Articles
Published on
December 15, 2023

The Wallex Country Report: Indonesia

5
min read

Expanding your business overseas is one of the best ways to broaden your customer base and few regions in the world present opportunities as immense as Southeast Asia, a dynamic and fast-growing region with a combined population of over 600 million. Featuring a large and diverse consumer base, a supportive business environment, and robust economies, it’s the go-to destination for any ambitious business.  

But it’s also to take one step at a time, especially since Southeast Asia is a large place, and establishing a presence in all its countries at the same time will be costly and time-consuming. With that in mind, we’ve produced the Wallex Country Report, a quick guide on the key markets of Southeast Asia’s economies – and we start with Indonesia.

It’s little surprise that Indonesia made the top of this list. After all, it is one of the top destinations to expand your business into as the largest economy in Southeast Asia. The country has a population of over 270 million people, presenting a large and diverse consumer base for companies to tap into.

🔑 Read More: Top 10 E-commerce Platforms In Indonesia

Quick Facts

  • Population: 273 million
  • GDP (2022): US$1.319 trillion  
  • Currency: Indonesian rupiah (IDR)
Indonesia Top 5 Imports | Wallex
Indonesia Top 5 Imports | Wallex
Indonesia Top 5 Exports | Wallex
🔑 Read More: Top 10 Exports In Indonesia

What are Indonesia's top emerging industries? 

Manufacturing

Indonesia's manufacturing sector is one of the largest in the world and the primary contributor to its GDP, presenting numerous opportunities for businesses, particularly in commodities such as palm oil, rubber, and textiles. Its abundance of natural resources and raw materials have enabled Indonesia to become leading manufacturers of food and beverage products, automobiles, furniture, textiles and garments, and many more.

This presents overseas businesses with a twofold opportunity. It’s the perfect place to offshore manufacturing operations with the country’s lower labour costs,abundance of land, and natural resources. At the same time, it creates plenty of opportunities for businesses involved in the value and supply chains that support Indonesia’s manufacturing capabilities. Suppliers of components, machinery and quipment, and raw materials are well-positioned to benefit from Indonesia’s manufacturing strengths.

Complementing its plentiful resources is Indonesia’s extensive and growing logistics infrastructure. An extensive network of seaports and airports facilitates efficient import and export of goods. Businesses can leverage this infrastructure to streamline their supply chains and reduce transportation costs.

Healthcare, Pharmaceuticals & Medical Tourism

The National Health Insurance-Indonesian Health Casrd (JKN-KIS) programme in Indonesia covers more than 250 million, making it one of the top national health insurance programmes globally. The associated government spending on such programmes and consumption of pharmaceuticals will only grow with the population, making Indonesia an ideal destination for businesses specialising in medical equipment, pharmaceuticals, or services.

Another sector to keep an eye on is medical tourism. Already, efforts are underway to make Bali a medical tourism destination with the construction of the Bali International Hospital (BIH) within its Health Special Economic Zone (SEZ). BIH will feature centres of excellence known as CONGO, which refer to cardiology, oncology, neurology, gastroentero-hepatology, and orthopedic.  

🔑 Read More: Top 10 E-commerce Platforms In Indonesia

Electric Vehicles (EVs)

Indonesia is the world’s largest nickel producer, a crucial element required for making the lithium-ion batteries used in electric vehicles. This makes Indonesia an important hub in the EV manufacturing supply chain, with the government looking into the creating a downstream nickel industry that will attract foreign businesses to set up smelters.

EV production is also part of the country’s National Masterplan for Industry 2015-35. In the shorter term, EV infrastructure has been designated as part of the agenda in its National Medium-Term Plan 2020-24. Moreover, the Indonesian government has set a target to sell a total of 2.5 million EVs by 2025, which bodes well for businesses involved in the EV industry.

Which key imports of Indonesia should we monitor? 

Mineral fuels, oils, distillation products

Indonesia heavily relies on imported mineral fuels, oils, and distillation products due to insufficient domestic energy production and escalating demand. This reliance stems from limited crude oil and gas output, coupled with insufficient petroleum refining capacity, which is needed for industrial processes such as manufacturing plastics, or power generation in homes and businesses.  

The most recent data from 2020 suggests that Indonesia is refining 1.1 million barrels a day (b/d), which is considered to be insufficient. Additionally, many refineries are state-owned and operate at a loss, with the government absorbing the costs.  

Demand for road, air, and maritime transportation compounds the situation as fuels are essential for powering the vehicles, aircraft, and ships that people and businesses depend on for commercial activity across Indonesia’s vast archipelago.

Machinery, Nuclear Reactors, Boilers

Ongoing infrastructure expansion in Indonesia is fueling substantial imports of machinery. One notable example is the construction of its new capital of Nusantara in East Kalimantan, which is estimated to cost over US$30 billion. Moreover, plans are being made to extend the newly completed Jakarta-Bandung line even further to Surabaya.

Outside of public transport and urban development, Indonesia is actively working to tap on its geothermal potential as a source of power for its citizens across the country’s islands. The government has set a target to commission 6.2 GW of geothermal energy by 2030, and is providing geothermal exploration incentives in the form of infrastructure financing programmes to attract investor interest in the sector.

In terms of nuclear power, Indonesia already has plans to begin building nuclear power plants (PLTNs) from 2030 onwards. Small PLTNs will be built in remote areas to help minimise power outages and introduce more energy stability. Meanwhile, large PLTNS will be built to support more urban areas.  

Electrical, Electronic Equipment

Indonesia's substantial imports of electrical and electronic equipment cater to a growing appetite for consumer electronics, industrial machinery, and infrastructure development. Rising consumer electronics demand from a growing middle class is one of the key drivers for this, as it is estimated that at least 210 million smartphone users in Indonesia by 2028, up from 190 million in 2023. Furthermore, these imports are essential for telecommunications networks, power grids, and critical infrastructure projects, which supports Indonesia’s economic growth and development.

Indonesia is also becoming a major hub for electronics manufacturing, with Samsung producing its mobile phones in the country. These will require semiconductors, printed circuit boards, and electronic displays as part of the manufacturing process. More recently, LG has also established a presence in Indonesia with two plants for the production of EV battery materials.

🔑 Read More: Top 5 Rising Cities in Indonesia to Do Business In

Make your inroads into Indonesia seamless with Wallex

One of the biggest challenges for any business looking to expand into a foreign market is managing their payments and collections, and it’s no different with Indonesia. Making international payments in IDR to staff, freelancers, or making collections in IDR from customers in Indonesia are just some of the things you’ll need to do as part of the process.

That’s what Wallex was designed to help you with. Our fully digital platform allows you to make instant payments in IDR, receive and hold IDR payments in our Multi-Currency Wallet, and convert SGD to IDR or other key Southeast Asian currencies such as THB or MYR.  

Our dedicated Account Manager will also ensure you get the best FX rates and all the help you need when making payments and collections.  

Enjoy speed, support, and savings with Wallex as you expand your business. Speak to us today and bring your business into Indonesia with confidence.

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