COUNTRY REPORT - INDONESIA

IBM 530 : INTRODUCTION TO INTERNATIONAL BUSINESS IBM 530 : INTRODUCTION TO IN

COUNTRY REPORT

Indonesia

REPUBLIC OF INDONESIA

ACIBNOOFNUOTTRAMININADATOILNOLENSIA

Lifestyle magazine A magazine is a periodical It is issued regularly, usually
publication.
DECEeMveBry EweRek. 2021

IBM 530 : INTRODUCTION TO INTERNATIONAL BUSINESS IBM 530 : INTRODUCTION TO IN

TABLE CONTENT

Background of Indonesia .................................................1
Political in Indonesia ........................................................ 3
Economy of Indonesia ......................................................7
Social structure of Indonesia ........................................ 12
Technology of Indonesia ............................................... 15
Do and Don't of doing Business in Indonesia............18
5 Potential business to Trade and Investment..........19
Recommendation..............................................................24
Conclusion...........................................................................27
References......................................................................... 28
Authors .............................................................................. 29

BACKGROUND OF Current issues include the poverty
reduction, improving education, preventing
INDONESIA terrorism, consolidating democracy after
four decades of authoritarianism,
Indonesia is the world's biggest implementing economic and financial
archipelago. It is made up of five large reforms, curbing corruption, reforming the
islands and over 30 smaller groupings. criminal justice system, combating climate
The islands are situated at the change, and controlling infectious diseases,
confluence of two oceans, the Pacific especially those of global and regional
and Indian, and straddle two continents, significance.
Asia, and Australia/Oceania. Its vital
location in Southeast Asia's maritime Indonesia signed a historic peace accord
region has long affected the country's with Aceh's armed separatists in 2005,
cultural, social, political, and economic paving the way for democratic elections in
life, even though it only earned Aceh in December 2006. Indonesia
independence from the Netherlands in continues to confront low-intensity armed
1949. opposition from the separatist Free Papua
Movement in Papua.
For centuries, the archipelago was
For many years, the development of
influenced by Indian culture, which commerce in Indonesia has been closely
connected to political power and
introduced Hinduism and Buddhism, patronage. Making progress on any
significant project has been nearly difficult
and eventually accepted Islam between without the correct degree of influence with
top officials in the relevant government
the 13th and 16th centuries. Indonesia ministry - and the closer one's ties to the
President, the better.
was colonised by the Dutch in the early
The recent Asian currency crisis compelled
17th century, while Imperial Japan ruled the government to confront some of the
cronyism inherent in all corporate deals –
the islands from 1942 to 1945. Shortly and significant progress has been achieved
in this regard. . (Corruption and graft had
before Japan surrendered to Allied

troops, Indonesia proclaimed

independence. Despite this, the

Netherlands consented to cede

sovereignty in 1949 after four years of

often harsh combat, intermittent

discussions, and UN involvement.

1

apparently reached such proportions
that the World Bank created a whole
category in its cost estimates for big
projects specifically to cover these
inexplicable charges.)

Aside from problematic topics like

bribery and corruption, the Indonesian

approach to business shares many

similarities with Malaysian cultures and

practises — It's hardly unexpected,

given that both nations have a Muslim,

ethnic Malay majority and a tiny but

commercially disproportionately

significant Chinese minority. As a result,

attitudes, and notions of acceptable

behaviour centre on themes such as

the need to respect seniority, the

uncritical acceptance of hierarchical

systems, and the continual strive for

the formation and preservation of

harmony within the group environment.

With a population of 260 million people
and a fast-expanding economy,
Indonesia provides a huge commercial
potential in fields such as electrical
products, automotive, retail, and
infrastructure. To enter this industry,
however, you must first grasp the
business culture.

2

POLITICAL

IN INDONESIA

Executive branch of Indonesia

The executive branch is made up of
the president, vice president, and cabinet.
The Indonesian population chooses both the
president and the vice president in
presidential elections. They serve for a five-
year term that can be extended once by
another five-year term if re-elected by the
voters . During these elections, the president
and vice president run as a fixed,
interdependent pair, indicating that the
composition of this pair is extremely
important in terms of political strategy.
Important influences include ethnic (and
religious) origin and (prior) socioeconomic
standing in Indonesian society.

In terms of race and religion, a
Javanese Muslim will have more public
support because Javanese Muslims
constitute the majority of the Indonesian
population. Non-Muslim political leaders are
available at lower political positions (and
dependent on the regional religious
environment).

3

In terms of social standing in Meanwhile, Indonesian President
Joko Widodo picked Jusuf Kalla as his
society, there are a few groups that running mate (a businessman,
politician and Muslim from Sulawesi).
all have widespread support from a Kalla has a strong history in
Indonesian politics and is widely
part of the population. Army generals, popular in the country (especially
outside the island of Java). Widodo
businessmen, technicians, and was a relative newbie to national
politics at the start of 2014, but Kalla's
famous Muslim scholars are among considerable political experience
offered the couple greater political
those who fall within this category. As credibility.

a result, in order to maximise their Widodo nominated a hardline
Government minister, Ma'ruf Amin, as
chances of winning the election, the his vice-presidential candidate in the
2019 election, which he won. Most, if
president and vice president not all, Islamic streams hold Amin in
high regard. This was a strategic
frequently come from different social decision, as religious tensions had
been high in Indonesia in the year
groups in order to capture a bigger leading up to the 2019 presidential
election. These tensions dissolved as
percentage of the popular vote. For soon as Amin joined him. It did,
however, raise concerns about the
example, in his 2009 presidential rising influence of hardline Islam in
Indonesian politics.
campaign, former President

Yudhoyono (a retired army

commander and Muslim) selected

Boediono (a Javanese Muslim

technocrat) as his running mate.

People's trust in the couple grew as a

result of Boediono's experience as an

economist. Despite Indonesia's

authoritarian background under

Suharto, army generals running for

president may still depend on

widespread public support in the

country today since they are

regarded as strong leaders.

4

Legislative branch of Indonesia The DPR, which has 560 members,

The People's Consultative Assembly is creates and executes laws, creates the
Indonesia's legislative branch (Majelis
Permusyawaratan Rakyat, abbreviated yearly budget in collaboration with the
MPR). It has the authority to establish
or revise the Constitution and to president, and monitors the overall
nominate (or impeach) the President.
The MPR is a parliamentary system performance of political activities. It is
government comprised of the People's
Representative Council (abbreviated chosen for a five-year term in general
DPR) and the Regional Representative
elections using proportional

representation. Surprisingly, this DPR is

well-known for the multiple cases of

corruption scandals among its members.

Council (Dewan Perwakilan Daerah,
The DPD works with legislation, laws, and

abbreviated DPD). regional issues, therefore enhancing

regional participation at the national

level. Every Indonesian province elects

four members to the DPD on a non-

partisan basis (for a five-year tenure).

Because Indonesia has 33 provinces, the

DPD has a total of 132 members.

5

Judicial branch of Indonesia

The independent Supreme Court is the highest court in Indonesia's judicial
system (Mahkamah Agung). It is the last court of appeal and also hears
cases involving lesser courts. The Constitutional Court (Mahkamah
Konstitusi), created in 2003, is a relatively young court that reviews whether
decisions made by the government and parliament (MPR) are in accordance
with the Indonesian Constitution. The majority of legal matters in Indonesia,
however, are handled by public courts, administrative courts, religious courts,
and military courts.

A Judicial Commission (Komisi Yudisial) supervises the honour, dignity,
and behaviour of Indonesian judges. According to several studies, Indonesia's
judiciary institutions are not free of corruption and are not totally independent
of the other political branches.

6

ECONOMY

OF INDONESIA

Since the half century, Indonesia has Despite the fact that Indonesia has
played a minor part in the global
economy, and its impact has been far been a significant importer of
less than its size, resources, and
geographic location would suggest. The manufactured products, high
nation is a major crude petroleum and
natural gas exporter. Furthermore, technology, and technical skills since
Indonesia is a major provider of rubber,
coffee, cocoa, and palm oil, as well as a the early 1970s, the country's economic
variety of other commodities such as
sugar, tea, tobacco, copra, and spices structure has moved from the primary
(e.g., cloves). Large estates produce
nearly all commodity production. sector to secondary and tertiary
Exploration for oil and other mineral
reserves has resulted in a number of industries—manufacturing, transport,
large-scale projects that have
contributed significantly to general and services. Manufacturing replaced
development finances.
agriculture in terms of contribution to

GDP in the early 1990s and has

maintained the country's largest single

component of the economy. However,

agriculture has continued to receive a

huge portion of the national budget,

and as a result, the country has been

self-sufficient in rice production since

the mid-1980s.

7

MANUFACTURING

The Indonesian government Because we are now living in
the digital age, the opportunity to
has recognised that growing the enhance manufacturing in Indonesia
is growing. Specifically, the
country's manufacturing economy will opportunity to track the most popular
products in demand and create a
create numerous possibilities in a system that can assure the
manufacturing business is developing
variety of areas. The manufacturing to produce goods of high quality and
market confidence. The government's
industry will surely represent a interest in this business will soon
propel Indonesia to a higher level,
significant investment in enhancing particularly in terms of the economic
ecology.
infrastructure required by the

Indonesian people. Greater facilities

may lead to more opportunities, such

as employment openings, economic

development, and big distribution

improvements, while also

demonstrating how well the

investment has worked so far.

8

TOURISM

Tourism has become an
important asset for Indonesia, which
is why this industry has a better
return on investment. The country's
culture, landscape, one-of-a-kind
traditional practises, and over a
thousand different local languages
have attracted the world's interest in
learning more about wonderful
Indonesia. The exotic aspects of
Indonesia are an attractive
component to bring beneficial
benefit, assisting the economy to
grow rapidly in a short period of time.

Tourism will grow alongside
many other businesses, including
retail items for hotels, local fashion
trends as local culture is promoted to
the rest of the globe, and arts and
crafts for tourists. This sector's
investment expansion will probably
bring up other sub-sectors in the
same business line. It is now obvious
that tourism, through supporting the
business ecosystem, has the
potential to expand the range of the
economy.

9

03
E-COMMERCE

The next promising investment industry is e-commerce, which has had a
significant impact on how the market and customer behaviour in Indonesia
have altered recently. E-commerce and people's daily needs are strongly
intertwined. Even before individuals realise what they need, a customer
connection is critical for understanding their needs. This is the most basic
requirement for a firm in this industry to succeed in the market.
Another compelling argument to consider entering this industry is the social
habits of many Indonesians who value the usage of technology in their
everyday lives. Indonesia has become one of the world's most active social
media users, implying that access to the internet market has expanded
significantly. The same reason why Indonesian e-commerce businesses
survive and prosper.

10

03

INFRASTRUCTURE

The industrial industry, tourism, These investment industries will
and e-commerce are all three
promising areas that will have a undoubtedly provide excellent
significant effect on how the
infrastructure in this country evolves. opportunities for individuals looking to
Surprisingly, it is already obvious, as
evidenced by the Indonesian start a business in Indonesia. It's great
government's huge efforts in recent
years to establish new transportation news for investors who want to bring in
links on undeveloped regions
throughout Indonesia. A solution that their inventions, technology, and
allows additional economic sectors to
thrive. upgrades and convert them into a

lucrative firm.

More routes and public transit have

been established, resulting in improved

access to a much larger region

throughout Indonesia. Better

infrastructure will provide opportunities

for the eastern areas to enhance their

standard of living, which will naturally

propel the economy forward. Property,

tourist attractions, and various job

possibilities for residents are sources of

revenue to help the economy grow and

catch up with the regions around the

nation's capital on Java island.

11

Social Structure

of Indonesia

THE MEASURE OF WEALTH MEASURE OF POWER AND AUTHORITY

It is the possession of one's belongings It is the possession of one’s power in
based only on number and stuff. People regulating and controlling the source of
with a great abundance of wealth will production or government. Usually this
usually be at the top of the social measure is associated with the status
categorization based on these factors. or social status of a person in the
It is also applicable in Indonesia. political field. In Indonesia, the measure
of power and authority is also could be
In Indonesia, this metric is utilised as a an important hierarchy in government.
parameter for the hierarchy. People While they could get better position in
who do not have a lot of money are the government, it would be easy for
labelled poor. Those who can make a them to get the top hierarchy in
lot of money are considered wealthy. Indonesia.

12

MEASURE OF HONOR

It can be assessed either by the title of
noble or by the side of tangible wealth.
People with titles after their names,
such as Raden, Raden Mas, or Raden
Ajeng, will be at the peak of the social
order. This is known as feudalism.

Feudalism in Indonesia, particularly in
Java, includes certain social hierarchy,
such as: Santono Dalem (the royal
family, such as princes and noble
people), Abdi Dalem (royal servants),
and Kawula Dalem (the royal servants)
(the common people).

THE MEASURE OF SCIENCE

It means the measure of one’s possession or one’s mastery of a science. This
criterion can also be referred to as a measure of intelligence in quality. Based
on this measure, a highly educated person, such as a scholar will occupy the
top position in social hierarchy in society.
The hierarchy is also measured from the background education that they
reach. The people who graduate from doctoral degree would have more
prestige than those who graduated from Senior High School only.

13

SOCIAL HIERARCHY IN ECONOMY

Upper class: The groups of people who occupy the upper layers in
economic hierarchy such as large entrepreneurs, officials, and professional
workers who have a large income.
Middle class: Usually occupied by employees, workers, and laborers.
Lowest class: the groups that occupy the lowest social layers, among
others, homeless, beggars, scavengers, and farm laborers.

SOCIAL HIERARCHY IN SOCIAL STATUS

Lower class: Some persons is born as a lower class (sudra), then forever
the person will be branded as sudra. This also applies to the offspring of
the individual.
The middle class: It is called Waisya. The people of Waisya consist of the
nobility (knight) and the intellectuals (Brahmin).

SOCIAL HIERARCHY IN POLITICAL SYSTEM

President: President has the highest status in politics. It is the person who
leads Indonesia generally.
Vice President: Vice president is a lower status than president. He would
change the president if something happen to president.
Governor: The leader of Province in Indonesia
Mayor or Regent: the leader of a city or regency
The head of district: the person who lead the district area
The head of village: the person who lead the village

14

Technology
of Indonesia

Aerospace and transportation

Indonesian Aerospace , a state-owned aviation firm formed in 1976, has also
produced aero plane components for Boeing and Airbus. Indonesian Aerospace, in
collaboration with EADS CASA of Spain, also created the CN-235 aircraft, which has
been exported to a number of nations. Former Indonesian President B. J. Habibie was
helpful in this achievements. Habibie undertook several research projects as a professor
in Germany, generating ideas on economics, structures, and aviation known as the
Habibie Factor, Habibie Theorem, and Habibie Method, respectively. Indonesia also
intends to produce the South Korean KAI KF-X fighter. The N-219, a twin-engine 19-
seater commuter plane, is the most recent development.

In addition, Indonesia has a well-established railway industry, with the Indonesian Railway
Industry, situated in Madiun, East Java. Since 1982, the company has been producing passenger
train carriages, freight trains, and other railway technologies, which it has sold to countries such
as Malaysia and Bangladesh.

15

Food processing technology

Due to the tropical environment of Indonesia, which is crowded with species of
bacteria, Indonesians have produced several improvements in food technology.
Indonesians have established traditional fermentation processes, which has resulted
in the production of fermented foods such as tempeh, oncom, and tapai, as well as
beverages such as brem and tuak. Tempeh is manufactured by natural culturing and
a controlled fermentation process that utilises the fungus Rhizopus oligosporus or
Rhizopus oryzae, which binds soybeans into a cake shape. It has more protein, fibre,
and vitamins.

16

E-commerce

Indonesia's present e-commerce business is similar to China's online
marketplace in its early stages, with a massive number of different retailers
offering things for purchase through social network recommendations.

Similarly, Indonesia's e-commerce symbolises the first U.S. e-market,
overwhelmed with buyers wary of stores and online payments. As a
consequence, Indonesia is now catapulting itself to the global online
marketplace, with the potential to develop a hybrid of the best chances based
on America's and China's e-market economies.

According to research performed by the Indonesian E-Commerce Association
and Google, the e-commerce market in 2018 grew to IDR 81.8 trillion (USD
8,591 million).

The convenience of getting information from home and making simple
electronic payments, as leveraged by Indonesia's e-commerce marketplaces, are
two of the primary causes for the massive development in e-commerce.
According to iPrice.com, the leading and second most searched e-commerce
sites with the biggest income in 2017 were Lazada and Tokopedia.

17

05

Because Indonesia is primarily a Muslim Do & Don't of
nation, it is prudent to become acquainted Doing Business
with the important Muslim festivals and rituals.
Bringing wine as a present to a practising and in Indonesia
devoted Muslim, for example, is unacceptable
because alcohol use is prohibited in Islam.

In Indonesia, business partnerships are Make sure your business cards are printed
built on trust. When doing business in this in both English and Bahasa Indonesian (or
country, it is critical to develop personal Chinese, if you will be working with
contact with possible partners. Chinese Indonesians).

When meeting someone for the first time, Negotiations may take longer than you are
handshakes are usual. In contrast to many accustomed to in your own country.
Western nations, where a forceful Multiple meetings may be required to get
handshake is considered a show of a final decision or agreement. Avoid
strength, most Indonesians shake hands rushing your Indonesian business
with extremely minimal pressure. Women's colleagues, as this may create offence.
hands may also be shook if they initiate.
When greeting a group of individuals, it is 18
usual to shake the eldest person's hand
first.

Remember that devout Muslims pray five
times every day. You should not book any
meetings or lunch dates with Indonesian
Muslims at these times if you do business
with them. Prayer hours are available on
the Islamic Finder and in local mosques.

5 Potential business Trade and
Investment

infrastructure, education, and

In the year of 2021, it is the best time healthcare, to name a few. Indonesia
for the business to start investment in
Indonesia. With the global economy has enormous prospects for
entering a recovery phase in 2021
caused by the Covid-19 pandemic, international investors, with the
Indonesia’s GDP is expected to soar to a
6% growth rate in 2021, according to the government determined to execute
latest economic survey from Oxford
Economics, restoring confidence to smart macroeconomic policies and
invest in Indonesia. This will give more
confidence to consumers and the reforms to enhance the investment
income of each household will depend
on a stronger job market. The job landscape. . The many business
market will be stronger based on the
nationwide vaccine program and the opportunities opened in Indonesia to
reopening of Indonesia's borders. The
Indonesian government has set aside Rp other countries have made this country
2.75 quadrillion (US$ 193.24 billion) for
the National Economic Recovery one of the most popular destinations in
Program, which is an important tool for
assisting Indonesian businesses in their the world for the preparation and
recovery, driving the economy, and
funding development programmers in formation of businesses that will attract

investors from abroad to invest in the

business. With the growth in population

and so much development throughout

the decades, there has also been an

increase in company start-ups, with

specific industries standing out from the

throng.. Several government initiatives

have been developed in recent years to

encourage future entrepreneurs and

investors to establish businesses in

Indonesia. 19

This is several business opportunities for the foreigner to trade and investment:-

Healthcare and pharmaceuticals List. The healthcare industry is a potential
prospect for foreign investors due to its
The healthcare industry in Indonesia is a vast market size, growing demand for
lucrative investment opportunity for products treating chronic ailments, and
foreign investors, thanks to the country's the government's increased investment.
growing middle class and the
introduction of universal healthcare, Furthermore, the government expects
which has fueled demand in almost that by upgrading the country's
every aspect of the industry, from healthcare system, Indonesians seeking
hospitals to pharmaceuticals to medical medical treatment overseas will spend
devices. In 2017, the government domestically. Over 1.2 million Indonesians
amended the country's Negative yearly spend more than US$2 billion on
Investment List (NIL) to give foreign healthcare abroad, primarily in
investors a bigger ownership in specific Singapore and Malaysia
sub-sectors of Indonesia's health
business, such as hospitals, specialty
clinics, and medical equipment, in an
effort to open the sector up to more
international investors.

Hospitals with more than 200 beds,
pharmaceutical manufacturing, and
wholesale sectors are now available to
100% foreign ownership thanks to the
establishment of the Positive Investment

Manufacturing

Electronics, automobiles, textiles, footwear, food
and drinks, and chemicals have all played a key
role in the economy. It currently accounts for 20% of
Indonesia's GDP and has grown at a rate of 4% each
year since 2016. According to the significant
amount of foreign direct investment that flows into
the nation each year, manufacturing has always
been one of the most important industries with the
greatest influence on the Indonesian economy. This
prospective business appears to be thriving quickly,
especially now that the Indonesian government has
streamlined permission and licensing requirements
and offers incentives for investment. Indonesia is
the world's tenth-largest manufacturing country,
employing more than 20% of the country's working-
age population, or around 25 million people. As a
result, with an abundant and low-cost labor, as well

20

as a rapidly increasing middle class, now E-commerce / digital economy based
is the moment for foreigners to capitalize
on this ever-growing manufacturing LIn 2019, e-commerce in Indonesia had
industry. spectacular gains, with sales of US$2.7
billion. In addition, the country has the
To establish a manufacturing firm, you greatest online market transactions in
need choose an excellent place for Southeast Asia. In 2020, the Indonesian
factory development, such as an e-commerce market was predicted to
industrial region. Then, apply for the reach $1130 billion. Indonesia’s digital
master facility list, which allows you to economy has grown at a breakneck
avoid paying import taxes on industrial pace, with the country's digital economy
equipment, and last, secure a permanent predicted to be worth US$124 billion by
company license. 2025, making it an attractive investment
destination.Digital Wallets, Cloud Kitchen
Services, Online Education and
Consultation, Delivery Services, and
Digital Marketplaces are all viable
options for investors looking to get a
piece of the Indonesian digital pie. For
example, some of the world's biggest
tech companies are looking to buy a
local low-capital bank to create a digital
bank.Indonesia has the world's fourth-
largest mobile market and and Southeast

Asia's highest IT spending. This shows that the
Indonesian IT and IT product market is robust and
increasing. Those who seek to promote new
technologies in the country will reap significant
benefits consequently. The most prevalent
enterprises in the Indonesian technology industry
include app development firms, advanced IT
technology organizations, and e-commerce
platforms.
Setting up an e-commerce firm in Indonesia is a
simple procedure.

Obtain a business license.
Comply with business requirements, such as
obtaining a tax ID, a technical license, and a
company registration license.
Participate in government programs.
Submit accurate and truthful information about
the owner, goods and services, and so on.

21

Tourism and Entertainment

In comparison to its Southeast Asian neighbor’s,
such as Singapore and Malaysia, Indonesia has
struggled to establish a stable, efficient, and
successful tourist industry. As a result, there is a
drive to make the country's road infrastructure
more efficient and modern. This contributes to
the provision of suitable infrastructure for both
residents and visitors, as well as the stimulation
of tourism in more distant areas.

Bali, Indonesia's most popular tourist
destination, has the highest number of tourists
of any place in the country. Many other
Indonesian islands, on the other hand, remain
predominantly agricultural and lack tourism
infrastructure. Tour operators, information
offices, hotels, restaurants, theatres, and retail
malls aimed at both visitors and residents
would increase accessibility and make
Indonesia's most isolated islands viable tourist
destinations.

Indonesia, with over 17,000 islands, provides a
variety of landscapes and objectives to
enhance the visiting experience of international

. As a result, the tourist sector is growing and
offers several commercial prospects to
investors. In 2019, alone, more than 16 million
international visitors visited Indonesia. The
tourism sector and its prospective economic
prospects in Indonesia, notably travel firms, are
set to increase steadily, especially now that the
Indonesian government enables tourists from
169 countries to visit Indonesia without a visa.
Here's how to create a travel agency in
Indonesia:

Decide on a business structure.
Make a name for your company.
Register your travel agency in accordance
with the Tourism Law of 2009 and the
Standard of Business Tourism Area Law of
2014.
Obtain a Tourism Sector Business
Certification.

22

Infrastructure and Construction

According to Infrastructure Asia, a Singapore-
based infrastructure investment firm, Indonesia
has improved its attempts to reduce the risks of
its infrastructure projects through schemes such
as viability gap funds (VGF) and public-private
partnerships (PPP). Indonesia also intends to
invest over US$430 billion in infrastructure
between 2020 and 2024, a 20% increase over
2019. To build the infrastructure, Indonesia also
needs the construction industry for the investor
to invest or trade the construction company in
Indonesia.

The construction industry is another dynamic
sector that offers some of the best business
opportunities in Indonesia. The Indonesian
president emphasizes this sector as well,
spending IDR 404 million in 2018 on various
building projects around the nation, particularly
on infrastructure such as airports, highways,
power plants, and trains. As one thing leads to
another, perfect infrastructure implies that the
country's growth will be accelerated, and
additional economic prospects in Indonesia will

begin to emerge as sub-sectors or other linked
sectors. It is the following stages on how to start
a construction firm in Indonesia:

Understand the many sorts of construction
services in which your firm will be involved.
Choose a legal framework.
Incorporate and register your construction
company.
Obtain the proper sort of company licence
and any necessary certificates. Expertise
certificate (SKA), business entity certificate
(SBU), and building services company
licence are a few examples (IUJK).

23

RECOMMENDATION

THE MOST BUSINESS SECTORS TO TRADE AND INVEST

It has several business sectors to trade and
invest in Indonesia. The first business sectors
that really need for now is Healthcare and
pharmaceuticals. It is because during the
Covid-19, the health of the people in this
country is the number one. The government
are allowing the foreigner that want to invest
or trade a new business in Indonesia. It is
because from that Indonesia will get the
health supplier from the foreigner company.
The suitable entry mode for this business is
Licensing.Licensing are options for
organizations who wish to enter a worldwide
market fast while assuming minimal financial
and legal risks. In return for royalty fees, an
international licensing agreement allows a
foreign firm (the licensee) to sell the goods
of a producer (the licensor) or to exploit its
intellectual property (patents, trademarks,
and copyrights). This is the example of the
mode of entry works. For example, their own
company from the United Stated that sells
the healthcare and pharmaceuticals and the
foreigner sure that their product will get a lot
of response in Indonesia, but don’t have the
resources such as building to set up the
factory and the main office to sell the
product in that country. So, they decide to
take the licensing as a mode of entry-to-
enter Indonesia.Licensing effectively allows a
corporation in the target nation to use the
licensor's intellectual property. Trademarks,
patents, and production procedures are
examples of intangible property. In exchange
for the rights to utilize the intangible property
and maybe technical help, the licensee pays
a fee. The advantage of this mode is fast
entry, low cost, and low risk.

24

The second business sectors that have a big
potential to success is e-commerce and digital
economy based. It is because during the Covid-
19 pandemic, the people need to take care of
social distancing. So, the face to face of
business sector is not allowed because this will
make the figure for covid-19 patients increase
drastically. So, not only Indonesia but all around
the world will change their business online
which is digital economy based. The best
example of this is the rise of digital platforms
such as Amazon, Uber, and Airbnb. These
companies connect market participants
together in a virtual world. The suitable entry
mode for this business is exporting. It because
the Indonesia people also can the product from
Malaysia easily. For example, now the people
around the world also can buy the product from
another country using the online application
such as Shopee, Lazada etc. The marketing and
direct selling of locally produced commodities
in another nation is known as exporting.
Exporting is a tried-and-true means of
accessing international markets. There is no
need to invest in overseas manufacturing
facilities because the items do not have to be
manufactured in the target nation. Most of the
expenditures connected with exporting are
related to marketing. For the digital economy
based like Uber they use the greenfield venture.
It is because the are wholly owned the
subsidiary and they are launch their own
product which is mobility service. For example,
the company of Uber from the America has
opened their own company in Indonesia.

The next business sector that has a big
potential to success is Tourism and
entertainment industry. It is because in
Indonesia have many beautiful islands that
turned into tourist attraction. So, it suitable for
the foreign country to create the travel agency
in Indonesia.From that the revenue from the
tourism and entertainment industry will
increase. The suitable entry mode for this
business is joint venture. It is because the local
company will expert more about the place. The

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joint venture entails establishing a firm continues to thrive with the growth of 7-
that is jointly owned by two or more 8% annually, driven by energy and
otherwise independent firms. The most residential projects and investment in
typical joint venture is a 50-50 venture, infrastructure in cities across Indonesia,
in which there are two parties, each leading to high demand for the
holding a 50 percent ownership stake construction industry. The suitable entry
and contributing a team of managers of mode for this business is turnkey
share operating controls. The benefits of projects. This entry mode is for the firms
collaborating with a local firm include the that specialize in the design, construction
fact that the local firm is more likely to and start-up of turnkey plants are
grasp the local culture, market, and ways common in some industry. For example,
of doing business than an outside one. Indonesia will collaborate with the
For example, the travel company from foreign company contraction to make
Malaysia make a joint venture with the the project of Trans-Sumatra toll road
local travel company in Indonesia to become successful and ready at the
make the travel company that will attract agreed time.
the tourist from Malaysia to come travel
in Indonesia. 26

The last business sector that I think has a
big potential to success is construction
and infrastructure. It is because
Indonesia has many projects in
construction, so this is a bright
opportunity for foreign entrepreneurs to
join the development in Indonesia. The
overall construction sectors in Indonesia

CONCLUSION

In conclusion, Indonesia is a country that contains great economic potential that
has not gone unnoticed to part of the global community. Indonesia is the Southeast
Asia’s largest economy that contains several characteristics that put the country in a
great position for newly advanced economic development. Furthermore, the central
government has recently shown significant support for reducing Indonesia's historic
reliance on (raw) commodity exports while increasing the importance of the
manufacturing industry in the economy. Infrastructure development is another
important priority of the government, and it should have a multiplier effect on the
economy. Indonesia also a big potential to export their product to another country.
Indonesia's micro, small, and medium-sized firms, which account for 99 percent of all
operating enterprises in the country, are also significant. They contribute for around
60% of Indonesia's GDP and employ nearly 108 million Indonesians. This means that
micro, small, and medium-sized businesses form the backbone of the Indonesian
economy. Indonesia also has a good technology in food processing. Indonesia
currently imports 62 percent of raw materials for its growing food processing industry.
The Indonesian economy is built on solid foundations such as social stability, robust
local demand for products and services, continuously growing foreign reserves (just
under $136 billion in May 2021), and stable pricing with moderate-to-low inflation.
However, persisting trade and investment restrictions fuelled by protectionist
sentiment, extensive corruption, inadequate infrastructure, uneven interpretation and
implementation of laws, and labour rigidity continue to stymie greater levels of
economic progress and prosperity. As a result, the Indonesian government must put a
stop to items that are causing the country's economy to stagnate. The government
must impose severe penalties on the negligent people involved.

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REFERENCES

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business-sectors-indonesia-nurmia-agustina
Hype, P. (2021, December 7). Top Business Opportunity in Indonesia. Retrieved from
Paul Hype Page & Co.: https://www.paulhypepage.co.id/business-opportunities-
indonesia/
nationsonline. (2021). Indonesia- A Country Profile. Retrieved from One World -
Nations Online: https://www.nationsonline.org/oneworld/indonesia.htm
Wolters, O. W. , Adam, . Asvi Warman , McDivitt, . James F. , Leinbach, . Thomas R. ,
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Indonesia's Economy (asialinkbusiness.com.au)
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Economy of Indonesia. https://www.indonesia
investments.com/culture/economy/item177
Ben Bland (2019, 10 April). Politics In Indonesia: Resilient Elections, Detective
Democracy. https://www.lowyinstitute.org/publications/politics-indonesia-resilient-
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Social Hierarchy in Indonesia – Measures. https://factsofindonesia.com/social-
hierarchy-in-indonesia

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Authors
of country report

- Indonesia-

NUR NATASYA UMIRA
BINTI CHE AZIZ
2021507779

NURUL AINA NABILA
BINTI ABDUL RAHIM

2021101463

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