The Indonesian economy is becoming the darling of Asia as economic growth hits 5.0 percent and the stock markets booms as foreign investors pour money into the country. The 2016 GDP growth rate, released by the Indonesian Central Statistics Agency last week, exceeds growth figures of 4.8 percent seen in 2015. Of this growth, part came from a healthy 5 percent increase in domestic consumption, while Indonesian imports and exports also increased, as did investment.
By: Dezan Shira & Associates
Editor: Samuel Glickstein
In order for a foreign firm to thrive in Indonesia, it must adapt to the country’s labor laws and human resource procedures. Although there is some space for flexibility in human resource management in Indonesia, the country’s labor laws and regulations have established firm protections for workers. Employers who violate these obligations will likely face significant legal repercussions. Therefore, it is paramount that employers learn about Indonesian manpower laws and the expectations that they may encounter when they interact with local workers.
By: Dezan Shira & Associates
Editor: Cameron Turnbull
On February 17th, 2016, Indonesian president, Joko Widodo, announced plans to further liberalize his nation’s economic policy’s 10th economic stimulus package aimed at stimulating foreign direct investment.
Indonesia has long been on the radar of international investors as a rapidly developing region with serious potential. More stable and diversified than many believe, domestic consumption represents 56 percent of total GDP. This is higher than fellow ASEAN member countries Malaysia (52.4 percent) and Thailand (52.2 percent). It also dwarfs the domestic consumption of Asian economic giant China, which comes in at just 36.5 percent.
In early April 2016, Indonesia Tax Authority indicated that Google Indonesia, Yahoo Indonesia, Facebook Singapore Pte Ltd and Twitter Asia Pacific Pte Ltd were avoiding tax in Indonesia.
Among the four companies, Facebook and Twitter are established in Indonesia in form of Representative Offices (RO). This article will not analyze the pros and cons of the representative office compared to other investment vehicles, but instead will focus on application of tax regulation to representative offices; and highlight regulations that caused tax authorities to target Facebook and Twitter.
By: Aysha Nesbitt
As the world’s largest archipelago, Indonesia is among the most important producers of aquaculture globally. In 2001, Indonesia ranked fourth in aquaculture output and has since increased its fishery exports to US $4 billion in 2015. Though Indonesia’s aquaculture industry has begun to make strides, it is still far from realizing its full potential.
In an effort to harness its comparative advantages, the Indonesian government has made monetary commitments to the sustainability of the industry and is working to relax regulations surrounding foreign investment. Upon their election in 2014, both President Joko Widodo and Susi Pudjiastuti, the Minister of Maritime and Fisheries, have been working to establish strategies to promote and expand Indonesia’s fisheries.
As businesses look away from China and towards other countries to fulfill their manufacturing needs, Indonesia is an increasingly attractive prospect. With a massive workforce, a growing middle class, and newly established investment incentives, Indonesian leaders are making clear their commitment to promoting Indonesia as a hub of manufacturing in Southeast Asia.
Although Indonesia shows promising signs of growth in the manufacturing industry, regulations governing the sector are still cumbersome and are further complicated by governmental red tape. Ambiguous legislation, combined with stark regional differences in infrastructure, make it imperative for prospective investors to understand the Indonesian manufacturing climate. In this respect, Manufacturing in Indonesia: new options, opportunities and challenges, published by Cascade Asia Advisors, provides a clear overview of the current investment environment and considers the investment incentives, the fastest growing sectors, and the most cost effective locations in the country.
The following is a brief outline of Cascade Asia’s insightful article, which highlights the momentum that will move Indonesia closer to its goal of rebuilding its manufacturing industry.