​Hi, Friends of Indonesia!

Are you aware of the compelling reasons to consider investing in Indonesia?

At present, Indonesia stands as the 16th largest economy in the world by nominal GDP, boasting a robust GDP surpassing the remarkable threshold of US$1 trillion.

Notably, Indonesia’s economy has demonstrated commendable resilience, showcasing a consistent annual growth rate of over 5% over the past two decades. The exception was the economic contraction of 2.07% in 2020 during the pandemic, that marked the first downturn since the occurrence of the Asian financial crisis in 1998.

1. ​Stable Economic Growth of >5% (y/y)

Presently, Indonesia is the 16th largest economy worldwide, boasting a GDP surpassing US$1 trillion. McKinsey & Company’s estimation indicate that by 2030, Indonesia is anticipated to secure its place as the 7th largest global economy. It is worth noting that among Southeast Asian nations, Indonesia is the sole representative within the G20.

Throughout the past two decades, Indonesia has enjoyed economic stability, with consistent annual growth exceeding 5%. However, the year 2020 during the COVID-19 pandemic the country witnessed a notable contraction of 2.07%, marking the first downturn since the financial crisis that engulfed Asia in 1998.

2. Competitive & Predictable Wages​

Provincial minimum wage 2022: US$126 – US$323 per month*
Provincial minimum wage growth in Indonesia is determined by a formula that was set in Government Regulation No. 78/2015.
Minimum Wage New Year = (Minimum Wage Old Year x {Annual National Inflation Rate + Annual National GDP Growth Rate})

3. 130+ Million of Educated Workforce

Indonesia ranks as the 4th most populous nation globally, with a population of 272 million in 2020. Notably, two-thirds of this population fall within the working-age bracket, contributing to the country’s vibrant labor force. Furthermore, the average age of Indonesians stands at 28 years old, reflecting a dynamic and youthful demographic profile.

4. Open Policies for International Investments

• ​Most business fields are open for 100% foreign ownership

The concept of business fields concerning Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI) is encapsulated in the “negative investment list.” Notably, the revised Presidential Regulation No. 44/2016 on investment has expanded the scope of available business fields for FDI, fostering increased opportunities.

• Minimum FDI of IDR10 billion (~US$700,000)

With minimum paid up capital of IDR2.5 billion (US$175,000) for Limited Liability Company (PT) (note: US$1 = IDR 14,500)

• FDI and DDI obtain investment licenses through Online Single Submission (OSS) system

www.oss.go.id Investment services are provided at one-stop service centers (PTSP) at central & regional levels.

• Established in the form of Limited Liability Company (PT)

Additional permissible forms for foreign entities include Foreign Representative Offices, which include general trading, oil and gas, and construction services. Furthermore, the options of establishing a Foundation or a Permanent Establishment (PE) are also available.

• Allowed to employ expatriate(s)
• Guarantee of no expropriation
• Guarantee to freely transfer and repatriate

Capital/shares, dividend, interest, royalty, and (branch) profit; subject to With Holding Tax (WHT)

• Must consider Corporate Social Responsibility (CSR), respect local culture and preserve environment

5. Young and Increasing Middle-Class Population

Many Indonesians are joining the middle-class group. In fact, Indonesia has one of the world’s fastest growing middle class. They are mostly young, optimistic and sophisticated buyers.
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According to the World Bank, people with daily expenditures between US$7.75-US$38 are classified as middle-class. There are 52 million Indonesians that fall under the concrete middle class group.

Another group is the aspiring middle-class that spends between US$3.3-US$7.75 per day. Around 115 million Indonesians are in this category.

So, what you are waiting for? Swipe to immerse yourself in the ensuing discourse to uncover more advantageous insights on investment prospects in Indonesia.​

(Source: kemlu.go.id)

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