Indonesia and Japan and are putting plans in motion to further collaborate in establishing a manufacturing company in Indonesia. This joint venture will also put emphasis on the usage of electric vehicles (EV). This is stated by the Minister of Industry Agus Gumiwang Kartasasmita on a written statement, Thursday (8/9/2022)

Manufacturing Collaboration between Indonesia and Japan

“In this working relation with Japan, I hope to obtain their specific knowledge and advanced technology which  can be used in Indonesia’ future strategic programs, especially natural commodity downstreaming, research and development of electric vehicles, and health and food sector”, the Minister said.

This partnership is just one of many agendas that will be discussed and ratified in the Indonesia-Japan Economic Partnership Agreement, which was announced during the G20 Conference in Bali. 

In return, Indonesia is committed to offer trade deals for goods or spare parts in the manufacturing industry. It is hoped that this can create a win-win solution for both nations and smoothen the deal between one another. 

Business Relations between Indonesia and Japan

The business relations between Indonesia and Japan are getting stronger by the day. In recent weeks, Japan has committed around IDR 37 trillion to manufacturing companies in Indonesia, specifically in the electric vehicle category. It is reported that the funds are coming from two of the most renowned Japanese automotive manufacturers, Toyota Motors and Mitsubishi Motors.

Future Business Prospects in Indonesia and Japan

It is widely believed that the electric vehicle industry will be booming from 2022 onwards. In relation to the Indonesian government’s latest fuel policy, the people of Indonesia are expected to switch from fuel-powered vehicles to electric vehicles. The current demands are very high and they are expected to rise even further.
By looking at the upwards trend of manufacturing companies in Indonesia, it looks like environment-friendly product registration will be the most popular service moving forward. Japan has paved the way and it also presents excellent investment opportunities for other countries in the world.

How can Double M help?

Indonesia is opening many opportunities for collaboration in the manufacturing industry. With Double M’s help, you can find suitable business partners or even establish your own manufacturing company in Indonesia

Digital Transformation – New era business seems to be the need of every business stakeholder, both small and large scale. The changes due to Covid 19 have made many business sectors shift and focus on digitalization. In 2021 alone, the technology industry has increased by Rp. 2.1 trillion and continues to grow.

So this opportunity must be fully exploited and optimized. Then, does your company understand digital transformation? If not, see the full explanation.

Understanding Digital Transformation

In simple terms, digital transformation is more about using technology to change the market business, previously already running or creating a new business. The Enterprises Project explains that digital transformation is affecting fundamental changes in the overall ongoing business operation.

At this stage, companies starting to implement digitization will provide more value to their clients or consumers. Through these stages, digital transformation is much easier, especially in terms of effectiveness and efficiency.

So, the concept is not only about using technology but rather about existing optimization.

In the future, digital transformation will continue to develop and cover various existing aspects, but currently, the technologies that are in demand by the public are the Internet of Things, Cloud, and big data.

Why Should You Get Started?

There are many reasons when a company should embark on a digital transformation. One of them is that many global companies are implementing the system. Almost all start-up companies start optimizing and abandoning old business models to develop existing businesses.

Several big brands have also implemented a comprehensive digitalization system, thus focusing more on new business models. Companies that have implemented digitalization will be far superior, especially in operational efficiency. If your company wants to achieve this target, start welcoming the digital era.

Reasons for Digital Transformation

The International Data Group (IDG) explained that the important thing for digital transformation is IT security enhancement, customer retention, and more controlled costs. Here is more discussion.

1. Technology Security

The presence of digital transformation does provide many benefits and opportunities for new businesses. But behind the advantages provided, technology has a big risk in terms of existing security. Cyber ​​security is an important point that must be optimized and carried out thoroughly.

Thus, digital transformation must improve existing technology to be able to compete and remain productive without problems.

2. Consumer Retention

Times have changed, technology has a significant impact on all these conditions. Can compete in change, digitalization has the right role. Especially in improving customer experience.

The conventional way is no longer the right choice, adaptation is a new key to unlocking the desired target market. For this reason, digital transformation provides the right picture in expanding the company’s business for the better. Moreover, if you use modern technology, the behavior of your customer  both offline and online can be more easily understood.

3. Cost Control

Digital transformation has a positive impact, especially in controlling costs in the business being run. This is interesting for business people to see because it provides the right impact to optimize the running of the company for much better performance. Therefore, the business you run is much more optimal.

If you want cost efficiency, digital transformation is one of the most attractive for you to maximize.

Forms of Digital Transformation

The MIT Sloan Management Review website explains that there are three business models related. What they are? Read the full explanation.

1. Improve Customer Experience

Customer experience is a crucial point in improving the progress of the managed business. To make it easier to understand, the help of technology provides many advantages. If your company begins to consider digital transformation, it can increase the number of customers.

These affect more scalable and broad customer touchpoints. This form of business is starting to be in great demand by business people.

2. Ease of Operational Process

Operations that are getting easier and more practical make it easier for employees to improve their work performance. The impact that is present is that the business that is run will grow faster. Digital transformation requires employees to be able to master and operate various equipment in the managed business.

Especially in digital tools and using data to make various business policies.

3. Business Model Changes

A significant aspect is changing the direction of the business and focusing on digital products. So that they offer provided will use technology for a wider product range.

Advantages of Digital Transformation

1. High Mobility

Almost all walks of life are not far from smartphones and other devices connected to the internet. Companies must adapt to these changes. Excels in providing business models that can attract new markets.

Through a broad market, digitization provides many benefits for business progress.

2. More Secure Data

Makes companies more aware of some of the data in their business. Commitment to data security builds business trust. Thus, data is an important asset.

3. Increase Productivity

The work process carried out will be much easier in increasing work productivity. This is because technology and several tools are present so that everything will be much easier to obtain. Pulling again the cost of employees can be reduced.

4. Able to Compete With Other Businesses

Amid digitalization, your company can provide added value to existing businesses and compete in other industries. However, behind this position, you can adapt and use some of the latest tools.

How can Double M help ?

Double M is providing market entry solution services in South East Asia. Should you have any inquiry, please contact us at info@double-m.co

The manufacturing industry is one of the major components of the Indonesian economy. The manufacturing industry is accounted for 21% of Indonesia’s total GDP in 2019. Manufacturing industry grew by 2% in the period of 2015-2019. Food and beverage manufacture is the largest in this sector and accounted for 34% in 2019. Due to the size of the manufacturing industry, the role of supporting industries such as the provision of capital goods and machinery becomes crucial.

Figure 1. GDP from Manufacturing Industry (constant 2010 price and USD)

Source: Indonesia Central Statistics Bureau

Despite of its important role, Indonesia is still dependent on imports of capital goods and machinery. This is due to insufficient capacity of domestic the machinery and equipment industry. Based on data from Indonesia Central Statistics Bureau (BPS) in 2019, the machinery and equipment industry was 0.3% of total GDP or only 1% of the total manufacturing industry.

Figure 2. GDP from Machinery and Equipment Industry (constant 2010 price and USD)

Source: Indonesia Central Statistics Bureau

In 2019, the import value of machines and electronics reached $47 billion. During the period 2015-2019, imports of these commodities grew by 4%. China is the largest supplier with a total of $20 billion in 2019, followed by Japan with $5,7 billion.

Figure 3. Import of Machinery and Electronics

Source: ASEAN Data Stats

Due to the dependence, the import of capital goods and machinery is becoming one of the key indicators of Indonesia’s economic performance. The decrease in imports of capital goods will impact the component of Gross Fixed Capital Formation. This indicator measure how much investment in machinery and production equipment, thus indicating slower economic growth.

The government of Indonesia imposes import duties that vary between 0% to 15% and VAT of 10%. However, to encourage the development of industry and foreign investment, the government provides an exemption of VAT and import duties. Companies importing machinery for production purposes can apply for this exemption. The requirements for this exemption are regulated in Regulation of the Minister of Finance number 3 and number 10 of 2015.

Despite this exemption, the government is planning to reduce the dependence in the future. Machinery and equipment industry is one of the priorities in the National Industrial Development Master Plan 2015-2035. The government targets within 20 years, the domestic machinery industry is able to develop and domestically produce 5 types of equipment:

• Computer Numerical Control (CNC) Machine.
• Industrial Tools.
• CNC Controller.
• Flexible Machining Center.
• Automation for electronic production and food processing.

In addition, to boost the investment in this sector, the government put machinery and main components of the machinery manufacturing industry as 1 of 18 strategic sectors which have been granted tax holiday facility. The tax holiday is given in the form of Corporate Income Tax reduction ranging between 25% to 100% depends on the size of the investment.

The European Union Vietnam Free Trade Agreement (EVFTA) took effect on August 1 paving the way for increased trade between the EU and Vietnam.

The EVFTA is an ambitious pact providing almost 99 percent of the elimination of custom duties between the EU and Vietnam. As per the Ministry of Planning and Investment (MPI), the FTA is expected to help increase Vietnam’s GDP by 4.6 percent and its exports to the EU by 42.7 percent by 2025. While the European Commission has forecast the EU’s GDP to increase by US$29.5 billion by 2035.

65% of the duties on EU exports to Vietnam has been eliminated upon entry into force of the Agreement, the remainder will be phased out over a period of ten years. EU duties on imports from Vietnam will be phased out over a period of seven years.

• Practically all the machines and appliances are free of tariffs from the moment the Agreement enters into force, and the rest will be after five years. The current fees are up to 35%.
• Auto parts will be duty free after seven years (current duty is up to 32%).
• Approximately half of EU pharmaceutical exports are duty free as entry into force of the Agreement, and the remainder will be duty free after seven years (current duties are up to 8%).
• Duties applied to all exports of textile products has been eliminated as entry into force of the Agreement.
• About 70% of EU chemical exports are duty free at the time the Agreement entered into force and the rest will be after three, five or seven years, as appropriate (current fees are up to 25%).
• Wines and spirits will be fully duty free after seven years (currently the duties are 50% and 48%, respectively)
• Frozen pork will be duty free after seven years, bovine meat will be duty free after three years, dairy products will be duty free after a maximum of five years and food preparations will be duty free after one year. maximum of seven years.

REDUCE NON-TARIFF BARRIERS TO EUROPEAN EXPORTS

The EU and Vietnam have agreed to strengthen the disciplines of the WTO Agreement on Technical Barriers to Trade (TBT).

The agreement also contains a chapter that addresses Sanitary and Phytosanitary Measures (SPS), specifically aimed at facilitating trade in plant and animal products, where the parties agreed on some important principles such as regionalization and the recognition of the EU as a single entity.

These provisions will facilitate access to the Vietnamese market for EU companies that produce a wide variety of products, including household appliances, information technology, and food and drink.

PROTECTION THROUGH TARIFF QUOTAS

Only some sensitive agricultural products will not be fully liberalized, the EU has limited Vietnamese exports through tariff quotas (TRQs): Rice, Sweet corn, Garlic, Mushrooms, Sugar and products with high sugar content, Cassava starch, Surimi, Tuna canned.

A distinct aspect of EVFTA is its strong focus on sustainable trade and a shared vision of labor, corporate social responsibility, and environmental conservation. These values have far-reaching potential to improve the competitiveness of European businesses and their brands.

Project Outline

La Liga is the Spanish professional football league, which is among the most prestigious football leagues in the world as the Premier League or Bundesliga.

We have been working with La Liga and their Country Manager since several years by supporting them with working permits for their staff in Indonesia. Recently, we have started to provide them legal support as they are preparing to run a Youth Football League in Indonesia.

Testimonial

“From La Liga in Indonesia, we have worked and collaborated on various official projects and procedures with Double M. The result has always been the same: professionalism, speed and excellent execution. At Double M they are always available and ready to help without obligation. It is convenient to have close partners with such extensive knowledge of the local market”.

Rodrigo Gallego Abad – Indonesia Delegate     

Project Outline

NES Global Talent is the largest provider of workforce in oil & gas sector, with more than 60 offices in the 5 continents

NES Global Talent is a British Company, specialized in HR Consultancy and outsourcing for the Oil and Gas Industry. They are the world leader on their Industry, having offices in 33 countries. 

In Indonesia, Double M provides them with payroll services, HR consultation and Tax support (specially in Income tax, foreign income, BPJS, etc). 

Testimonial

“When I joined NES Global Talent in Indonesia we were already working with a regional vendor to advise on local payroll and tax matters. We were however in search of a more efficient payroll process, without compromising on compliance. Subsequently, we changed to DoubleM who introduced us to a completely new process which is much more sophisticated. In addition, DoubleM supports us on the rare occasions that there is a client query related to payroll or labor law, by allowing their specialists to join the meetings with our consultants.”

Henrique Castro – Indonesia Country Manager

Project Outline

Coren Group is the largest livestock integrator and food processor in Spain. Spain has been the first country in the EU and the fourth in the world to be approved by Indonesian authorities for the export of beef. This is the result of Double M’s work with their network and political contacts.

Novafrigsa and Artesanos Gallegos as well as the Slaughterhouse Artesanos Gallegos de la Carne have obtained halal certification by the halal official entity in Indonesia, as well as their slaughterhouses have been approved to export to Indonesia.

After these approvals, Double M has been leading the sales initiatives in Indonesia since 2016 for both slaughterhouses. The results are 3000 tons of meat sales for 2019, and 5000 tons are expected in 2020.

With the success in the sales aspect, Grupo Coren decided to establish a subsidiary in Indonesia in partnership with Double M. Coren group has trusted Double M to manage the subsidiary, handling all administration (accounting, tax, HR, legal, etc), sales, and operations. Currently, the company is running successfully and is one of the ten biggest meat importers and distributors in Indonesia.

Testimonial

“Our experience with Double M has been unbeatable, both for its professionalism and for its human quality. Their knowledge of the Indonesian market is not reduced to a mere description of statistical data but, has shown that they are perfectly integrated into Indonesian culture knowing in detail their way of thinking and doing business. The dedication they have shown to understand some complex businesses in which they did not have much experience initially has made them specialists in our sector, with good contacts both in the administration of the country and with the other local operators. In summary, for a Spanish company it is lucky to be able to count on Double M, a trustworthy consulting firm specialized in a country as different from ours as Indonesia “

Dino Grobas – President Director of Novafrifgsa S.A.

Project Outline

Keralty health is a company which belongs to Sanitas Group, a healthcare and insurance conglomerate with Headquarters in Colombia. They are a Worldwide leader in the healthcare and insurance companies.  

In this case, Double M has assisted Keralty by stablishing their representative office in Indonesia (KP3A), and the we have run all their local administrative affairs (Accounting, tax and payrolls). 

Joaquin, the country manager from Sanitas, has the following opinion about how is working with PT DMG Investment Services

Testimonial

“Double M has successfully assisted us during the process of establishing the Representative Office of Keralty in Indonesia as well as other kinds of services such as tax compliance, payroll calculation and accounting reporting, so it’s being a valuable resource for our project.”  

Joaquin Colunga – Country Manager Indonesia

Project Outline

IVACE is a Public owned company which belongs to the Government of Valencia. This entity supports the companies of the region of Valencia to Export around the world.

Testimonial

“We have been their official consultant (Antena as they call us) for Indonesia since 2016, and we have won their tender (can only work with them through tenders) three times in a row for Indonesia. From late 2019 we are also their official consultants / partners in Vietnam. 

With this client we mainly provide commercial services, such as meeting arrangements, search of potential clients and partners, arrange trade missions for them every year, inverse trade missions, seminars online and presential, etc.  We have worked with around 100 companies from the Valencia region since 2016 for Vietnam and Indonesia.”

Begoña Sanchez  – internationalization Technician

Project Outline

EXTENDA is a Public owned company which belongs to the Government of ANDALUCIA, in Spain. This entity supports the companies of the region of Andalucía to Export around the world. 

Testimonial

“We started to work with Double M to open up a market in the export of our product in Vietnam, Indonesia, Thailand, Malaysia, etc. The commercial relationship could not have been better: they prepared the agendas and trips to the countries, accompanied us on the visits, followed up on them… and managed to make the clients. The treatment on a day-to-day basis and all the procedures with our clients could not be done in a more fluid and optimized way, making each of our contacts a success”.

Borja Fernandez  – Plant Manager