Indonesia Overview
Indonesia is the largest country in Southeast Asia (SEA) with a total area of 1,9 million Km² (Indonesia Statistics 2022) and a population of 272,6 million citizens according to the 2022 census. As one of the founding members of ASEAN, Indonesia boasts a Gross Domestic Product (GDP) that penetrates the USD 1 trillion benchmark in 2018.
Indonesia is currently at the sweet spot of its demographic transition, with most of the population being in their prime working-age group. This acts as an advantage towards the economy, signifying the availability of abundant work force. A massive young population, combined with a large middle class with increasing levels of disposable income, sets Indonesia up to potentially be the biggest consumption base in the region. Thus, the demographic also offers an attractive captive market to tap into.
Source: Indonesia Statistics (2022)
These opportunities have led Indonesia to be the ideal place for foreign and domestic investors alike to do business. Foreign Direct Investment (FDI) leads the investment category in Indonesia. However, in recent years the increasing Domestic Direct Investment (DDI) has started to match the FDI.
FDI & DDI, 2017 – 2021
Source: Ministry of Investment (2022)
Generally, the pandemic did not have any significant effect towards both FDI and DDI in Indonesia. Despite FDI slightly declined in 2018 and 2019, it has recovered in 2020 and 2021; whilst DDI has shown consistent growth with a recorded CAGR of 12.8%.
Between 2017-2021, FDI is mostly dominated by Asia (77%) followed by Europe (10.4%) and the Americas (9.3%). The destination for said investment is mostly located in West Java due to the expanding population and developing infrastructure. The FDI to West Java is mainly towards the secondary sector (49.7%) and tertiary sector (49.6%), which supports the province as the leading manufacturing center in Indonesia.
TOP-5 FDI by Origin, 2017-2021
Source: Ministry of Investment (2021)
TOP-5 FDI by Destination, 2017-2021
Source: Ministry of Investment (2021)
Building Investment in Indonesia
In building investment in Indonesia, there are various main government agencies that cooperate the most with foreign investors. The main government agencies are as follows:
- Ministry of Laws and Human Rights of the Republic of Indonesia
- Ministry of Investment of the Republic of Indonesia
- Ministry of Finance of the Republic of Indonesia
- Ministry of Trade of the Republic of Indonesia
- Ministry of Industry of the Republic of Indonesia
- Ministry of Manpower of the Republic of Indonesia
- Ministry of Environment and Forestry of the Republic of Indonesia
Below is a simplified flow chart to illustrate the general process for corporate establishment in Indonesia. Do note that different regions and types of company may have specific ground rules that must be obliged.
For more detailed and comprehensive information towards Doing Business in Indonesia, read and download our booklet here.
To get professional assistance in building investment in Indonesia, please contact Suryacipta Centre of Information (SCI), a one-stop service provided by PT Suryacipta Swadaya, which has handled hundreds of tenants in running its business in Indonesia.
Contact us to get your assistance:
Ms. Revi Cuhyanti
Email: revi.cuhyanti@suryacipta.com
Suryacipta Centre of Information
The Manor Building 1st Floor,
Suryacipta City of Industry.