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

Manufacturing Companies in Indonesia – Partnership 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

Invest in Indonesia would be a wise choice for foreign companies to do. Indonesia has emerged as a promising destination for Foreign investment. As the world’s fourth most populous country, Indonesia is one of the strongest economies in Southeast Asia. With its plethora of natural resources, large territory, and continuously growing market, Indonesia’s stature as a place to invest grows stronger than ever. Foreign Business owners’ consider to invest in Indonesia because of those reasons.

What Are the Steps to Invest in Indonesia?

In order to invest in Indonesia, there are several steps you must consider. Therefore, it would be better to have a clear and thorough understanding about the investment climate. Since 2018, the Indonesian government has introduced the Online Single Submission (OSS) as an online gateway for investment and business establishment. The aim of this system is to make it easier for micro, small, and medium enterprises to establish themselves. 

Recently, the government introduced the OSS-RBA (Risk-Based Analysis), which differentiates the business depending on their risk scale. For new investors, this new system can help you measure and assess the potential risk of your investment. 

Procedures to Invest in Indonesia

Here are the procedures to invest in Indonesia:

1. OSS Account Registration

To create an OSS account, you must provide your identity number. But tor foreign investors, you can replace it with your passport number. You will also have to enter details about your business. After completing all of the forms, you will receive the OSS username and password. 

2. NIB Registration

After creating your OSS account, you will also need to obtain a business identification number. This functions as your main identity while carrying various business and investment in Indonesia. 

3. Licensing

According to the risk scale of your business, you will need to obtain special licenses. For medium low and medium high risk businesses, you will need a self-declaration of your business standards. Meanwhile, if you have a high risk business, to invest in Indonesia, you will need to obtain a special license from related Ministry and other governmental institutions. 

Risk-Based Business Classification in Indonesia

1. Low-Risk Business owners are required to have a Nomor Induk Berusaha (NIB)/Business ID Number.
2. Medium-Risk Business owners are required to have NIB and standard certificates.
3. High-Risk Business owners are required to have NIB and a business license

How can Double M help?

Indonesia is an excellent destination for investment. With Double M’s help, you will be able to invest in Indonesia and register company in Indonesia. 

Business in Indonesia presents a realm of exciting opportunities and unique challenges for entrepreneurs and investors alike. In recent years, Indonesia has emerged as a leading destination to do business. In order to do business in Indonesia, it is mandatory for you to obtain all the necessary licenses and permits. To make sure your business operations go smoothly, it would also be helpful to start and maintain a positive working relationship with the Indonesian business and governmental circle. Business in Indonesia has several important areas you have to consider.

Prominent Sector of Business in Indonesia

In its long history, Indonesia’s economy has leaned heavily towards the agriculture sector. Geographically, the country is blessed with plenty of fertile soil which are located evenly within the larger Indonesian territory. In the late 1960s, a significant process of industrialization and urbanization was kickstarted by the government. This expanded the country’s economic focus towards manufactured imports and new kinds of sectors. 

1. Automotive Industry

In Indonesia, the automotive industry is generally seen as the cornerstone of the country’s manufacturing sector. Many world class car manufacturers have started manufacturing factories or expanding distribution in the Indonesian territory. Indonesia is the second-largest car manufacturing nation in Southeast Asia. The robust growth is supported by the increasing amount of population, meaning that the target market is already available. 

With typically low labor costs and a continuously expanding middle class, international car manufacturers have been  investing heavily in order to expand production capacity in Indonesia. As for the designs, low-cost-green-car (LCGC) have been gaining popularity in recent years. However, it is quite widely known that most Indonesians still would rather buy multipurpose vehicles (MPV), considering the fact that they are able to carry many people. This is very useful because, by nature, Indonesians like to take their family members on a trip using their cars. 

Just like other parts of the world, the current buzz in the automotive industry is electronic vehicles (EV). Therefore, as we strive to reach a more sustainable future, the massive production and distribution of EVs are very common occurrences that you can see in Indonesia. As such, the EV sector seems like the specific niche that you can tap in to if you have ambitions on entering the automotive industry in Indonesia.

2. Property Industry

In recent years, the property industry has been one of the pillars of the economy. There are several reasons for this. First, property industries will grow once there’s macroeconomic growth in the country (represented by the increase of per capita GDP). This has occurred in Indonesia and as a result, purchasing power is increasing. In the past decade, the Indonesian GDP has increased exponentially. This puts them in the position to purchase houses, apartments, and condominiums. 

Furthermore, Indonesia currently has a beneficial demographic composition. With a population of over 270 million people, the country is already a promising market to begin with.

Indonesia is undergoing a rapid process of urbanization. More than half of the Indonesian population currently lives in urban areas. When this happens, the demands for new houses, apartments, etc. will continue to increase. For potential business investors, this serves as a hugely potential market to tap into. If you come to Indonesia to enter the property market. There will be a large market of potential buyers at your disposal.

3. Tourism Industry

Now that Indonesia is slowly recovering to normal conditions, the tourism sector is once again in a prime position to bounce back. The Indonesian government is making strategic plans to revive the industry, including offering foreign investors to take on projects worth up to USD 1 billion. 

One of the efforts to revive Indonesian tourism is the cooperation between the Ministry of Tourism and the Ministry of Investment. The two institutions agreed to work together intensively to build the creative economy and infrastructures, exchanging data and information, and upskilling the workers in the tourism industry.

Furthermore, the Ministry of Law and Human Rights through the Immigration Services are continuously formulating new regulations to ease foreign traveler’s way to Indonesia such as creating new policies like Second Home Visa and Visa on Arrival. The results are clear for all to see. The tourism industry in Indonesia has come back to life. As business practitioners, it becomes such an interesting opportunity for you to invest in Indonesian tourism, either in the hospitality side or even invest in the tourism objects. 

Business Permit Registration for Foreign Companies in Indonesia

After securing the certificate and being officially established as a Perseroan Terbatas (PT), a company still needs to obtain and register their tax identity then process a business permit (Perizinan Berusaha) before starting their operations, which consists of Basic Requirements (Persyaratan Dasar) and Risk-Based Business Permit (Perizinan Berusaha Berbasis Risiko).

 The Basic Requirements consist of:

1. Kesesuaian Kegiatan Pemanfaatan Ruang (KKPR), a document that verifies the planned usage of the location being used.
2. Persetujuan Lingkungan/Environmental Permit, a document that verifies that the operations of the will not endanger the environment, issued by the Ministry of Environment and Forestry.

Persetujuan Bangunan Gedung dan Sertifikat Layak Fungsi, documents that verifies that the building used follows a certain quality and safety standard.

Risk-Based Business Permit in Indonesia

The Risk-Based Business Permit consist of:

1. Low-Risk Business owners must have a Nomor Induk Berusaha (NIB)/Business ID Number.
2. Medium-Risk Business owners must have NIB and standard certificates.
3. High-Risk Business owners must have NIB and a business license.

After submitting all documents, the Online Single Submission (OSS) system under the jurisdiction of the Ministry of Investment will review the documents. Should the application be approved, the business permit will be issued by the aforementioned ministry on behalf of the government

How can Double M help?

Before starting your business in Indonesia, it is important to decide whether you want to establish your own company or join forces with others. Double M can help you either way. We can help you establish your company in Indonesia or help you find local partners which suits you. 

As the world’s fourth largest population, Indonesia is a potential market for foreign investors to dive in. According to TradingEconomics, foreign investment in Indonesia (excluding investment in banking and oil and gas sectors) jumped to an amount of 39.7% year-on-year to a record amount of IDR 163.2 trillion (USD 10.89 billion) up until the second-quarter period of 2022. This is a 31.8% growth from the previous period and recorded as the greatest rise in the past decade. This is a phenomenal achievement considering the fact that the country and the rest of the world are still recovering from the effects of the Covid-19 pandemic.

Why Invest in Indonesia?

As a foreign investor in Indonesia, deciding where to invest plays a big part in your success. Pick a wrong place, and you gain the risk of investment loss. Pick the right one, and your business could exponentially grow larger and larger, thus giving you the platform to expand even more. To further convince you to invest in Indonesia, here are our picks of the 6 reasons why Investors must choose Indonesia:

1. Economic State

Indonesia’s economy is the largest in Southeast Asia and one of the most emerging market economies in the world. A proud member of the G20, Indonesia is an industrialized country. It is the 17th biggest economy in the world by nominal DP. In recent years, large numbers of internet-based startups, some of which have emerged as the world’s leading decacorns, have been supporting the economic uprisings in Indonesia. In the year 2025, it is projected that the worth of the internet economy in Indonesia will pass the USD 130 billion mark. The Indonesian economy relies on its thriving and vibrant domestic market.

2. Political Stability

A country’s political situation has a huge effect on the success of investment. In the simplest terms, a country in the middle of a full-blown conflict or war would never be an ideal spot to invest in, because it would put the investor in huge jeopardy. The first indicator of political stability is corruption within the political system. It is no secret that Indonesia has had to endure infamous corruption cases by political figures in the past. However, continuous efforts are constantly pursued by the country’s anti-corruption commission, KPK, alongside the police force in order to eradicate corruption to its very core. The second indicator is government management. In this regard, the Indonesian government has been able to maintain the quality of regulations they produce, navigating the country through the worst periods of the pandemic.

One of the most discussed laws, the Omnibus Law, is also deemed favorable for foreign investors. In terms of democratic accountability, the high usage of social media has enabled the people to voice their aspirations. This also increases accountability of the government. Any violation or unlawful practice could be made viral on social media, prompting immediate action from the authorities. Speaking of authorities, the police and military in Indonesia are doing an excellent job to protect law and order. Furthermore, there is a rule in place barring active members of the police/military to be involved in electoral politics. All these factors mentioned above show that the political landscape in Indonesia is stable and won’t disrupt your investment.

3. Investment Climate

The arrival of the Covid-19 pandemic has threatened the success of investments in Indonesia. To tackle this problem, Minister of Investment and Chairman of Indonesia Investment Coordinating Board (BKPM) Bahlil Lahdalia proposed several recovery strategies. First is to follow-up on stalled investments and initiate large scale investment. The Minister wants Indonesia to be more proactive and ask the investors what their problems are and offer help to solve it. Second is to compile a map of regional investment potential. This is done to list and compile all the potential areas for investment within the Indonesian territory and package in a proper way. It is hoped that this strategy will help attract investors to put their funds in Indonesia. Third, is to assist foreign investment relocation in Indonesia. 

4. Natural Resources

Indonesia as a country is blessed with the abundance of natural resources. The mining industry, which is commonly signified by extracting oil and gas, brings in roughly one-tenth of the nation’s GDP. By exporting and charging tax for them, it helps the country obtain more earnings to finance their own development. Fossil fuels such as petroleum, coal, and natural gas also make up a huge chunk of the country’s revenue. They are largely extracted from Sumatra and Kalimantan. In Indonesia, the ownership of natural resources and the right to process them are owned by the government.

Foreign investors work alongside government-owned companies under a production-sharing scheme. Foreign companies act as contractors and processors of the resources, using their facilities and supplying capital when necessary. Through the halfway point of 2022, the mining industry takes up 11,2% of the total of foreign investment, which accounts for USD 2,4 million. Ever since the country’s inception, natural resources have been the lynchpin of Indonesia’s economic progress and consistently stayed as a profitable industry which makes Indonesia even more appealing as a country to invest in.

5. Demographics

In 2030, Indonesia will reportedly acquire a demographic bonus which means that the working-age population is significantly higher than the young people and the elderly. In theory, this could be super beneficial for the economy. When the workforce increases, the economic growth and national prosperity will be significantly higher. For foreign investors, this could be good news.

Investing in Indonesia during demographic bonus means you could collaborate with high quality work forces. The Indonesian government will try and create as many job opportunities as possible. One of the best ways of doing this is to create a business environment that is friendly for potential investors. With more investors in the country, it should increase the amount of job opportunities up for grabs. 

6. Global Influence

As the only Southeast Asian country in the G20, it is clear to see that Indonesia has a prominent role internationally. Earlier this year, Indonesia had the honor to assume the presidency for G20. Through the “Recover Together, Recover Stronger” theme, Indonesia hoped to become a catalyst and role model for the rest of the world. In a time when we still have countries going to war against another, Indonesia would like to to remind the value of collaboration and partnership.

As the world collectively bounces back from the pandemic, Indonesia also hopes to push productivity in all sectors. For foreign investors, investing in Indonesia means you are on a partnership with a country with a fast rising economy.

How can Double M help?

If you have decided to invest in Indonesia, there are multiple procedures that you must go through. At Double M, we offer all the services you could possibly need starting from market research to company establishment.