Five Reasons to Do Business in Indonesia

Indonesia is a prime location for businesses to expand. One option is to hire employees in this location through HR outsourcing to tap into this burgeoning location. 

Indonesia is ranked the fourth most populated country in the world while also being one of the most powerful economies in Southeast Asia

According to CIA Factbook, the Indonesian population is estimated to grow to 267 million people by July 2020. 

Indonesia is a prime location for businesses to expand and grow for many reasons, such as free trade agreements, a growing economy, and a growing middle class, to name a few. If your company is interested in hiring employees or do business in Indonesia, read on.

thailand temple

1. Indonesia’s Free Trade Agreements 

Indonesia is a member of the Association of Southeast Asian Nations (ASEAN) and trades with nine other countries with minimal or zero tax. The other nine countries include Thailand, Malaysia, Singapore, the Philippines, Vietnam, Myanmar, Cambodia, Laos, and Brunei.  

You will have access to a consumer population of more than 650 million in the ASEAN alone by doing business in Indonesia.

Access to this large consumer class means sales and staffing opportunities through hiring employees in Indonesia for your company.

Beyond ASEAN, Indonesia also has trade access to India, China, South Korea, Japan, Australia, and New Zealand. Having an extensive list of connections makes Indonesia a prime epicenter for trade within the Southeast Asia region.

2. Official Business Language is English 

Bahasa Indonesia is the official language of Indonesia and there are more than 700 languages and dialects spoken across the country. Papua, one province alone has over 270 spoken dialects. 

However, the official business language in Indonesia is English. This eases the burden of language barriers for foreign business owners and allows a smoother entry into the Indonesian market.  

However, if companies intend to market their products to Indonesian consumers, they should make sure their marketing is localized.

Not only does this mean translating a business’ products into local dialects, but businesses should also advertise their products in ways that resonate with the local population to show that the company is knowledgeable about the culture.

For example, the color red may symbolize danger in western cultures, but in Indonesia, it symbolizes luck and fortune.

Hiring local employees through HR outsourcing is a great way to enter the Indonesian market while being cognizant of and adhering to local customs.

Some important Indonesian business etiquette to remember is: 

a. Indonesian business emphasize patience. Companies and employees take time to respond to emails, especially if the sender is not explicitly known. 

b. Business relationships are founded on trust, familiarity, and personal connections.

c. Indonesians place emphasis on age. Respect towards elders is expected.

d. Watch body language. Hands on hips or folded arms can signify anger.

e. Avoid using the left hand when passing or receiving anything, such as business cards or gifts. 

3. Indonesia’s Growing Economy  

Indonesia is considered the fifth emerging country in the world after China, India, Brazil, and Russia. Indonesia’s growing economy means businesses can capitalize on emerging sectors. 

In 2019, Indonesia completed construction on fifteen new airports and plans to add another terminal at Soekarno-Hatta International Airport in Jakarta by 2021. Countries in the construction sector have the opportunity to take advantage of the growing demand for contractors, technicians, architects, and project managers. 

With so many new airports, Indonesia is becoming more connected making business easier to other industries as well.  

Indonesia’s education sector is also expected to grow.

The country has the fourth-largest education system in the world, with one-third of a million schools and universities.

This emerging education sector will demand more teachers, class resources, training, technology, and construction. Not only will companies maximize this opportunity but they will also positively impact the next generation of Indonesians’ education. 

motorcyclists on a street in Thailand

4. Indonesia is a “Young” Country 

Between the years of 1971 and 2010, Indonesia’s population doubled. Indonesia’s median age is 31.1. A country where most of the population is young means there is a lucrative business opportunity within the next few years.  

As the general population gets older, the country grows accustomed to modern business practices. A country full of young people also means an increase in educated, skilled workers.

In due time, foreign companies that plan to hire employees in Indonesia will have an expansive employment pool to choose from.  

5. Indonesia has a Growing Middle-Class 

Another reason why companies should look to Indonesia for their next business venture is that Indonesia has one of the world’s fastest-growing middle-class.

It is estimated that 90 million Indonesians will join the consumer middle-class by the year 2030, according to McKinsey. This rising consumer class makes it easier to hire employees in Indonesia; whether your company is established in Indonesia or are just entering this market, payroll services through HR outsourcing companies are a must to ensure you stay in compliance with local laws and regulations. 

Citizens joining the consumer middle-class will have higher amounts of disposable income and drive the demand for luxury products and quality services in Indonesia. 

With this growing demand and consumer culture, new opportunities will open for foreign businesses that plan to expand their services in Indonesia.  

Indonesia has made its mark as a powerhouse in Southeast Asia. Whether you are looking to hire employees in Indonesia, require payroll services, or are interested in other ways to expand to Indonesia, NNRoad is here to guide you on your journey to global expansion. Reach out to us today!