Trade Guide: Indonesia

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Indonesia(officially the Republic of Indonesia) is a sovereign country in Asia and Oceania. It is the largest island country in the world by the number of islands, with more than fourteen thousand islands. Indonesia has an estimated population of over 255 million people and is the world's fourth most populous country and the most populous Muslim-majority country.


Indonesia's economy is as vibrant as its culture. With multiple biomes distributed across a tropical archipelago, it’s developed a lively export industry that ranks as 24th largest in the world. It exported $203 billion in 2013, and much of that came from its rich petroleum-based resources. Coal remains on the top of its export list, with crude petroleum and rubber taking second and third place.

Japan, The United States, and China receive more Indonesian exports than any other country in the world. This makes Indonesia profile grow stronger. The exports sector has experienced robust growth, so its trade deficits between 2012 and 2014 began to shrink its economy somewhat. Its imports sector shrunk by 20% in response, and today, most of its surpluses were with Japan, Thailand, and China.

Indonesia has one of the most diverse cultures in the world, but Javanese ethnic groups dominate it. Their emotionalism is far more expressive than Westerners are used to; an aspect that should be taken into account during negotiations. The intricate subterfuge found in local executives can cause frustration when orientation and cross-cultural training is neglected prior to trade.

The country’s trade bill, passed in 2014, was drafted to protect against deficits in the imports sector and has caused plenty of confusion among foreign companies. Regulations are still being developed to make things easier for the international business community, but during the interim, foreigners will be most affected by Article 35, which gives the government the power to impose trade bans and restrictions on products when they suit national interests.

Indonesia’s economy is enjoying a gradual, but reliable growth path. Its economic freedom ranks 99th in the world. Most of the nation’s workforce is employed in the informal sector, with a weak judicial system affecting business risk negatively. Quotas, licensing, and non-tariff barriers distort trade, and there are caps on some sectors of the economy. The Heritage Foundation has given Indonesia a Trade Freedom rank of 80.4, which is rising.

2017 will be a year of plenty for the country. The Asian Development Outlook predicts a growth spurt of 5.5% in that year. Two of the country’s most redeeming features are its low inflation rates and transportation costs. Deregulation packages are also giving trade professionals more confidence.

Given that Indonesia economic profile is considered an emerging one, it gives investors who have the smarts to handle their projections well an exciting opportunity to attract profits. Fixed investment is thus increasing.

President Joko Widodo has pushed funds into infrastructure, which will be another ace up the sleeves of importers. More improvements are, of course, ideal, but no trade opportunity is without its disadvantages. Indonesia’s external debt and inflation rates are perfect for creating a brighter economic future.

The import of foodstuffs and commodities are limited, and sale of raw materials is regulated to meet Indonesia's value added chain goals. Not all trade is restricted, though, and as the Ministry of Trade muddles through its regulations, there will be more trial and error before the country arrives at its economic pinnacle.

For more Indonesia information, you may take a look on the sections on the left.

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