for businesses wishing to expand into another country/territory. This Global Business Guide was produced in January 2016. The materials contained in this document provide a snapshot at that time and were based on the law enforceable and information available at that time.
Indonesia continues to implement measures to open up the archipelago to foreign investment, including removing sectors from its negative investment list. Consequently, foreign direct investment (FDI) flows continue to grow; FDI into Indonesia increased by 19.2 per cent year-on-year to IDR365.9 trillion in 2015.
Indonesia ranked 109th in the World Bank's 2016 Doing Business rankings, rising from 120th in the year prior. The rankings recognised a number of reforms enacted to make doing business easier. Indonesia made starting a business in Jakarta easier by reducing the time needed to register with the Ministry of Manpower. It also improved access to credit by enabling searches of the collateral registry by the debtor’s name. Paying taxes became easier and less costly through the introduction of an online system for paying social security contributions and a reduction of both the rate paid by employers and the ceiling for the contributions.
Key facts about starting a business in Indonesia:
Indonesia's attractiveness as an investment location can be attributed to a number of factors, including its abundant natural resources, young workforce and large domestic market. Nevertheless, in order to make an informed decision, it is critical to understand the nuances of any local regime. The manner in which people conduct business in Indonesia may differ from the home countries of investors. Furthermore, variations on these distinctions may exist depending on the region and the industry in which a company operates.
Indonesia's official language is Indonesian or 'Bahasa Indonesian' which is a standardised dialect of the Malay language. Due to the size and structure of the country, most of the population will speak regional dialects. However, Bahasa Indonesian is the lingua franca of business.
Business in Indonesia is formal and companies tend to be hierarchical. Business attire is conservative. A handshake is the typical business greeting and business cards will usually be presented after initial introductions. Gifts are generally not exchanged as part of business interactions.
Those looking to establish a business in Indonesia may look across Southeast Asia for alternative options. However, Indonesia can be differentiated on the following factors:
While there are significant opportunities for investment in Indonesia, a number of challenges remain. The legal and regulatory system is often uncertain and changes can be enacted quickly. Complex bureaucracy means that the country's 'Ease of Doing Business' ranking remains low and businesses will face difficulties entering the market.
This guide has been developed to provide businesses with an overview of Indonesia, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in Indonesia. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.
Please note that the Global Business Guides may only be available in English.
|2||Inland Revenue Authority|
|3||Indonesia Customs Authority|
|4||Industrial Property Office|
|5||Ministry of Communication and Information Technology|
|6||Investment Coordinating Board of the Republic of Indonesia|
|7||Ministry of Manpower and Transmigration|
|2||Doing Business Rankings|
|3||Limited Stay Visa|
|4||Indonesia PPP (update figures)|
Download Global Business Guide - Indonesia (2.54MB, PDF)
This document is issued by The Hongkong and Shanghai Banking Corporation Limited, Indonesia (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.
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