indonesia richard rothman senior commercial officer u.s. embassy - jakarta

IndonesiaIndonesia

Richard RothmanSenior Commercial Officer

U.S. Embassy - Jakarta

GeographyGeography•Archipelago of 17,000 Islands•Size of United States•Located in South East Asia

Indonesia

Facts and FiguresFacts and Figures

Population

Diversity

4th Largest Country in the World

230 Million

300 Dialects; 5 Main Religions

IndonesiaIndonesia

• 1995 Era of the Big Emerging Markets

• 1997 Asian Financial Crisis

• 1998 Era of Economic & Political Reforms

• 2004 Election of Susilo Bambang Yudhoyono

Indonesia Historical PerspectiveIndonesia Historical Perspective

Indonesia TodayIndonesia Today

Security Situation

Political Conditions

Economic Performance

Assessing the Commercial Environment:Assessing the Commercial Environment:

Security Conditions ImprovingSecurity Conditions Improving

• Security Situation:

October 12, 2002 Bali Bombings Kill 202

August 5, 2003 Marriott bombing

September 2004 Australian Embassy Bombing

October, 2005 Bali Bombings Kill 23

2006 No Bombing

Political ConditionsPolitical Conditions

1998 Financial Crisis prompts Suharto’s resignation; VP B.J. Habibie becomes President

1999 Democratic Elections Held Abdurrachman Wahid

becomes President

2001 Abdurrachman Wahid impeached;VP Megawati becomes President

2004 First Democraticly Elected Government; SBY becomes President

Key Economic IndicatorsKey Economic Indicators•GDP Growth: 2006 = 5.8%

2005 = 5.6% 2004 = 4.8%

Per capita GDP 2006 = $ 1,430Per capita GDP 2005 = $ 1,233

•Purchasing Power Parity = $3,800 (2006, estimated)

•Inflation Rate: 2007 = 6.10%, target 2006 = 6.60%

2005 = 17.11% (Fuel prices) 2004 = 6.40%

•Exchange Rate: 2007 = Rp9,300 to US$1.00, estimated2006 = Rp9,166 to US$1.002005 = Rp9,810 to US$1.002004 = Rp8,600 to US$1.00

Key Economic IndicatorsKey Economic Indicators

Purchasing Power Parity = $3800

GDP Growth

4.80%

5.60% 5.80%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Year

GDP Growth

GDP Growth 4.80% 5.60% 5.80%

2004 2005 2006

Per

cent

age


Per capita GDP

$1,233.0

$1,430.0

$1,100.0

$1,150.0

$1,200.0

$1,250.0

$1,300.0

$1,350.0

$1,400.0

$1,450.0

Year

Per capita GDP

Per capita GDP $1,233.0 $1,430.0

2005 2006

US

$


Consumer price inflation

17.11%

6.60%6.40% 6.10%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Year

Consumer price inflation

Consumer priceinflation

6.40% 17.11% 6.60% 6.10%

2004 2005 2006 2007

Per

cent

age


Exchange rate

Rp9,810

Rp9,166

Rp8,600

Rp9,300

Rp7,800

Rp8,000

Rp8,200

Rp8,400

Rp8,600

Rp8,800

Rp9,000

Rp9,200

Rp9,400

Rp9,600

Rp9,800

Rp10,000

Year

Exchange rate

Exchange rate Rp8,600 Rp9,810 Rp9,166 Rp9,300

2004 2005 2006 2007

Rup

iah

to U

S$1

.00

11.97%

16.41%

6.72%

10.13%

35.41%

4.97%4.70%5.97%

3.72%

U.S. - Indonesia TradeU.S. - Indonesia Trade

• In 2005, U.S. was the 4th Largest Source of Indonesian imports after Japan, Singapore and China

USA

Other countries combined

Japan

Singapore

China

Malaysia

ThailandSaudi Arabia South Korea

16%

45%

4%5%

8%

10%

12%


In 2006, Indonesian Imports from USA = $3.08 Billion

Machinery

Misc Grain

Cotton

AircraftElectrical

Soap/Wax Etc

Others

7%

6%5% 11%

23%

9%6%

33%


In 2006, Indonesian Exports to USA = $13.40 Billion

Other

Fish & Shellfish Natural rubber and similar gums

Apparel & Household Goods

Manufactured Goods Classified

Chiefly by Material

Sporting and camping apparel, footwear and gear

Furniture, household items,

baskets

Television receivers, vcr's & other video equip

2006 U.S. Exports to Indonesia $3.08 billionU.S. Imports from Indonesia $13.40 billionU.S. Deficit $10.32 billion

2005 U.S. Exports to Indonesia $3.05 billionU.S. Imports from Indonesia $12.02 billionU.S. Deficit $8.97 billion

2004 U.S. Exports to Indonesia $2.67 billion

U.S. Imports from Indonesia $10.81 billionU.S. Deficit $8.14 billion

U.S. Trade Balance with IndonesiaU.S. Trade Balance with Indonesia

U.S. Trade Balance with Indonesia

$2.67 $3.05 $3.08

$10.81 $12.02

$13.40

$8.14

$8.97

$10.32

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

Year

U.S Exports to Indonesia

U.S Imports from Indonesia

U.S. Deficit

U.S Exports toIndonesia

$2.67 $3.05 $3.08

U.S Imports fromIndonesia

$10.81 $12.02 $13.40

U.S. Deficit $8.14 $8.97 $10.32

2004 2005 2006

U.S. Trade Balance with IndonesiaU.S. Trade Balance with Indonesia

In B

illi

on

Indonesia Leads ASEAN Region Indonesia Leads ASEAN Region for Export Success in FY 2007for Export Success in FY 2007

71

2620 18

12 9

0

10

20

30

40

50

60

70

80

90

100

Total Export Success FY 2007

FY 2007 Export Success Report for ASEAN Countriesas of February 21, 2007

Indonesia 71

Vietnam 26

Malaysia 20

Singapore 18

Philippines 12

Thailand 9

1

Top Ten US Exporting States Top Ten US Exporting States to Indonesia - 2005to Indonesia - 2005

TN6% LA

6%

IL7%

WA10%

TX13%

CA17%Others

28%

GA3%

NY3%

NC3% VA

4%

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

18,000.00

1998 1999 2000 2001 2002 2003 2004 2005 2006

Million USD

Total Every Country

US

Foreign Direct Investment Foreign Direct Investment Approval in IndonesiaApproval in Indonesia

As

of J

anua

ry 2

007

Year

13

,63

5.0

0

56

5.8

0

10

,89

4.3

0

14

2.8

01

6,0

14

.90

23

6.3

01

5,2

01

.90

87

.70

9,9

55

.40

46

8.5

0

14

,27

8.1

02

11

.70

10

,41

5.6

01

33

.30

13

,57

9.2

0

91

.20

13

,88

9.4

01

33

.20

Top 10 Things to Know about Top 10 Things to Know about Doing Business in IndonesiaDoing Business in Indonesia

1 Need an Agent» Required by Law» Needs Government Permit

» Familiar with U.S. Business Practices

2 Most Business People Speak English

3 State Owned Enterprises = 40% Market Activities

4 Corruption

5 Problems With Contract Enforceability

6 IPR Violations (2005 Piracy $253 Million)

7 Deteriorating Infrastructure

8 Active Foreign Business Community

Continued...Continued...


9 U.S. Government Agencies Who Can Assist You:

–U.S. Embassy (Commercial Service, ECON)

–Trade Development Agency, EXIM bank, OPIC

10 Secretary Rice signed waiver for Indonesia – January 2006

FMS and Direct Sales of Defense and Security Equipment allowed

•Licensing requirements still apply, as always

Continued...Continued...


Market OpportunitiesMarket Opportunities

• Strong Demand• Imported Products $187.4 Million in 2006• U.S. Market share : 10-15%• Sizeable Police Budget:

2005 Credit export: $64.71 Million

State Budget: $1.1 Billion

2006 State Budget: $1.6 Billion

Security & Safety:

Anasia Silviati

• Power Shortage in 2005, demand increase 8%/year

Imported Products Over $688 Million (Estimated)

13 Future Projects - Demand for Subcontracts

• Oil and Gas Investment

$7.7 Billion in 2006

U.S. Products $200 Million in 2005

15 New Blocks Offered in 2006

Market OpportunitiesMarket OpportunitiesEnergy:

Anasia Silviati


• Market size is estimated $4 billion in 2006

• U.S. Share of import market estimated at 15%

• Growth rate is forecasted at 30 – 40%

• Imports accounted for 90% of market

• Cellular operators invest $1.9 billion in 2006

• Best prospect: Cellular System, 3G Software, Network Management Systems, Cellular HandSets

Telecommunication Equipment and Services

Kalung Riang

Market OpportunitiesMarket OpportunitiesIndustrial Chemicals :

• Dependence on imports of chemicals

– Total imports in 2006: $8.1 Billion

– U.S. Market Share : 5%

– Jan-July 2006: $101.6 Million In Foreign Direct Investment

• Major players: USA, Japan, Germany,

China and South Korea

• Promising sub-sectors:

– Organic chemicals (HS 29)

– Plastic products & raw materials (HS 39)

Anasia Silviati

Market OpportunitiesMarket OpportunitiesEnvironmental Technologies:

• The market estimated at $23 million and projected to grow by 10 percent in 2006.

• Major issues: Deforestation, Water Pollution, Sewage, Air Pollution, and Smoke and Haze from Forest Fires.

• The U.S. is strong in pumps and water treatment chemicals.

• U.S. exports to Indonesia = $10 million in 2005.

• Main suppliers are USA and Japan.

Aulia Rochaini

• Opened to foreign investment in 1998

• Sales in 2006 predicted to reach $5.4 billion

• Most foreign investment is in the hypermarket sector

• Foreign retailers account only 8 percent of outlets, but capture 40 percent of the total retail sales

• U.S. retailers are strong in the specialty shop and minimarket sectors

Retail :


Henry Sutanto

Franchises :


• Home to 250 foreign and 50 local franchises

• Best prospective sub-sectors: Food and Beverages, Educations, Retail and Business Aids and Services.

• American franchises dominate, but strong competition come from Singapore, France, Australia, the United Kingdom, Thailand, and domestic franchises

• Estimated future growth around 5 percent.

Hanry Sutanto

• Estimated market was $230 million in 2006

• 2006 Imports estimate= $190 million: over 50 percent was from U.S

• Competitors: China, Taiwan, and European Countries

• Best Prospects: Degenerative Prevention Products,

Diet and Aesthetics Products, Maintenance

of Vitality and Stamina Products, and Vitamins

and Minerals

Food Supplements :


Sharon Chandra

• Market size is estimated $1.9 billion in 2006

• Growth rate is forecasted at 15%

• Imports accounted for 50 – 80%

• Best Prospect: PC’s+ High End Servers

• U.S. Share of import market estimated at 70-80%

Information Technology :


Kalung Riang

• 18 scheduled and 35 chartered airline companies

• Number of domestic passengers increase 10%, estimated at

27.8 million in 2006

• Imports of aircraft & parts in 2006: $290 million

• U.S. products hold 20% market share

• Opportunities: leasing commercial aircraft,

upgrading airports facilities, supplying spare

parts

Aviation :


Anasia Silviati

List of the Indonesian government’s List of the Indonesian government’s priority projectspriority projects

• Security Equipment and Services: Airport and Seaport• Waste Management & Water Treatment• Energy• Transportation Projects: City of Jakarta• Health Care Services• Electronic Government• Internet Community Access Point

U.S. & Foreign Commercial ServiceU.S. & Foreign Commercial ServiceU.S. Embassy JakartaU.S. Embassy Jakarta

Services Offered:

• Single Company Promotions• Gold Key Service• International Partner Search• Market Research• Video Conferencing• Company Background Check• Asia Now Initiative

www.buyusa.gov/[email protected]

Important WebsitesImportant Websites

Business Chambers U.S. Government

www.usembassyjakarta.org

http://www.state.gov/r/pa/ei/bgn/2748.htm

www.buyusa.gov

www.opic.gov

www.exim.gov

www.tda.gov

www.export.gov

www.amcham.or.id

www.aiccusa.org

www.us-asean.org

www.kadin.or.id

indonesia richard rothman senior commercial officer u.s. embassy - jakarta

Documents

bombing slide

indonesia trade

embassy jakarta slide

key economic indicators

key economic indicators

indonesian exports

us exporting states

security conditions