A recent blog posted on the Links International website looked at the most profitable business streams in Indonesia in 2023, which gives some interesting insights if you’re thinking about investing in Indonesia or if your business is looking to expand.
We’ve shared a lot of reports in the last few months around the strength of Indonesia’s economy and the country’s strong GDP growth. Towards the end of last year a recent press release from Indonesia’s Ministry of Finance said that Fitch Ratings had announced that Indonesia’s BBB credit rating and outlook were stable. This affirmation is a form of acknowledgment of macroeconomic stability and Indonesia’s economic prospects going forward, amidst a global situation that is experiencing increased risk and uncertainty.
Fitch assesses that the prospects for Indonesia’s economic growth in the medium term are relatively good, while the government’s debt-to-GDP ratio is considered low.
More recently Kompas reported on the most up-to-date economic growth projections from the IMF for Indonesia, which have increased from a previous estimate of 4.8-percent in the January 2023 edition of the World Economic Outlook (WEO) report to 5.0-percent.
According to a recent report on FXStreet by Enrico Tanuwidjaja, Economist at UOB Group, Indonesia’s economic outlook for 2023 is positive, with growth expected in all regions of the country.
Whichever way you look at it, Indonesia is certainly emerging as one of the best places to invest and these are the top five profitable industries in Indonesia according to Links International:
E-Commerce
A pre-pandemic trend which has boomed even further post-pandemic is online shopping in Indonesia. With Tokopedia and Shopee taking the lead as the top sites as of Q2 2022, a survey by Deloitte explains that 31-poercent of Indonesians prefer shopping online due to the convenience and practicality it provides. The cherry on top? GlobalData explains that E-Commerce payments in Indonesia are expected to increase 22-percent per year between 2021 and 2025 and will reach an eye-watering IDR 753.8-trillion by 2025.
A report by Statista released in November 2022 reveals that ‘Clothing’ related purchases took the top category for online purchases in Indonesia in 2022 with 71-percent, followed by:
- Shoes (52-percent)
- Bags & Accessories (48-percent)
- Accessories, Cosmetics and Body Care (40-percent)
- Consumer Electronics and Household Appliances (30-percent)
- Food & Beverages, excluding restaurant delivery (28-percent)
- Drugstore and Health Products (26-percent)
- Bags and Luggage (23-percent)
Travel and Tourism
In 2022, the World Travel and Tourism Council’s latest Economic Impact (EIR) explains that Indonesia’s tourism and travel sector, which contributes almost 5-percent to the country’s GDP, is expected to create over 5-million jobs over the next 10-years and the industry is expected to grow at an average annual rate of 10-percent over the same time frame.
As the jewel in Indonesia’s tourist destination crown, Bali has topped TripAdvisor’s Travelers’ Choice for the top 25 most popular destinations two years in a row.
Data from Trading Economics suggests air arrivals to Bali have increased significantly and in Q4/ 2022 foreign tourist arrivals across Indonesia jumped 364.31-percent Year-on-Year.
Infrastructure and Construction
A report published by Pricewaterhouse Coopers (PwC) explains that there is a significant need for infrastructure investments in Indonesia, particularly in roads, tolls, ports, airports, railways, water, and power plants.
The Indonesian government will be investing around USD 430-billion into the country’s infrastructure between 2020 to 2024.
Mining
Indonesia is a major player in the world’s mining ecosystem industry, mainly in coal, gold, tin, copper, and nickel. Links International suggest that Indonesia’s mining sector is looking at being one of the country’s leading sectors, which is supported by recent government initiatives including banning the export of raw materials and increasing the value of mining products.
The mid-term effects of this will also create more job opportunities and increase profit margins for mining commodities.
Aviation
Surprisingly, aviation makes this list of the top five profitable industries in Indonesia according to Links International. As of 2022, Statista Research reported that Indonesia was the second fastest growing aviation market in the world based on aircraft purchases and trade value.
The International Air Transport Association (IATA) reported that Indonesia was set to be the world’s sixth largest market for air transport by 2034.
Opportunities in the aviation sector include investing in infrastructure for the development of the industry as well as human resources to meet the demand.
Indonesian airports currently see an increasing growth in air traffic and the developments of new airports closest to tourists destinations and refurbishment of existing airports is crucial. Other areas of growth within the industry include improvements to ground infrastructure, runways, and air traffic systems.
If you’re ready to invest in Indonesia, Seven Stones Indonesia is here to help you. Our team of experienced professionals can provide you with the guidance and support you need to establish and grow your business in Indonesia. From market research to legal compliance, we’ll assist you every step of the way. With our deep understanding of Indonesia’s business landscape, we can help you navigate the challenges and seize the opportunities that come with starting a business in this vibrant and growing economy.
Contact us today at hello@sevenstonesindonesia.com to start your business in Indonesia and unlock your potential for success!
