American products are perceived by Indonesians as expensive but durable with limited after sales service and support. Therefore, in addition to product pricing, U.S. companies should compete on after sales service, which includes providing access to customer service and spare parts.
Trade Promotion and Advertising
There are dozens of industry-specific trade shows held in Indonesia throughout the year. Many are held at either the Jakarta International Expo or at the Jakarta Convention Center.
Traditional advertising on billboards, buses and taxis is common in Indonesia for companies hoping to catch the eye of customers stuck in traffic jams. Targeted advertising online via social media, text messages and mobile applications is increasing common. According to statista.com, total advertising market value in Indonesia was estimated to be U.S. $2.57 billion in 2018 and projected to increase to U.S. $5.3 billion by 2024. Television advertising made up the largest share of the Indonesian advertising market, followed by internet & digital advertising. Advertising spending in the Digital Advertising market is projected to reach US $1,482 million in 2020, with the largest segment being Search Advertising with a projected market volume of US $560 million.
Most Indonesian customers are price sensitive and are looking for good value for their money. Most customers check prices on the internet before making purchases at retail outlets.
A value-added tax on the sale price, service fee or import value is applicable on deliveries (sales) of goods and services within Indonesia at a rate of 10%. Certain goods are not subject to the VAT but other types of tax may apply instead. VAT free goods include goods that are taken directly from their source (oil, gas & coal), financial services, hotels, restaurants and entertainment. A Luxury Tax of between 10% and 125% is applied to certain goods, including high-value real estate, high-value automobiles, and alcohol.
A VAT rebate for luxury goods bought in Indonesia is available for tourists at international airports on the day of departure. Eligibility is restricted to tourists who have stayed in Indonesia for no longer than two months.
Sales Service/Customer Support
Major companies in Indonesia increasingly use customer relationship management tools to provide automated, consistent and customized customer experiences. Customers of luxury goods still expect personal interaction but digital chat tools are increasingly common for customer support. Due to the widespread use of mobile phones, customers expect to be contacted via text or in mobile apps. Customer service can sometimes be outsourced as long as proper training and quality control measures are in place.
Local Professional Services
A directory of professional services companies in Indonesia can be found on the AmCham Indonesia website.
Principal Business Associations
- Indonesian Chamber of Commerce & Industry (KADIN)
- American Chamber of Commerce in Indonesia
Limitations on Selling U.S. Products and Services
Indonesia issued Presidential Regulation 10 of 2021, which liberalizes many business sectors for foreign investment. The old regulation with the Negative Investment List has been canceled and replaced with a Positive Investment List. This regulation liberalizes over 245 business lines, including important sectors, such as construction services, distribution, energy, telecommunications, and transportation.
Foreign investors are also eligible for various fiscal and non-fiscal incentives depending on their investments. Almost all business lines are open to 100 percent foreign investment under PR10/2021 with the exception of six business sectors. These business fields include business related to controlled substances, gambling, fishing of certain endangered species, coral utilization, chemical weapons, and industrial process of chemical substances and ozone-depleting substances.