Export Potential in Indonesia

Indonesia doesn't have the land mass, population, or industrial density of China or India—but as a young, growing nation, it has immense potential for businesses hoping to import or export consumer goods.

Below are some considerations for strategizing product sourcing or importing within Indonesia's growing market.

Facts About Indonesia

Indonesia is the world's largest archipelago (chain or cluster of islands), spanning 735,358 square miles, with seventeen thousand islands, and a population of 264 million people. The climate is typically tropical, hot, and humid. The languages spoken are Bahasa Indonesia, English, Dutch and local dialects, and a majority of the population is under 25 years old.

Indonesia's population is the world's largest Muslim-majority, and is the fourth largest population center overall. The archipelago has been a valuable region for nearly two millennia, but in just the past 50 years, the country has experienced economic upheaval coinciding with massive deforestation, mining, and pollution, and new controversies about the political identity of the nation. It has the fastest population growth in Asia and is grappling with its status as a newly industrialized country.

Its economic growth, population density, and environmental footprint are much higher than other developing countries, and the social consequences of industrialization, urbanization, and social reorganization have yet to be fully realized.

The service sector is currently the economy's largest segment, accounting for 43.6% of GDP, followed by industry (39.3%) and agriculture (13.1%). 

Growth Prospects

According to World Bank, Indonesia continues to post significant economic growth; during the global financial crisis of 2008, Indonesia outperformed its regional neighbors, and joined China and India as the only G20 members posting growth.

Most of Indonesia’s success is largely homegrown. Meaning, domestic consumption (roughly 60%) has enabled Indonesia to grow faster than its neighbors, such as Singapore, whose economy is more dependent on import/export trade and therefore more vulnerable to slowing export demand. Indonesian exports, such as gas, minerals, crude palm oil, electrical appliances, and rubber products, are worth about 25% of the country’s economy.

Homegrown Products

The products Indonesia is best known for are rubber, oil, palm oil, seafood and forest products, cocoa, coffee, medicinal herbs, and spices. Ecotourism attracts people from around the world for such niches as yoga retreats, surfing, and adventures to see the increasingly-rare and specialized wildlife of the archipelago.

And despite its young, religiously-conservative population, the cosmetic industry in Indonesia has recently seen a boom focused on lip cream with a non-drying matte finish.

Exporting to Indonesia

The Indonesian market is both large and competitive, and determining what young Indonesians are looking for is crucial. The national government continues to seek infrastructural development, and U.S. corporations have been well positioned since the 1970s to supply the kinds of architectural, engineering, and project management services needed to reap massive profits from projects in Indonesia.

If you're interested in exporting to Indonesia, your best approach for entering the market is to work with local agents and distributors. The U.S. Commercial Service in Jakarta helps U.S. companies identify and qualify potential Indonesian representatives. Once you find a qualified representative, visit Jakarta and meet with him/her. Like consumer markets elsewhere, Indonesians tend to base their buying decisions on competitive pricing, financing options, and after-sales service.