Useful links in the UK

Foreign Comonwealth Office (FCO)
The British Government department responsible for overseas relations and foreign affairs, through the headquarters in London and Embassies, High Commissions and Consulates throughout the world

The British Chambers of Commerce
The British Chambers of Commerce comprise nationally a network of quality-accredited Chambers of Commerce, all uniquely positioned at the heart of every business community in the UK. These accredited Chambers are local, independent, non-profit, making and non party-political organisations, funded by membership subscriptions.

UK Online for Business
UK Online for Business is part of UK online, a nation-wide partnership that brings together government, industry, the voluntary sector, trade unions and consumer groups to help make the UK one of the world’s leading knowledge economies. As part of UK online we share the overall objective of making the UK the best place in the world for doing business online.

Trade Fairs and Exhibitions UK
Trade fairs and exhibitions UK offers a comprehensive listing of all the consumer, public, industrial and trade exhibitions to held in major venues around the UK.

British Expertise
British Expertise is the leading UK private sector organisation for exports in the service sector. Its sole purpose is to help develop business for companies offering professional services in the range of sectors.

The UKRep Commercial Section
The UKRep Commercial Section helps British companies take advantages of business opportunities under EU funded programmes, primarily those under the EU’s external aid programmes. There are substantial opportunities for British companies including consultancy, supply of equipment and major construction projects and UKRep can offer advice and provide access to information about forthcoming tenders and help with preparing bids and solving associated problems.

Useful links in Indonesia

The British Chambers of Commerce
The Capital Investment Coordinating Board
The Directorate General Customs & Excise
Bank Indonesia
Indonesian Stock Exchange

UKTI Indonesia

The Trade & Investment Section forms part of UK Trade & Investment global network; the Government Organisation that supports both companies in the UK trading internationally and overseas enterprises seeking to locate in the UK. We support our customers with our local knowledge and contacts.

Trade & Investment teams can produce tailor-made reports providing specific market advice according to the customer’s needs. We can also provide general advice to British visitors and help set up a visit program. We can also help with publicity for successful British business achievements in Indonesia. Some of these services are chargeable.

UK Trade & Investment have a wide range of tools that UK customers can use to gather information on target markets and help match customer’s products with the right buyers. Details of the full range of services (including “Business Opportunities”) we offer to British exporters can be found on the Indonesian pages of the UK Trade & Investment website.

We have close links with the British Chamber of Commerce in Indonesia; the British Council in Jakarta and British Executive Services Overseas (BESO) based in the UK.

There has been a marked increase in the fraudulent use of stolen or cloned credit cards in Indonesia to purchase goods or services from the UK. This is the most common with internet. It is important to first ensure that the companies and all transactions are legitimate before sending the payment or shipping the goods to Indonesia. There has also been an increase in the number of bogus website offering products from Indonesia. Again it is worth checking out the company details. More information from Home Office about Internet Fraud and Credit Card Theft

Indonesia Trade and Investment Brief

Introduction

The Republic of Indonesia is a huge market of over 220 million people and is South East Asia’s largest economy. It has a substantial, affluent and increasingly aspirational middle class of over 20 million which is more than the population of Australia or Malaysia. These demographics alone indicate considerable potential for British companies. Before the global downturn, both PricewaterhouseCoopers and Goldman Sachs predicted that Indonesia would be the seventh largest economy in the world by 2050, ahead of Japan and the UK.

Under UKTI’s Five Year Strategy, Indonesia is designated as one of just 17 High Growth Markets deserving special attention.

The country is the world’s second largest exporter of liquefied gas (after Qatar) and the second largest producer of palm oil. Its main industries are textiles, footwear, cork, wood (timber) and tourism. In 2008, the main economic activities in terms of % contribution to GDP were:

• Manufacturing : 27.9%
• Agriculture, Animal Husbandry, Forestry & Fishery : 14.4%
• Trade, Hotels and Restaurants : 14%
• Mining : 11%
• Services : 9.8%
• Construction : 8.5%
• Financial and Real Estate : 7.4%
• Transportation & Communications : 6.3%
• Electricity, Gas & Water Supply : 0.9%

Presidential elections took place on 20 September 2004 when retired General Susilo Bambang Yudhoyono (popularly called SBY) was sworn-in as the country’s sixth President for a five-year term. He enjoys popular domestic support. Legislative elections were held on 9 April 2009 and Presidential elections took place on 8 July.

Trade

Bilateral trade relations between the UK and Indonesia are substantial, with the balance historically in Indonesia's favour. In 2008, the UK exported over £ 391 million worth of goods (36% more than in 2007). The total exports for January to April 2009 were about £ 100 million. However, the actual total is much higher as many goods are transhipped via Singapore and not registered as exports to Indonesia. The provision of services - including financial services as well as other ‘invisibles’ - remain a particular UK strength, but our top 10 exports last year included a wide range of goods, including transport equipment and pulp & waste paper (full breakdown on final page).
According to official Indonesian statistics, the UK was amongst Indonesia’s twelve largest foreign trading partners in 2008. However, UK direct exports to Indonesia in 2008 were only 1.34% of all British exports to the Asia & Oceanic region..

Total UK imports from Indonesia (predominantly textile products) for 2008 were worth £ 1,144 million (almost £1 billion in 2007). The UK imported over £ 435 million worth of goods in January to April 2009.

Investment

The UK is a leading investor in Indonesia. Although accurate figures for total investment are not available (much investment described as British comes through e.g. the British Virgin Islands), it is estimated to be around the $20 billion mark. US$11 billion is concentrated in the Oil and Gas Sector, of which BP has invested over US$6 billion, making Indonesia their fourth largest market globally after the UK, USA and Egypt.

Other major investors include Jardine Matheson Group, Unilever, Shell, Standard Chartered Bank, HSBC, Rio Tinto, Premier Oil, BAT, Prudential, Shell, Rolls Royce, GlaxoSmithKline and Astra Zeneca. There is also a strong and growing UK retail presence, including Marks and Spencer, Next, Debenhams, Top Shop and Ted Baker. Harvey Nichols opened a major store in October 2008.

HSBC has completed the acquisition of 88.89% shares of Bank Ekonomi Raharja Tbk. Barclays are in the process of taking over a local bank.

In March 2006, the Indonesian company Sampoerna paid a reported £115 million for Les Ambassadeurs Casino in London. The company also owns commercial property in the City.

In March 2008, Eastman Chemical Company sold of its European PET and PTA facilities and related business in the UK and the Netherlands to Indorama (Indonesia’s leading producer of polyester) for €224 million or approximately US$354 million.

The Government issued Law No 25/2007 on Investments in April 2007. This was followed by Presidential Regulations No 76 and 77 (revised with Presidential Regulation No 111 dated 27 December 2007) concerning an expanded "Negative List." The apparently arbitrary capping at different percentages of foreign shareholdings in some sectors was a surprise to many observers. A revision of the Negative List is currently underway.

Economic Developments

When he came to power, the key priority of President Yudhoyono's Government was to implement far reaching economic and legal reforms to improve the investment climate and attract FDI in both infrastructure and natural resource development (gas, coal, minerals, alternative energy and agriculture) to create much-needed jobs and expand the economy. Work is underway to produce new Taxation and Manpower laws to help promote legal certainty and restore investor confidence. Implementation will be key. Extensive efforts are also being made to combat corruption and to introduce international standard tender documents.

In 2008, GDP growth reached 6.3% while GDP per capita was US$2,271. Private and public consumption were the main contributors, whilst investment showed signs of slowing.

In their 2009 budget, the Government decided to increase the allocation for infrastructure projects to IDR 61 trillion (approximately US$ 5.6 billion). The majority of the funds will be allocated to toll road projects; progress has been hampered by land acquisition issues. In addition, the Government also allocated IDR 79 trillion (approximately US$ 7.2 billion) for transportation projects (airports and ports) preferably under a PPP programme.

In January, the Government announced an economic stimulus package of IDR 73.3 trillion (approximately US$ 6.7 billion) to help maintain positive economic growth, control rising unemployment and support exports. The package includes tax saving, lower import duties, subsidies and additional government spending on infrastructure development.

Indonesia is undoubtedly better prepared to cope with the global downturn than at the time of the Asian Financial Crisis in 1997/98. The economy is, however, expected to slow considerably in 2009-10 due to reduced exports and capital inflows. At the end of March, the Central Bank revised their 2009 GDP growth forecast to 3%-4% (down from 4%-5%). This still represents the highest forecast in ASEAN. Inflation remains high at 11.7% - increased food and fuel prices have been the main drivers. These factors appear to be easing, and it is almost certain that inflation has peaked. Year on year inflation continued slowing to 3.65% in June 2009 from 6.04% in May. FOREX reserves were US$57.6 billion on 30 June.

The repatriation of foreign investments in the capital markets as part of a general flight from risk in late 2008, has led to a decline in the Jakarta Composite Index (JCI) to the level of 1,355.41 (a 50% fall over 2007). The JCI closed at 2,106.35 on 20 July 2009.

In January 2009, Fitch Ratings affirmed Indonesia’s long-term foreign and local currency Issuer Default Ratings at “BB”. The outlook on the rating is stable. International bond issues have been very successful. In February, Barclays Capital was one of the lead banks in a US$ 3 billion Medium-terms Notes issue which was well over subscribed. On 20 April, the Government’s first global Islamic bonds worth US$ 650 million were issued. The deal was led by Standard Chartered, HSBC and Barclays Capital. Although the amount involved was small in terms of government debt, it was 7 times oversubscribed at US$ 4.6 billion.

VIP Visits to Indonesia

The former Prime Minister Tony Blair visited Indonesia in March 2006, the first such visit over 21 years. His programme included a meeting with President Yudhoyono and a major high impact Business Event, where 26 British companies featured their business and Corporate Social Responsibility activities.

In May 2006, The Lord Mayor of the City of London (David Brewer) visited. His programme coincided with a Public Private Partnership (PPP) Seminar.

HRH The Duke of York visited Indonesia from 3-6 March 2008 in his role as Special Representative for International Trade & Investment. HRH had meetings with the President, Vice President and Ministers of Trade, Defence, Energy & Natural Resources, and State Owned Enterprises. HRH also visited BP's US$ multi billion Tangguh LNG project in Papua.

VIP Visits to the UK

In April 2009. President Yudhoyono led a Ministerial delegation for the G20 Summit. SBY called on the Prime Minister and HRH The Duke of York.

Further information

UK Trade & Investment
British Embassy Jakarta
Indonesian Embassy in London
Office of National Statistics Website, HMG website covering UK statistics, including trade.

Press

The Jakarta Post, a local English language newspaper
Antara, National News Agency