Indonesia - Country Commercial Guide
Market Entry Strategy

Generalizes on the best strategy to enter the market, e.g., visiting the country; importance of relationships to finding a good partner; use of agents.

Last published date: 2020-10-11

As the largest economy in Southeast Asia and the fourth-most populous country in the world, Indonesia’s market offers opportunities in nearly every sector. With rising disposable income levels, Indonesia’s growing middle class has a growing interest in products and services imported from abroad.

In order for U.S. companies to successfully enter the Indonesian market, it is often advisable to find and appoint local partners to represent their products. It is recommended that U.S. companies visit and have face to face meetings with prospective partners and conduct due diligence. Appointment of a representative requires care, since it can be difficult to terminate an unsatisfactory relationship.

Developing an understanding of Indonesian culture and local consumer preferences is a key success factor. Patience, persistence and presence are three key factors for success in Indonesia.

Important factors affecting purchasing decisions in Indonesia are pricing, financing, technical skills, and after-sales service. Firms should be prepared to invest in training for their local staff, from entry-level personnel to experienced managers.

Indonesian non-financial firms often depend on trade financing and obtain nearly 50% of their financing from abroad via loans, bonds, and other forms of credit. The Export–Import Bank of the United States, the official export credit agency of the U.S. federal government, often provides working capital and loan guarantees to U.S. companies exporting to Indonesia. The United States International Development Finance Corporation is the U.S. federal government’s development finance institution and provides secure financing opportunities to U.S. firms planning to invest in the Indonesian market.

Although it is possible for U.S. companies to sell directly to the government and state-owned companies, local agents or distributors are often critical (and at times, required by law) for successful project development and delivery of products or services. Many government tenders are awarded based on the proven track record and relationship of an agent or distributor with the government agency.