Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
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.
- Balai Sidang Jakarta Convention Center: http://www.jcc.co.id
- Jakarta International Expo: https://www.jiexpo.com
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: https://www.amcham.or.id/en/directorys
Principal Business Associations
Indonesian Chamber of Commerce & Industry (KADIN): www.kadin-indonesia.or.id
American Chamber of Commerce in Indonesia: www.amcham.or.id
Limitations on Selling U.S. Products and Services
All foreign-owned companies that wish to operate in Indonesia are required to submit an Investment Plan and obtain approval from the Investment Coordinating Board (BKPM. Indonesia’s Negative Investment List (DNI) is based on President Regulation Np. 39/2014. The Negative Investment List outlines three major categories: Business Fields Open to Foreign Investment, Business Fields Closed to Foreign Investment, and Business Fields that are Open to Foreign Investment subject to certain conditions.
To make investment in Indonesia more attractive to foreign investors Indonesia is moving from a Negative Investment List to a Positive Investment List. Indonesia will continue to close some sectors off entirely from foreign investment and to keep others open subject to conditions. Unless otherwise stipulated under the Positive Investment List or other regulations, 100 percent foreign ownership is allowed.