Indonesia is often regarded as one of the most favourable business locations in Asia due to factors such as its abundance of natural resources and industrial facilities. What makes it even more impressive is that the nation has seen strong GDP growth, even though the last few years have been turbulent for many economies around the world. Indonesia is projected to see a solid GDP increase of 4.5%-5.3% in 2023, and then a further climb of 4.7%-5.5% next year.
Looking for the most profitable industry opportunities in Indonesia? As the largest Southeast Asian economy and the 16th largest in the world, Indonesia is a land of opportunities for business owners. We share the top 5 profitable industries in Indonesia for you to expand to or explore in!
Top Industry Opportunities in Indonesia
A pre-pandemic trend which has boomed even further post-pandemic is online shopping in Indonesia. With Tokopedia and Shopee taking the lead as the top sites as of Q2 2022, a survey by Deloitte explains that 31% of Indonesians prefer shopping online due to the convenience and practicality it provides. The cherry on top? GlobalData explains that eCommerce payments in Indonesia is expected to increase 22% per year between 2021-2025 and will reach IDR753.8 trillion by 2025.
A report by Statista released in November 2022 reveals that ‘Clothing (71%)’ related purchases took the top category for online purchases in Indonesia in 2022. This is followed by:
- Shoes (52%)
- Bags & Accessories (48%)
- Accessories (40%)
- Cosmetics & Body Care (40%)
- Consumer Electronics (30%)
- Household Appliances (30%)
- Food & Beverages, excluding restaurant delivery (28%)
- Drugstore & Health Products (26%)
- Bags & Luggage (23%)
2. Travel and Tourism
In 2022, the World Travel & Tourism Council’s latest Economic Impact (EIR) explains that Indonesia’s tourism and travel sector is expected to bring around more than 5 million jobs over the next 10 years. Indonesia’s tourism and travel industry is expected to grow at an average annual rate of 10% over the next 10 years – making it a great time to enter the industry. In a report by Statista, it is explained that Indonesia’s tourism industry plays a strong role in the country’s economy, contributing almost 5% of its overall GDP.
Popular with tourists is Bali, a city which has topped TripAdvisor’s Travelers’ Choice for top 25 popular destinations two years in a row. As per data from Trading Economics, the number of arrivals by air in Bali increased to 446.7 thousand in October 2022. It does not end there – Indonesia is made of 17,700 different islands each offering an atmosphere of its own making it a top spot for foreigners to travel to. Trading Economics also reported that in October 2022 itself, foreign tourist arrivals in Indonesia jumped 364.31% year-on-year which was boosted by the further easing of the pandemic restrictions.
3. Infrastructure and Construction
Indonesia’s government has raised several notices about the importance of having better infrastructure in the country opening a road for investors looking to get involved in the development. Better infrastructure brings around faster country development and stronger opportunities. The Indonesian government will be investing around $430 billion into the country’s infrastructure between 2020 to 2024.
A report by PwC explains that in Indonesia there is a significant need for infrastructure investments in roads, tolls, ports, airports, railways, water, and power plants.
Indonesia is a frontliner player within the global mining industry, well-known for its production of coal, gold, tin, copper, and nickel – to name a few. Indonesia’s mining sector is going towards the direction of being one of the top most potential leading sectors in the country. The Indonesian government has implemented several actions to boost the sector including:
1. Banning exports of raw materials
2. Increasing the value of mining products
This aims to also bring around more job opportunities and increase profit margins for mining commodities.
As of 2022, Statista Research Department reported that Indonesia is the 2nd fastest growing aviation market in the world based on aircraft purchases and trade value. The International Air Transport Association (IATA) reported that Indonesia is set to be the world’s 6th largest market for air transport in 2034.
Carrying huge investment opportunities for local and foreign investors, opportunities include investing in infrastructure for the development of the industry and human resources to meet the demand. Indonesian airports currently see an increasing growth in air traffic and the developments of new airports closest to tourists destinations and refurbishment of existing airports is crucial. As mentioned on the International Trade Administration, other areas of growth within the industry include improvements to ground infrastructure, runway, and air traffic systems.
Looking to expand into Indonesia?
Familiarising yourself with local labour laws is where you’ll need to begin – but this can be tricky if you’re completely new to the Indonesian business scene. In Q1 of 2023 itself, Indonesia is set to introduce a range of new laws including the increase of minimum wage for 28 provinces starting 2023 and issuing a regulation to revoke and replace the job creation law.
We’ve got some good news, though! In our latest addition to the Links International’s Payroll, Labour Law & Compliance Workshop series, we will be hosting a COMPLIMENTARY webinar on Wednesday, the 15th of February 2023 at 11:00 AM Hong Kong time to walk you through Indonesia’s recent legislation and payroll updates. Take this opportunity to learn all you need to know on running a compliant business in Indonesia, and feel free to ask away during the Q&A session!
This session will be led by Wima Lintang and Ashwin Srigantha. Wima is our Payroll Manager based in Indonesia who has more than 10 years of in-depth HR experience. Wima’s expert knowledge is centred around technical and payroll outsourcing solutions, as well as processing high-volume payrolls in Indonesia. Ashwin, our Business Development Manager based in Malaysia, has over 5 years of extensive experience in HR-related matters serving multiple organizations. Ashwin has helped over 1000 clients automate their HR processes through outsourcing and business process automations.
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.