Expanding business to Indonesia presents exciting growth opportunities, but it also comes with notable challenges due to the country’s complex market structure. With over 17,000 islands and more than 300 native languages spoken, navigating the local business landscape can be daunting without the right support. Indonesia’s Omnibus Law on Job Creation, enacted in October 2020 and revised in 2023, is a step toward reducing bureaucracy and improving the ease of doing business. While these reforms are ongoing, foreign businesses may still encounter regulatory and operational hurdles.

Although American products are generally well-regarded in Indonesia for their quality, safety, and innovation, they are often positioned as premium offerings, competing with European and Japanese brands. This premium status can be advantageous in specific sectors such as healthcare, education, and high-end electronics, but price sensitivity is a significant factor for many Indonesian consumers. 

The most effective way to enter the Indonesian market is by working with a local partner. A reputable partner not only understands the regulatory requirements for specific sectors and products but often also has the infrastructure to handle distribution. For food and beverage products for example, approval from Indonesia’s National Agency of Drug and Food Control (Badan POM or BPOM) is mandatory. Only the local companies can manage this application process, after which they can import, market, and distribute the product on your behalf. This streamlined process allows foreign businesses to operate more efficiently and ensures compliance with local laws. 

It is also important for suppliers to determine whether mandatory certification applies to their products and, if so, whether halal certification is feasible and cost-effective. In October 2024, Indonesia implemented Government Regulation No. 42/2024, extending the certification deadline for MSMEs and imported products from October 17, 2024, to October 17, 2026, while retaining the 2024 deadline for medium and large businesses. The regulation granted halal certificates permanent validity (unless product composition or processes change) and streamlined procedures by expanding the role of regional and foreign halal bodies under the independent BPJPH (Halal Product Assurance Organizing Agency).

Localization is also critical. To succeed in this diverse market, U.S. companies should pair high product standards with localized customer service, robust after-sales support, and accessible spare parts. Furthermore, adapting to local preferences—such as using Bahasa Indonesia in marketing, leveraging local influencers, and offering mobile-first platforms—is essential to resonate with Indonesian consumers and establish a competitive edge.

Trade Promotion and Advertising

Indonesia hosts a wide array of trade exhibitions throughout the year across key sectors including food and beverage, education, manufacturing, automotive, and consumer goods. Major venues include Jakarta International Expo (JIExpo) Kemayoran, Indonesia Convention Exhibition (ICE) BSD, and Jakarta Convention Center (JCC). Participation in these events offers U.S. firms valuable brand exposure and opportunities for buyer engagement.

In terms of advertising, digital channels dominate. Indonesia’s digital ad spending reached USD $2.56 billion in 2023, with projections indicating that digital advertising will account for over 53% of all advertising spend by 2027. Google, YouTube, Instagram, and TikTok are among the most widely used platforms. Digital banner ads, short-form video ads, influencer partnerships, and localized search engine marketing are increasingly important for reaching younger and urban demographics.

That said, traditional advertising still plays a complementary role, particularly in Jakarta and other major cities. Billboards, public transport ads, and out-of-home displays remain effective for high-traffic areas, where extended commute times increase exposure.

Pricing

Value for money is paramount for most Indonesian consumers. Even in high-end markets, buyers often compare online prices or look for bundled promotions and flexible payment options such as installment plans and paylater schemes. E-commerce platforms and price comparison websites make it easy for consumers to evaluate pricing before committing to purchases.

A 10% Value-Added Tax (VAT) is levied on most goods and services. Exemptions apply to certain categories, such as unprocessed natural resources (e.g., coal, oil, gas), financial services, and hospitality-related services. Additionally, Luxury Goods Sales Tax (LST) ranging from 10% to 125% applies to high-end vehicles, real estate, alcohol, and other select products.

Tourist VAT refunds are available for certain luxury goods purchased in Indonesia and carried out of the country through international airports, provided the tourist has stayed less than two months.

Sales Service/Customer Support

After-sales service is a key differentiator in Indonesia. Brands that provide responsive customer support and local service centers often outperform competitors, especially in electronics, automotive, and industrial goods. Consumers value prompt warranty support and clearly communicated service policies.

Customer relationship management (CRM) systems are increasingly used by large firms to provide omnichannel support. Tools such as WhatsApp, Telegram, and Instagram Direct have become default platforms for customer queries, complaints, and order updates. As mobile-first communication becomes the norm, 24/7 chatbots and AI-based customer service are gaining popularity across industries.

Outsourcing customer service is viable if the local partner is well-trained and able to meet brand standards. U.S. companies should consider integrating quality control, regular training, and localized customer experience design when selecting local support partners.

Local Professional Services

A robust ecosystem of local and international professional service providers—including legal firms, consultants, accounting firms, and HR specialists—supports the needs of foreign investors in Indonesia. These service providers play a critical role in helping companies navigate regulatory procedures, establish local entities, and comply with evolving tax, labor, and licensing laws.

A directory of U.S.-affiliated and other recommended professional services companies in Indonesia is available through the American Chamber of Commerce in Indonesia (AmCham Indonesia) at: https://www.amcham.or.id/en/directorys

Principal Business Associations

• Indonesian Chamber of Commerce & Industry (KADIN) – Indonesia’s apex business chamber, which represents Indonesian enterprises across all sectors and acts as the private sector’s main liaison with the government. Indonesia’s apex business chamber, which represents Indonesian enterprises across all sectors and acts as the private sector’s main liaison with the government.
• American Chamber of Commerce in Indonesia (AmCham Indonesia) – Represents the U.S. business community and offers advocacy, market insights, networking events, and regulatory engagement.
• U.S.-ASEAN Business Council (USABC)– Supports U.S. firms operating across Southeast Asia and engages with ASEAN governments on behalf of American businesses.
   

Investment Licensing and Ownership Guidelines

All foreign-owned companies intending to operate in Indonesia are required to submit an Investment Plan and receive approval from the Indonesia Investment Coordinating Board (BKPM). BKPM serves as a central coordinating agency and manages the country’s Online Single Submission (OSS) platform that facilitates streamlined business licensing.

Indonesia has shifted from a Negative Investment List (Daftar Negatif Investasi or DNI) to a Positive Investment List, which was formalized through Presidential Regulation No. 10/2021 and revised through Presidential Regulation No. 49/2021.This reform has significantly liberalized foreign ownership in over 200 business sectors, promoting investment in priority industries such as digital services, manufacturing, logistics, healthcare, and infrastructure.

Unless otherwise stipulated in the Positive Investment List or through specific regulatory restrictions, 100% foreign ownership is permitted. However, some sectors remain partially restricted or require joint ventures with local firms, particularly in strategic areas such as media, defense, and select natural resource industries.

For further guidance, foreign investors are advised to consult licensed investment consultants or legal firms familiar with the OSS system, BKPM procedures, and sector-specific limitations.