Indonesia

Selling and buying in Indonesia

Reaching the consumers | Distributing a product | Market access procedures | Organizing goods transport | Identifying a supplier

Reaching the consumers

Marketing opportunities

Consumer behavior: Consumers, especially those with average or low income, are very aware of prices and the economic situation. Loyalty to a brand and recognition of its name are enhancing elements. Customer follow-up and the quality of after-sales service count.
Consumer profile and purchasing power: Consumption is an enhancing act, assimilated to modernity and the riches of the western lifestyle. The purchasing power of the majority of the inhabitants being low, consumption essentially turns around food products and other basic goods.
Consumers associations: Indonesian consumer association (YKLI)
Konsumen
Communication and information media for Indonesian consumers
Main advertising agencies: Match advertising
Advantage Advertising
Dentsu
Cheil & Co
DNA Design in action
Lintas Indonesia
WIra Pamungkas Pariwara (Ad-Force JWT)
PT Ad Indonesia

Distributing a product

Evolution of the sector: Consumer goods were originally sold on traditional markets which could be categorized in different sectors like wholesalers and retailers. With modern markets, most manufacturing companies do not distribute their products themselves as this is too expensive; they call on companies specialized in distribution, which, in turn, use traditional channels.
Doing business in Indonesia means going through a wide spectrum of agents, distributors or economic intermediaries. It may be difficult to find a distributor for storage, as expenses linked to warehousing are rather crippling. Corruption is everywhere, especially in the Customs, and this makes offshore warehousing more attractive (especially in Singapore). Likewise, corruption in police services and among local officials makes goods transport across Indonesia from a central warehouse very costly.
Market shares: Although traditional markets are still dominant in Indonesia, modern retail shops, such as hypermarkets, are rapidly becoming more popular, especially in urban areas. Hypermarkets enjoyed the fastest growth rate in 2005: their number rose by 55% and their area by 51%. In spite of the rapid growth of modern retail shops, the "other" retailers of grocery products (small traditional stalls, itinerant merchants and other small retailers) represent 95% of all retailers and almost 56% of sales.
Organizations in the retail sector: Indonesian shopkeeper's association on Multiply (APIM)

Market access procedures

International Conventions: Member of World Trade Organisation
Party to the Kyoto protocol
Party to the Washington convention on International trade in endangered species of wild fauna and flora
Party to the Basel convention on the Control of Transboudary Movements of Hazardous Wastes and their disposal
Party to the Montreal protocol on Substances that deplete the Ozone Layer
Party of the International coffee agreement 2001
International economic cooperation: ASEAN, APEC
Non tariff barriers: It is strictly prohibited to import certain products: books, magazines, brochures and newspapers written in Chinese, in Indonesian or in a local language (except for scientific reasons) as well as cassettes, video cassettes and films for personal use.
Import licenses are required for medicines, psychotropic substances, explosives, arms, fireworks, films and videos, telecommunications equipment, color photocopiers, unregistered foods and drinks, some pesticides (DDT, EDB, Pentachlorophenols). These licenses are issued after consultation with the competent Ministry (Agriculture, Health, Commerce and Industry).
Customs duties and taxes on imports: 9.5% (2006)
Customs classification: To classify imports and exports, Indonesia uses the Harmonized System of nomenclature and codification of goods. To honor its commitments to the WTO and respond to the imperatives of domestic politics, the government has implemented two types of policy over the last few years which have had a considerable effect on the level and the structure of duties. These policies are linked to a program of duty reduction between 1996 and 2003, and to a program of tariff harmonization between 2004 and 2010.
Import procedures: Documents required for import are: a waybill which must show the transport costs; a commercial invoice containing information, amongst others, about the buyer and the seller, the date of dispatch, the nature and the price of the goods, their origin, transport and insurance costs; an insurance certificate, which must usually be produced when the goods are insured outside Indonesia or if they must be put in a bonded warehouse; and a certificate of origin, in the case of drugs or medicines.
The case of samples: Commercial samples must be sent directly to the importer.
For further information: General Customs Office
Ministry of Commerce
Indonesian Chamber of Commerce and Industry