This section contains some useful information on the economy and investment climate in Indonesia and is aimed at Italian companies interested in exporting or investing in this market. The page also includes practical guidance on services to support Italian businesses provided in Indonesia by the various articulations of the Italian state, the European Union and international organizations, as well as internationalization tools available to businesses in Italy. Finally, a section is aimed at introducing Indonesia’s main institutional economic and business interlocutors to facilitate access to information and procedures for exporting and investing in Indonesia.
For information regarding business opportunities in Indonesia, we suggest consulting the Indonesia section of the Ministry of Foreign Affairs and International Cooperation’s Info Mercati Esteri website. Furthermore, since September 2020, a unique portal created by the Ministry of Foreign Affairs and International Cooperation in collaboration with the ITA Agency, SACE AND SIMEST has been active, dedicated to Italian exporters with information, data and practical guidance on procedures, financing and business assistance: https://export.gov.it/
- MACROECONOMIC FRAMEWORK
- OPPORTUNITIES AND CHALLENGES
- SUPPORT TO BUSINESSES
- INDONESIA’S MAIN ECONOMIC INTERLOCUTORS
1. MACROECONOMIC FRAMEWORK
Indonesia is the largest economy in ASEAN and the fourth largest country in the world in terms of population, with more than 280 million people of whom 42 percent are between the ages of 0 and 24. These aspects, coupled with overall steady growth and good political stability, make the Indonesian archipelago a major hub of investment attraction in Southeast Asia.
After overcoming the Asian financial crisis of the late 1990s, Indonesia has experienced steady economic growth, which, except for A downturn due to the pandemic, has often been above 5 percent: 5.3 percent in 2022 and 5 percent in 2023 and 2024. This economic growth has made it possible to bring down poverty rates. Jakarta aims to expand its industrial and manufacturing capabilities, overcoming the current dominance of mining. Former President Joko “Jokowi” Widodo launched the “Indonesia Maju 2045 Vision” in 2019, a policy document that aims to make the country a sovereign, advanced, equitable and prosperous nation by 2045. The plan has the following goals: human resource development with the intention of training categories capable of making the most of the favorable demographic dividend, continued completion of major infrastructure, simplification of regulation through new labor and entrepreneurial regulations, simplification of bureaucracy through reforms and a culture of results, and overcoming dependence on raw materials through a renewed drive for industrialization and modernization of services, all geared toward social justice. The path outlined by Widodo is to progressively multiply the country’s wealth and significantly improve the population’s standard of living with the ambition to join the group of the world’s top five economies in 2045, when Indonesia will celebrate the centenary of its independence.
President Prabowo Subianto, who succeeded Jokowi in October 2024, shares the goals set by his predecessor and aspires to achieve 8 percent growth within his term
The Indonesian government, despite its excellent growth rates, has multiple challenges ahead, ranging from reducing social inequality and poverty to creating professional outlets for the many young Indonesians entering the labor market each year, and developing sufficiently adequate public health, and welfare services.
The investment climate – although generally positive – still suffers from regulatory uncertainties, and the government is working to improve the country’s attractiveness to foreign investment.
Indonesia and the European Union have also been negotiating a Comprehensive Economic Partnership Agreement (CEPA) since July 2016. The goal is to create an arrangement that facilitates trade and investment by covering a range of subjects such as trade tariffs and non-tariff barriers, services and investment, acquisitions, competition rules, intellectual property, and sustainable development. Negotiations for the bilateral agreement with Indonesia are the result of an increasing intensification of relations and are part of the same framework that includes other agreements initiated in parallel by the EU with other ASEAN members.
For more information regarding the macroeconomic framework and the performance of the Indonesian economy, it is also possible to consult the World Bank’s page dedicated to the country.
2. OPPORTUNITIES AND CHALLENGES
Good economic performance in recent years, together with the availability of cheap and increasingly skilled young labor, has enabled Indonesia to increasingly position itself as an attractive market for Italian companies as well. They find room both in investments in the traditionally leading sectors of the Indonesian economy – including mining and oil extraction, the energy and rubber sector, and the infrastructure and tarnsport sectors – as well as in the export of consumer goods for the Indonesian domestic market. Despite the opportunities outlined above, critical issues remain especially related to the increase in protectionist measures, infrastructure deficiencies, energy gap, lack of transparency and legal uncertainty.
3. SUPPORT TO BUSINESSES
Italian companies can take advantage of a wide range of public tools that support internationalization, offered by SACE (Foreign Trade Insurance Services), Cassa Depositi e Prestiti, SIMEST (finance for the development and promotion of Italian companies abroad), and through articulations of the Italian state in Indonesia (Embassy, ITA Office and Italian Business Association in Indonesia) and the facilities made available by the European Union and International Organizations.
4. INDONESIA’S MAIN ECONOMIC INTERLOCUTORS
– The Ministry of Investments and Downstream Industry/Indonesia Investment Coordinating Board (BKPM) is the primary interface between businesses and the Indonesian government. Its primary role is to encourage domestic investment as well as direct investment from abroad through the promotion of a favorable investment climate.
– The Ministry of Commerce of the Republic of Indonesia regularly publishes data regarding the country’s economic performance and other documentation useful to businesses operating in Indonesia.
– The Ministry of Energy and Mineral Resources of Indonesia regularly publishes information regarding regulations, developments and tenders in the country’s energy sector.
– The Ministry of Industry offers information on the country’s industrial development plans, as well as more specific regulations and guidance regarding sectors of interest to Italian companies, including industrial machinery.
– The Ministry of Tourism publishes information regarding projects and major investment opportunities in Indonesia’s tourism sector.
– The Ministry of Agriculture provides information regarding rural development in the country and is the main interface for Italian companies interested in exporting agricultural products to Indonesia.
– The Coordinating Ministry for Infrastructure and Regional Development contains relevant information regarding infrastructure developments and public works in Indonesia.
– Bank Indonesia, the central bank of the Republic of Indonesia, contains economic, statistical and monetary policy information on Indonesia.
– The Indonesia Financial Services Authority (OJK) is the body responsible for supervising the financial services sector in Indonesia.
– The Ministry of National Development Planning of the Republic of Indonesia (Bappenas) provides information regarding development planning in the country.
– The Ministry of State-Owned Enterprises of the Republic of Indonesia coordinates the development of Indonesia’s state-owned enterprises, providing information on their consolidation.
– The Coordinating Ministry for Economic Affairs, and the Ministry of Finance, provide information on the state of finances and the economy.
– KADIN, the Indonesian Chamber of Commerce and Industry, provides a strategic meeting point for all companies operating in Indonesia and, through a network of 34 regional chambers and nearly 200 business associations from various sectors, helps foreign investors connect with potential partners on the ground in the country.
– APINDO is the organization responsible for coordinating and protecting the interests of the members that make up the community of employers, workers and the government in Indonesia through the promotion of dialogue and active participation.