5 Benefits to Set Up a Business in Indonesia

5 Benefits to Set Up a Business in Indonesia

In the world economy, Indonesia is a country with a population of around 270 million people and a GDP of $1.32 trillion in 2022. Indonesia has its own attraction for foreign investors with its large market, abundant natural resources of the best quality, trade agreements and investment incentives. In this article, Bizsquare, as a business consultant, will discuss 5 advantages of setting up a business in Indonesia and how you can get benefits for your company.

Largest Economy in Southeast Asia

Indonesia is one of the developing countries in the world with the largest economy in Southeast Asia. As an upper middle-income country and a member of the G20, Indonesia is classified as an emerging economy country. With estimated total income of more than IDR$21 trillion in 2023, Indonesia is the 16th largest economy in the world in terms of nominal GDP and the 7th largest in terms of GDP(PPP). Indonesia’s digital economy reaches $77 billion in 2022 and is expected to exceed $130 billion in 2025. Indonesia relies on the domestic market, government spending, and ownership of state-owned companies (the central government owns 141 companies). The prices of various basic necessities (including rice and electricity) also play an important role in the Indonesian market economy. However, since the 1990s, most of the economy has been controlled by Indonesian individuals and foreign companies. Take advantage of this opportunity immediately to set up a business in Indonesia.

Low Labour Costs

With an economical budget, you can set up a business in Indonesia. One of the main advantages of doing business in Indonesia is low labor costs. According to the World Bank, the average monthly salary in Indonesia was $220 in 2020, compared to $3,700 in the United States and $4,100 in Japan. This means that you can employ highly skilled workers at lower costs than developed countries. In addition, Indonesia has a young and productive workforce with an average age of 30 years and a literacy rate of 95%. Setting up a business in Indonesia can help increase your company’s revenue, so what are you waiting for? Contact Bizsquare immediately for a consultation regarding setting up a business in Indonesia.

High Consumer Spending

Consumer spending in Indonesia averaged IDR$1,279,370.25 billion during 2010-2023, reaching a record high of IDR$1,631,019.80 billion in the second quarter of 2023, a sharp increment from IDR$1,582,219.30 billion in the first quarter of 2023.

Young & Productive Workforce

Indonesia has one of the largest populations in the world, ranking 4th after China, India, and the US. In addition, Indonesia has a large share of working-age people, providing to a young and productive workforce with an average age of 30 years and a literacy rate of 95%. A young workforce means a higher ability to adapt to new technology and learn new skills faster than an older workforce. Statistics and studies show that Indonesia will have one of the largest workforces in Asia when its demographic bonus peak between 2024 and 2030. This will serve as a great opportunity to set up a business in Indonesia and tap on the large young and productive workforce.

Furthermore, this sector absorbs quite a large number of young workers in terms of age, namely 17.8%, compared to the percentage of the national workforce which only reached 13.8%. What is interesting is that training for creative industry workers in 2015 was dominated by elementary school graduates and equivalent (57.20%), while high school graduates and diplomas only reached 6.70%.

This seems reasonable considering the nature of the creative industries, where personal skills and soft skills are prioritized over formal qualifications. This reminds us of the story of Steve Jobs, Bill Gates, and Mark Zuckerberg who were willing to leave education to realize their ambitions and become global technology pioneers.

The number of creative industry workers in Indonesia can be said to be quite high compared to other countries so this is a great opportunity to set up a business in Indonesia. In comparison, 14% of the workforce in Indonesia works in the creative sector, in Asia Pacific 43%, in Europe 26%, in North America 16%, in Latin America 7%, and in Africa and the Middle East 8%. By looking at the numbers and forecasts for the creative industry, it is hoped that it can develop into a pioneer industry in the future.

Strategic location in the ASEAN

Indonesia is located at the intersection of the Pacific Ocean, the Strait of Malacca and the Indian Ocean. More than half of international shipments passes through Indonesian waters. Indonesia’s role is increasingly important in the world arena. The country is the only G20 member in Southeast Asia and voices the concerns of developing countries. We estimate that Indonesia will join the G7 in 2030, and estimate that Indonesia’s economy will be the 10th largest country by 2020 and the 5th largest by 2030.

Indonesia is also a member of a new group called Emerging Markets. The growth markets group includes four countries (Indonesia, South Korea, Mexico, and Turkey), each of which generates 1% of total global GDP. As a leading member of ASEAN, Indonesia defines an integrative security and trade approach in the region and will be an integral part of the ASEAN economic community.

Finally, Indonesia is currently a key player in cross-sectoral international policy issues such as climate change and the global financial architecture, which will have a direct and indirect impact on trade and investment decisions. Bizsquare as a trusted business consultant is ready to help you set up a business in Indonesia.