Indonesia - Country Commercial Guide
Market Opportunities
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There are multiple market opportunities in the world’s fourth-most populated country, including expansion in retail, health, education, telecom, and financial services sectors. The Indonesian consumer ranks as one of the most confident in the world, and it climbed to 125.2 in August 2023 from the previous month 123.5.

Indonesia’s aviation market is the second-fastest growing in the world and favors U.S. products. Aircraft replacement parts and services are a significant market. There is also demand for air traffic control and airport logistics services, including ground support equipment. With high growth, the Indonesian aviation market require infrastructure, training, and components to keep their business running. With a projected CAGR of 6.5% from 2022 to 2028, Indonesia has a highly favorable in the MRO sector. This growth is driven by increasing demand and a wealth of opportunities for industry players. With a flourishing aircraft fleet, a thriving tourism industry, and a government dedicated to advancing the aviation sector, Indonesia holds a significant potential for MRO growth.

A competitive and expanding banking sector offers significant opportunities for IT and financial technology from equipment, software, and technology providers. There are opportunities for telecommunications infrastructure, such as satellites and ground stations, handheld devices, also integration devices or enablers. Telecommunications equipment and services and satellites remain excellent areas for U.S. products and services, which have a comparative advantage technologically.

Indonesia’s under-developed public infrastructure is a priority for the government and presents opportunities in aviation, rail, ports, and land transport; as well as in municipal infrastructure projects such as water supply, wastewater systems and waste management facility. From 2020 – 2024, Indonesia plans to develop transportation infrastructure including toll roads (2,724 km/ 1,693 mi), new roads (3,224 km/ 2,003 mi), and bridges (38 km/ 24 mi). Projects to build a mass transportation system, totaling $8 billion USD, are planned for the six metropolitan areas of Jakarta, Surabaya, Bandung, Semarang, Medan and Makassar with the goal of reducing economic losses due to traffic jams.

Government of Indonesia truly understand the importance of private sector participation in infrastructure provision, thus offering the Public-Private Partnership (PPP) as an alternative financing scheme in developing infrastructure projects. This scheme is provided through the Presidential Regulation Number 38/2015 alongside its derivative regulations. Based on the regulation, there are two PPP project proposal schemes, which are Solicited and Unsolicited. A solicited project is initiated by the Government, while the Unsolicited project is initiated by the private sector. According to Minister of National Development Planning Regulation Number 2/2020, for solicited proposals, the PPP Project Pipeline consists of four phases, namely Planning, Preparation, Transaction, and Implementation. The unsolicited PPP proposal is initiated by the private sector of the proponent. There are three stages of an unsolicited project: Preparation, Transaction, and Implementation and the preparation is being conducted by the private sector as the initiator.

The Government Guarantee, also known as an Infrastructure Guarantee, is granted to PPP projects by considering the principle of management and supervision of financial risk in the State Budget (APBN). The Government Guarantee for PPP projects is granted through PT. Penjaminan Infrastruktur Indonesia (PII) the Indonesia Infrastructure Guarantee Fund (IIGF), a business entity established by the Government to provide the Infrastructure Guarantee based on Government Regulation No. 35 of 2009 on Participation of State Capital in the Establishment of Companies (Persero) in the Infrastructure Guarantee Sector.

Important opportunities outside of Jakarta remain in energy and electricity transmission services.  Significant growth in power generation projects, conventional and renewable, and including IPPs, is expected to continue for the next decade. Emerging opportunities include sustainable biofuel processing, clean energy, energy efficiency and technology to improve local production capacity, dams, and waste-to-energy projects. For water and energy infrastructure, the government plans to build 18 multipurpose dams, approximating $6.2 billion USD, that would supply 2.4 GW of power and clean water for daily needs.

As the Indonesian military expands its budget, there are opportunities for U.S. defense manufacturers to sell a range of military aircraft, vehicles, communications systems, spare parts, and maintenance services. Monitoring and protection of sea-borne traffic for both national security and fisheries enforcement presents an area of opportunity for further exploration.

Education and professional training, medical equipment and high-quality U.S. agricultural commodities all retain their market edge even with premium prices. The U.S. has consistently been a desired destination for Indonesian students seeking to study overseas. Based on data collected from open doors 2022, there were approximately 8,003 Indonesian students studying in the United States in academic year 2021/2022.