How to start an import-export business in Indonesia

How To Start An Import-Export Business In Indonesia

Are you looking to start an import-export business in Indonesia or trading with Indonesian companies? Are you interested to know Indonesia’s top import and export products?

In this post, I will explain how to do import and export business with or in Indonesia. And what are the top export and import products in Indonesia, with what you could start?

After reading this article, you will have a basic knowledge of the Indonesian business environment. I will share with you the necessary information and ideas to help you build your own import-export business in the future.

Hello everyone, I would like to welcome you again.

My name is Murat. I am the Head of Global and Co-founder at Solar Solenturk and Futuresia Global Trade companies. 

I worked in many departments and offices from consultancy to directorship in international trade. I started to do international trade business through my own company. With this decision, I opened my eyes to the magnificent world of entrepreneurship. And since then I have built several successful businesses and had the chance to meet many countries. 

I learned and experienced many things in my global business journey. And I can tell to you if you want to achieve your success in your enterprise, you have to know three things well as much as possible. These are first, know your business. And second, if you sell any service or product, you have to know well what you are selling. And finally, you must have enough knowledge about a place where you to do your business or your target market. 

If you want to start your import-export business and want to learn the basics of international trade business, I have a guided video here, so you can find the link here.

Let’s dive in.

My article is in four parts. So let’s look at what we learn in this post.

WHAT WE LEARN

  1. The Basics Information About Indonesia
  2. The Top Export Products In Indonesia
  3. The Top Import Products In indonesia
  4. Conclusion
How To Start An Import-Export Business In Indonesia

1. The Basics Information About Indonesia

Okay, let’s start with a look at Indonesia’s import-export business environment. 

Jakarta, Indonesia
Jakarta, Indonesia

1.1. Indonesia’s International Trade Business Environment

Indonesia is a rapidly developing populous country in South East Asia. 

Indonesia is attracting many new investors and international entrepreneurs to invest in the country and set up their operations there. 

Many entrepreneurs realized that Indonesia has similar potential to China as it had in two thousand eight before the startup market exploded. 

Indonesia is a resource-rich country. The country has oil, natural gas, nickel, tin, and bauxite. But still relatively poor, because of its large population. 

Over fifty-five percent of the labor force is engaged in agriculture. Rice is a staple food, but Indonesia also exports a significant amount of rubber, tea, coffee, and spices. 

The export-import or international trading industry is heavily involved in mineral processing and agricultural products.

So let’s move on to look at some economic statics of Indonesia.

1.2. An Economic Statistics of Indonesia

Vendor Street, Indonesia
Vendor Street, Indonesia

Indonesia is ranked thirty-first in the export sector in the world economy. The Republic of Indonesia shipped one hundred sixty-three point three billion US dollars worth of goods around the globe in two thousand twenty. That dollar amount reflects a thirteen percent gain since two thousand sixteen but a minus two point six percent decrease from two thousand nineteen to two thousand twenty. 

Indonesia imported an estimated one hundred forty-one point six billion US dollars worth of goods from around the globe in two thousand twenty, up by four-point four percent since two thousand sixteen but down by minus seventeen points three from two thousand nineteen to two thousand twenty.

The main export markets are Japan, the United States, China, and Singapore. Indonesia imports a lot of goods from Japan, China, and Singapore.

Export products include oil and gas, electrical equipment, plywood, textiles, and rubber.

Indonesia’s main imports include machinery and equipment, chemicals, fuels, and food products

Indonesia is one of the attractive markets of the ASEAN Economic Community. It is thanks to the advantages of a large and rapidly growing population, an increasing degree of urbanization, and a large demand for consumer goods.

The consumption habits of the people in Indonesia have many things in common with other Asian people. Currently, from personal income about fifty percent is spent on eating and drinking; When shopping, people often care about prices consistent with quality; they prefer low-weight products; fresh food, clean products.

Now I would like to discuss the possibility of starting an import-export business in Indonesia.

1.3. Is It Possible To Start An Import-Export Business In Indonesia?

Jakarta city night view, Indonesia
Jakarta city night view, Indonesia

Is it the right time to start an export-import business in Indonesia?

The answer is yes. Most importantly, you have to prepare the knowledge and know-how to be ready to move into the new markets. Of course; you should register a trading company in Indonesia, and apply for the required licenses. 

I advise planning your activity properly, creating a business plan for your business would be beneficial. The more you plan your venture, the easier it will be to start your import-export business. 

If you want to learn how you can create an import-export business plan. I have a video for you. And you can find the link here, so you can watch it.

So let’s look at some questions that you have to answer before you are starting to import into Indonesia.

1.4. Import Into The Indonesia

Importing Into The Indonesian Market
Importing Into The Indonesian Market

Indonesia import is growing rapidly, but before you start importing, have some questions you should answer first before you start importing into Indonesia. There are six questions to answer.

  1. Are the products you are importing and exporting suitable for the Indonesian market?
  2. Which marketing channels do you aim to use if import and resell in the Indonesian market?
  3. Do you have a strategy to build and develop an import-export brand on the Indonesian market?
  4. Do you have a suitably priced product for the Indonesian market?
  5. What is the level of profit you want on a product?
  6. When are you ready to start importing and reselling in Indonesia?

So now we have come to the factors that will affect your success in exporting to Indonesia.

1.5. Export To Indonesia

Aerial Photography Of Aeon Mall, Indonesia
Aerial Photography Of Aeon Mall, Indonesia

If you are not Indonesian and you want to export to Indonesia, you should pay attention to these factors.

  • Indonesia consists of many muslims, so if exporting to this market should pay attention to living practices and specific regulations. (especially Halal regulations for food products).
  • The distribution system in Indonesia is relatively good, you can coordinate with local business people in Indonesia to distribute goods. You can set up a representative office and distribution network of goods.
  • You should notice that the income of Indonesians is relatively low, the price and promotion factors are important and should be suitable for local people.
  • Indonesian businessmen are calm but not moderate, they value their position, give business cards when meeting.
  • To make a good impression on the partners, you should express their interest. Gifts and commissions are quite popular, sometimes the partners will specify how much the commission is, you should not be surprised in this situation.
  • Do not go to Indonesia during festivals because it usually takes a long time to wait for meeting partners.

So that completes the basics information about Indonesia’s international trade environment. Now, as you are familiar generally with the Indonesian market and the specifics. Let’s move on to look at what are the top export-import products in Indonesia.

Okay, let’s start with the top export products in Indonesia

2. Top Export Products In Indonesia

Mineral Fuels Including Oil: US$42 billion (23.3% of total exports)

Mineral Fuels, Oil, And Gas
Mineral Fuels, Oil, And Gas

Indonesia ranked twentieth among oil-producing countries in the world, accounting for about one percent per day of the world for liquid fuels.

The oldest and largest oilfields in Indonesia are Duri, Minas, in the South Sumatra Basin, and oil mine in Cepu, with an output of about one hundred sixty-five thousand barrels per day.

Animal And Vegetable Fats, Oils, Waxes: $20.3 billion (11.3% of total exports)

Palm Oil Plantation – Majasari, Indonesia
Palm Oil Plantation – Majasari, Indonesia

Indonesia and Malaysia produce eighty-five percent of the world’s crude palm oil. The two countries are gaining a lot of profits due to the increasing demand for crude palm oil in the world while the supply is limited.

Although Indonesia is the largest palm oil exporter in the world, exports to the European Union are on a declining trend. The EU wants to limit the use of palm oil in biofuel production to achieve its renewable energy targets.

The European Union aims to stop using palm oil by two thousand thirty even, the palm oil production process has been confirmed to be harmless to humans and the environment.

Leather And Textile: $8.9 billion (4.9% of total exports)

Cempaka Putih, Indonesia
Cempaka Putih, Indonesia

With the opening and modernization being promoted strongly, the Indonesian sewing industry offers a lot of cooperation potential for foreign partners.

The related trade fairs in Indonesia attracted more than five hundred ninety companies from twenty-seven countries. Including the world’s leading countries in the manufacturing of machinery as well as textile products such as China, Germany, Japan, Korea, India, and Switzerland.

Vehicles Components: $7.6 billion (4.2% of total exports)

South Jakarta, Indonesia
South Jakarta, Indonesia

Currently, Indonesia and Thailand are the two countries with the largest automobile and motorbike industry in the ASEAN region.

In particular, Indonesia is the largest manufacturer of automotive components and spare parts and has the potential to become a country specializing in manufacturing components for sports cars, terrain vehicles, light trucks, and sedans.

Rubber, Rubber Articles: $6.4 billion (3.5% of total exports)

Rubber Gloves
Rubber Gloves

With a land area of ​​about three point five million hectares nationwide, rubber plantations provide eighty-five percent of the raw material for the rubber industry.

Personal Electronics, Including Computers: $5.9 billion (3.3% of total exports)

Personal Electronics
Personal Electronics

As one of the largest countries in Asia, with a population of over two hundred fifty million people, Indonesia is the fourth most populous country in the world.

However, the manufacturing of electronic devices, especially smartphones, has not been developed much. According to Nielsen market research years, ago, only about twenty-three percent of people here own smartphones. But this number is growing exponentially.

Foxconn’s new plant in Indonesia will produce handsets, especially smartphones, to meet the nation’s own needs.

Foxconn often works with electronics manufacturers to produce handheld devices, tablets, and TVs.

Gems, Precious Metals: $5.6 billion (3.1% of total exports)

Jewelry, Gems
Jewelry, Gems

Indonesia is one of the few countries with rich minerals, especially gemstones. This is a new potential market for operators and jewelry businesses in this country. Indonesia is a competitor of India with gems and jews, both countries have their national deposits of precious stones.

Not only domestic customers but also foreign tourists love Indonesian gemstones. This is a favorable opportunity for jewelers to expand the market and promote the brand.

Ores, Slag, Ash: $5.3 billion (2.9% of total exports)

Coal Mine
Coal Mine

Indonesia has exported thirty-three million tons of nickel ore and forty million tons of bauxite and is currently the largest tin exporter in the world.

As for coal, the Indonesian government will issue specific export control regulations, while fourteen minerals must comply with the new regulations. These are copper, gold, silver, tin, lead, chromium and transparent, bauxite, iron and sand ores, iron, nickel, molybdenum, manganese, and antimony.

Indonesian coal is mainly exported to South Korea, the Philippines, Japan, China, Malaysia, India, Pakistan, Thailand, and Italy.

Footwear: $5.1 billion (2.8% of total exports)

Wooden Shoe Molds
Wooden Shoe Molds

Indonesia is ranked fourth in shoe production after China, India, and Vietnam. The Indonesian leather hat industry is facing a lot of difficulties because it imports over sixty percent of its raw materials to produce.

In the future, Indonesia will increase the import of leather materials from MalaysiaMyanmarthe Middle East, and African countries.

The footwear industry is being prioritized due to its development as an export-oriented, labor-intensive industry.

 Along with the textile and apparel industry, the footwear industry is also about to enter the era of Industry 4.0, to be able to compete globally and increase exports.

Here are just a few examples of Indonesia’s export products. You can go deeper into each of them and choose the best product for you.

So that’s it on the top export products in Indonesia. Now moving on to Indonesia’s top import products.

3. Top Import Products In Indonesia

Mineral Fuels Including Oil: US$31.6 billion (16.7% of total imports)

Oil And Gas Industry
Oil And Gas Industry

Indonesia becomes a net importer of oil due to declining production while increasing demand.

In two thousand nineteen, Indonesia’s oil demand reached six-point nineteen million barrels a day, while supply will be only six-point zero four million barrels a day.

Personal Electronics, And Computers: $27.2 billion (14.4% of total imports)

Computers
Computers

Export of computers, electronic products, and components to the Indonesian market is declining due to new regulations of the Government of Indonesia, from two thousand eighteen, products imported into this market must reach a seventy percent billion localization rate.

Fifty to sixty percent of Samsung products are exported to Indonesia in the form of components and accessories.

Electrical Machinery, And Equipment: $21.4 billion (11.4%of total imports)

Heavy Duty Drilling Machine In Workshop
Heavy Duty Drilling Machine In Workshop

The Government decided to apply the policy of restricting the import of used machinery in two thousand nine to facilitate the development of the domestic machinery manufacturing industry. The Ministry of Industry and Trade Ministry of Indonesia are currently discussing how long it will take to continue importing used machines.

Used machinery is imported mainly from China, Australia, Malaysia, the USA, Japan, and South Korea.

Iron, Steel: $10.2 billion (5.4% of total imports)

Cutting Metal With Sparks
Cutting Metal With Sparks

Indonesia has an SNI quality management system (the Indonesian National Standard) for imported steel products. The country has issued Decision eighty-two to restrict iron and steel imports into Indonesia, applied from early two thousand seventeen for zinc corrugated iron and from February twenty-eight, two thousand seventeen, to all other steel products.

The purpose of this move is to force businesses to cut part of imports and switch to buying from domestic factories.

The new rule will only allow the import of boron-containing alloy steels on the registered list. In addition, to be allowed to import this item, importers are required to submit additional documents attached to the sale contract to the competent authority.

Steel and metal exporters that want to export to Indonesia must also do a pre-quality checking. This checking is carried out by supervisors designated by Indonesian officials and these organizations will send their supervisors to the factory while packing goods for export to Indonesia.

Plastics, Plastic Waste, And Plastic Articles: $9.2 billion (4.9% of total imports)

Assorted Plastic Bottles
Assorted Plastic Bottles

To limit the import of plastic waste, its customs officers will step up inspection of imported goods. Indonesia will not stop importing plastic scrap completely, as plastic is still used in the recycling industry.

Vehicles: $8.1 billion (4.3% of total imports)

Vehicle In Road At Golden Hour
Vehicle In Road At Golden Hour

Indonesia will occupy the number one position in Southeast Asia’s automobile production. Thus, Thai component manufacturers will turn to serve Indonesia and the Thai automobile industry will also rely on Indonesian demand.

Indonesia imposes two basic tariffs on cars: import tariffs, and luxury goods tax.

The import tax is forty percent for complete units. If assembled as a complete knock-down (CKD), which is a kit of the completely non-assembled parts of a product, the import tax is ten percent and mount as IKD (complete set of components), the tax is seven-point five to eight percent.

Pharmaceuticals: $6.9 billion (3.7% of total imports)

Alternative Medicines
Alternative Medicines

There are currently one hundred seventy pharmaceutical companies operating in Indonesia and most of them produce and distribute drugs. The organic chemical, pharmaceutical and traditional medicine industries in Indonesia have continuously grown to serve the domestic demand.

Cereals: $3.8 billion (2% of total imports)

Wheat Field During Golden Hour
Wheat Field During Golden Hour

Indonesia emerged as the world’s second-largest wheat importer and increased grain imports after it imposed stricter regulations on corn imports.

Wheat for food is imported mainly from Australia, Canada, and the United States.

Agricultural Waste, For Animal Feed: $3.1 billion (1.6% of total imports)

Rooster In Brown Wooden Coop
Rooster In Brown Wooden Coop

Import of wheat-waste as Indonesia’s animal feed from Ukraine and Eastern European countries, as well as Argentina and maize mainly from Brazil and Argentina.

Well, that concludes my post. We have learned how to start an import-export business in Indonesia.

4. Conclusion

Although Indonesia has import-export products for every taste and it is a country with great potentials for import and export, you should also be aware of risks, or unfavorable facilities, weak transportation.

Indonesians are generally quite friendly and honest in communication. Create good relationships with local people will help your import and export work smoothly. If you are looking to export to Indonesia, then you should have a local partner.

Congratulations! You have officially learned how to start an import-export business in Indonesia. Now start booming and make the world your business!

If you have serious plans to start your own import-export business, then my YouTube channel guides will help you during your journey. Please don’t forget to subscribe to my channel and share it with your friends.

Now I would like to hear your thoughts:

What’s your first takeaway lesson from this article?

Or maybe you have a question about the topic.

Either way, leave a comment below right now.

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Murat OZTURKER
Hi everyone! Murat here. I’m an entrepreneur who learned about global business because I had to. Like so many other people who have faced hardships in their jobs, I was forced to adapt—and quickly—to support myself and my family. Today, I’m well into my career.
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2 Comments

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