Political stability and company incorporation in Indonesia (2023)

What is in this article


  • Why is Indonesia a preferred location for foreign companies?
  • The risks of admission to Indonesia
  • National Long-Term Development Plan (RPJPN 2005 to 2025)
  • Master Plan to Accelerate and Expand the Economic Development of Indonesia (MP3EI)
  • frequent questions

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Today, Indonesia is a prosperous democracy that is strengthening its political institutions, deepening the liberation of its people, and expanding its economy.business opportunities.

The more the electorate becomes politicized, the more demands and expectations are placed on Indonesian politicians. Everything is on the shoulders of the current and future president to increase GDP, attract foreign companies and raise the standard of living in the lives of residents.

Political stability and company incorporation in Indonesia (1)

BESIDE:Since the ouster of General Suharto after 30 years of authoritarian rule and the collapse of the rupiah, Indonesia has undergone a major political transformation unprecedented in other Asian countries.

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The global and political climate, which highlights several essential characteristics to consider in emerging countries, defines Indonesia's advantages as a business and investment destination.

The country's natural resources, renewable energy potential and food security provide a long-term buffer against rising oil and food costs that are fueling social unrest in other markets.

By 2050, the population is projected to reach a whopping 288 million people, serving as a highly-skilled manufacturing capacity and consumer market as the country approaches its projected position as the world's sixth-largest economy. This makes Indonesia an attractive place forcompany establishment.

Why is Indonesia a preferred location for foreign companies?

Indonesia's economy is growing rapidly, which is one of the main reasons why this country is reclaiming its rightful place as a major investment destination for foreigners. Although the big Asian players like Singapore, China, Malaysia and India are seen as ideal investment destinations, Indonesia is emerging as a country that is part of this group.

The country is remarkable in many ways, including:

  • The largest archipelago in the world.

  • The largest Muslim-majority country in the world

  • The third largest democracy in the world.

  • A leading exporter of high-value commodities such as palm oil and coal.

Indonesia has positioned itself as a low- to middle-income transition economy, as well as a primary producer to a value-added exporter and knowledge-based economy.

Investment prospects are maturing across all industries and sectors, which means that foreign investors have opportunities to gain exposure to the world's fastest growing economies.

Looking ahead, Indonesia is already in a promising position, as consumer spending is buoyed by the confluence of its young, hard-working population with relatively stable inflation and sustained economic growth.

The risks of admission to Indonesia

To start a businessin a new, strange and unknown country is often associated with danger. This rule applies equally to all emerging markets, including Indonesia.

Investing in Indonesia can be extremely profitable, but it also carries more risk than investing in a developed country. Why? Indonesia has a multitude of characteristics that can hinder any investment or business environment that invades the country.

Solid planning is essential when investing in any country. Below is a list of potential threats or difficulties that could disrupt the investment climate in Indonesia.

1. Corruption and Bribery

Indonesia is currently ranked 88th in Transparency International's annual Corruption Perceptions Index. Although its performance has steadily improved since former President Susilo Bambang Yudhoyono took office in 2004, there is still a long way to go.

Corruption remains a problem in Indonesia and a major barrier to trade and investment. Bribery is illegal in Indonesia, and the government has publicly committed to combating all forms of corruption.

To reduce the risk of illegal payments, the Indonesian government has simplified business registration procedures and switched to online systems. Corruption remains a widespread phenomenon in the business world.

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2. Demonstrations

This happens practically every day in Indonesia, usually on a small scale but occasionally on a large scale. Protests take place over a variety of issues, including political and economic challenges. As already mentioned, low wages and poverty pose a significant threat to the local population.

These protests are directed directly at the government. However, any business can be affected by these types of demonstrations.

3. Infrastructure

Inadequate infrastructure, both qualitative and quantitative, has prevented economic and social progress from reaching its full potential. This has not escaped the attention of the Indonesian government.recognizesesof theeducatefor significant expenditures on the country's infrastructure.

4. Natural disasters

Volcanic eruptions, earthquakes, tsunamis, and floods are common phenomena in Indonesia that could disrupt business operations.

National Long-Term Development Plan (RPJPN 2005 to 2025)

The government's long-term development plan serves as a benchmark for the entire Indonesian society. This plan involves everyone, including the government, the people and their companies, to achieve the national goals designed and formulated by the democratically elected government of Indonesia. This development plan, which runs until 2025, is divided into four medium-term plans and is accompanied by the MP3EI.

Master Plan to Accelerate and Expand the Economic Development of Indonesia (MP3EI)

This master plan, introduced in 2011, gave the government an estimated target for an annual economic growth rate of seven to eight percent after 2013 and aimed to make Indonesia one of the world's largest economies by 2025.

The master plan foresees investments of US$470 billion to be provided by the private sector through public-private partnerships.

With all of the above, it is evident that the Indonesian government is doing everything it can to make Indonesia a major player in Asia. With government support and increasing rates from potential employers, it's clear that this archipelagic nation will succeed in no time!

Ready forTake the controla company in Indonesia or need awork visa? Contact us for a free consultation and find out how we can be a part of your business journey.

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frequent questions

How corrupt is Indonesia?Paul's bass drum page2021-12-23T11:54:46+08:00

How corrupt is Indonesia?

The Corruption Perceptions Index 2020 of Transparency International ranks the country1021st place out of 180 countries after 96 the previous year. There are two key areas in the public sector where corruption can be found in Indonesia.

How does government stability affect business?Paul's bass drum page2021-12-23T11:54:24+08:00

How does government stability affect business?

The stability of a political system can affect the attractiveness of a particular local market.governmentsee shopOrganosatonementas a crucial vehicle for social reform. Governments make laws that affect the Company's relationship with its customers, suppliers and other companies.

Why is it difficult to do business in Indonesia?Paul's bass drum page2021-12-23T11:54:04+08:00

Why is it difficult to do business in Indonesia?

What are the biggest challenges for companies in Indonesia? Some of the biggest challenges in doing business include a complex marketplace, an entrepreneurial culture, persistent corruption, bureaucratic inefficiency, a sophisticated tax system, and a population that only uses cell phones.

How stable is the political environment in Indonesia?Paul's bass drum page2021-12-23T11:53:18+08:00

How stable is the political environment in Indonesia?

ThatIndonesian Political Stability IndexI sat down-2.5 weak; 2.5 strong.

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More business information

  • Government agencies in Indonesia

  • How to register a company in Indonesia in 3 easy steps

  • How to do business successfully in Indonesia

  • Commissioners and directors in an Indonesian company

  • Company registration process in Indonesia

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Political stability and company incorporation in Indonesia (8)

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