How to enter the Indonesian market

Indonesia was Australia’s 10th largest export destination in 2024, with total exports reaching AUD 13.37 billion. Resources and agricultural products dominate Australian exports, but emerging trends are presenting opportunities for a range of sectors, including food and beverage, education and skills and healthcare.

Market entry models for exporting goods and services

Choosing an appropriate market entry model is essential for businesses looking to export to Indonesia. Any choice should be informed by factors such as the overarching business strategy, target sector and business size and maturity. Market entry models frequently evolve over time.

A. Agents and distributors

To export to Indonesia, Australian businesses are required to appoint a local agent or distributor. Agents and distributors can provide advice on regulatory requirements and assist with the import process, including licences, product registration and customs clearance. For food and beverage exports, agents and distributors can manage registration with the National Agency for Drug and Food Control (BPOM).

The role of agents and distributors differ, and they can vary across industry. It is therefore critical that roles and responsibilities are clearly defined early in any agreement.

Agents: Agents act as representatives of suppliers and do not take ownership of the products they sell. They are usually paid on a commission basis, which provides an incentive for them to drive sales. Being based in Indonesia, they will often represent several complementary products or services. They can be retained exclusively as the sole agent for a company’s goods or services or as one of several for the exporter.

Distributors: Unlike agents, distributors buy the goods from exporters and then resell them to local retailers. In some cases, a distributor may sell to other wholesalers who then on-sell to retailers or consumers. Distributors may carry complementary and competing lines and usually offer after-sales services. They make profit by adding margins to product prices. Distributor margins are generally higher than agent fees because of the costs associated with carrying inventory, marketing and extending credit for customers.

Some imported products are required to engage a separate importer and distributor, whether those products are sold online or offline. In this case exporters can employ an importer to manage the importation process, separate of any distribution agreement. Businesses must then engage an agent or distributor to manage distribution and sales. The Ministry of Trade (MoT) has introduced a ‘reputable importer’ list than provides de-facto certification for Indonesian importers.

Choosing an agent or distributor: Whether using an agent or distributor, building a close working relationship is essential. While all agents and distributors are required to register with MoT and obtain a Registration Identity (STP), due diligence is important – ask for trade references and seek a credit check through a professional agency. It is best to meet any potential agents or distributors in Indonesia. This will give them a chance to demonstrate knowledge of the market and provide an early opportunity to build the relationship.

Halal certification: Businesses must be aware of halal certification requirements when exporting to Indonesia. As the world’s most populous Muslim-majority country, halal certification plays a central role in regulating products and services entering the market. Certification is mandatory for nearly all food and beverage products and will be gradually introduced for a range of other products, including cosmetics, clothing and medical devices. Certification is valid indefinitely, replacing the previous time-limited certification system and is issued by Indonesia’s Halal Product Assurance Organising Body (BPJPH). However certification bodies outside Indonesia must be registered before distribution in Indonesia, and its validity period will match the original foreign certificate's term. An overview of Indonesia’s halal compliance requirements and a list of approved Australian halal certification bodies has been published by DFAT at Complying with Indonesian halal requirements | Australian Government Department of Foreign Affairs and Trade.

B. Online Sales

Indonesia has one of the highest rates of e-commerce adoption in the region, with nearly two-in-three adults having purchased a product or service online in 2023. While Indonesia’s share of Southeast Asia’s total online sales revenue has fallen slightly from 52% to 48%, the domestic e-commerce market is expected to grow to AUD 135.6 billion by 2028. Its vast consumer base, increasing internet penetration and growing preference for online shopping will continue to drive digital commerce.

The Indonesian Government is implementing wideranging initiatives to promote online sales. Regulatory reform is improving the governance of online and electronic trading. A national online shopping day, known as Harbolnas, has been developed to boost sales and promote e-commerce. The 2024 Harbolnas, delivered AUD 2.99 billion in total transactions—an increase of 21.4 % year-on-year, attracting about 97 million shoppers.

Despite rapid expansion and government support, navigating Indonesia’s e-commerce market can be challenging. The exporter requires an Indonesian importer/distributor to either register the product to relevant govt. body or manage paperwork and custom clearance. The government has introduced a blanket ban on e-commerce platforms selling foreign goods worth less than USD 100 (AUD 150) per unit and a ban on purchases via social media platforms, both of which will limit low-value cross-border transactions.

E-commerce strategies also require careful supply chain planning given Indonesia’s geography, particularly regarding warehousing, fulfilment and the use of omni-channel distribution.

Accessing digital consumers: While 63 per cent of Indonesian consumers now spend their rupiah online, one third of the country is yet to engage with e-commerce. Effective marketing is vital to establish trust and brand loyalty, particularly among those discovering online retail for the first time.

Top product categories for online sales include electronics, toys, fashion, furniture, and personal and household care (Figure 2). Smartphone use is enabling mobile and social commerce, with 82 per cent of internet users using social media for brand research. While regulations have restricted social media operators from facilitating purchases, platforms are still permitted to advertise - offering businesses unprecedented reach when promoting their products and services.

Figure 2: E-commerce spending on consumer goods (2025), AUD billion

Search engines: Search engines are a key tool for brand research, with 57 per cent of internet users using them as a primary source of information when researching brands. Google is the dominant search engine in Indonesia, followed by Bing and Yahoo.

Online sellers and marketplaces: Online marketplaces have become a popular way to enter the Indonesian market, with platforms like Shopee, Tokopedia and Lazada providing access to an existing customer base, online infrastructure, logistics capabilities and marketing services. Businesses should take time to evaluate and compare fees, competition and customer reviews of Indonesia’s online marketplaces.

Social media: Indonesia was home to 143 million social media users in January 2025 or 50.2 % of the population. These users are having a major impact on the digital economy, with over half using social media platforms to find inspiration for products and services to buy. The most used social media platforms in Indonesia include WhatsApp, Instagram, Facebook, TikTok and Telegram.

Investment environment

Indonesia has emerged as one of Southeast Asia’s most attractive markets for foreign investment.

Foreign ownership limitations have been relaxed and business establishment processes streamlined. A new sovereign wealth fund, Danantara, aims to restructure state owned enterprises and attract foreign investment. At the end of 2024, total Indonesian inward FDI stock stood at AUD 471.5 billion.

The Indonesian Government offers a range of investment incentives in priority sectors. These come in three forms:

• Corporate Income Tax (CIT): A 50 per cent CIT reduction for investments between IDR 100 billion (AUD 9.9 million) and IDR 500 billion (AUD 49.4 million) for five years, and a 100 per cent CIT reduction for investments over IDR 500 billion (AUD 49.4 million) for a period between 5 and 20 years.
• Import duties/tax: An exemption or reduction of import duties or tax on goods imported as fixed assets for the project.
• Land rent and levies: A 30 per cent reduction in taxable income for six years, a special withholding tax rate of 10 per cent on dividends, and tax losses carried forward for up to 10 years.

Investment incentives are also offered in Indonesia’s special economic zones (SEZs) (details can be found in Section 5.1). These zones are an entry point for foreign firms and offer easy access to ports and infrastructure, specialised labour and networks of suppliers.

Businesses that enter via SEZs with a minimum investment of IDR 100 billion (AUD 9.6 million) are eligible for a 100 per cent CIT reduction for 10 years.

Investment rules and regulations

The Indonesian Government has reformed its foreign investment regime. Significant developments include the introduction of a Positive Investment List in which previously restricted sectors are now open to 100 per cent foreign ownership. These priority sectors include over 200 business lines, including telecommunications, transportation, energy, and distribution and construction services.

A risk-based approach to foreign investment has been introduced for specific sectors and business licences are now issued after a government risk assessment. Business activities are classified as low, medium-low, medium-high and high risk. The lower the business risk, the simpler the business licencing requirements. One key change is the implementation of Positive Fiction (Fiktif Positif) policy: a provision stating that if a permit application is not acted upon within a certain timeframe, it is considered legally approved. In essence, silence means agreement, provided all requirements are met.

Guidance on the business application process can be found on the Indonesia Investment Coordinating Board’s (BKPM) Online Single Submission (OSS) system at oss.go.id/en.

Market entry models for investing

Choosing an appropriate market entry model is essential for businesses looking to invest in Indonesia. A business’ size, sector and growth strategy will help determine which market entry model fits best. Investment models frequently evolve over time as businesses enter and expand in a market.

A. Representative office

Opening a representative office (RO) can be a useful and economical first step to explore business opportunities in Indonesia. ROs cannot conduct direct commercial or revenue generating activities such as the execution of contracts, receipt of funds, sale or purchase of goods, or provision of services.

However, ROs can provide a wide range of support activities to head offices back in Australia. They are a common form of presence in Indonesia for foreign companies, particularly those in the early stages of a market entry strategy.

The most common form of RO in Indonesia is a foreign representative office (KPPA). Its main function is to manage the parent company’s interests and prepare for the establishment of a local company. KPPAs must be established in the capital city of the province in which they are based. They can be 100 per cent foreign owned, have no capital requirements and can employ local and foreign staff.

Establishing a representative office (KPPA) in Indonesia

B. Franchising

Franchising allows business owners to retain a measure of control while harnessing the energy of franchisees to drive expansion. Franchises project a company’s reputation and brand, and while it can be expensive, building a network of franchises is generally cheaper than owning and operating retail or branch offices in foreign markets.

Indonesia’s franchise industry began to gain traction in the 1990s and has since grown to include many well-known international chains. In 2023, there were 520 international franchise brands in the market. Indonesian franchise seekers are interested in both established and innovative food and beverage businesses and retail outlets. Emerging franchise sectors include entertainment, training, home services and security franchises.

Franchise activities are governed by MoT. Franchise regulations were simplified in 2019, making it easier for franchisees and franchisors to establish a business. Before entering into a franchise agreement, a franchisor must first obtain a franchise registration certificate (STPW) from MoT. There are no local content requirements, no limitation on the number of outlets and STPWs are not time limited.

Franchise trade events and associations can provide helpful information on opportunities and procedures. These include the International Franchise, Licence and Business Concept Expo & Conference, the Franchise and Licence Expo Indonesia and the Indonesia Franchise Association.

Establishing a franchise in Indonesia:

C. Foreign-owned enterprise

Businesses may establish a separate, wholly-owned legal entity in Indonesia: a foreign investment company or PT PMA. Indonesia’s Omnibus Law introduced new criteria for granting PT PMA licences, including a minimum invested capital of IDR 10 billion (AUD 960,000). For certain sectors, a business licence is only granted after a government risk analysis. Under the Positive Investment List, PT PMAs can be 100 per cent foreign owned unless subject to a specific limitation.

A PT PMA can take the form of a trading company. A trading company can import without the need for local importers, agents and distributors. Since regulations were introduced in 2021, a trading company can now use a Business Identification Number (NIB) as an import licence. As well as the NIB, importers must secure additional licences depending on the type of product to be imported.

A Limited Liability Company (PT PMDN) can also be established, but as these can only be owned by Indonesian nationals, foreign investors’ rights will not be recognised under Indonesian law. Seek professional advice on the best structure for your business.

Establishing a foreign-owned enterprise in Indonesia

D. Joint Venture 

A joint venture (JV) is an agreement between two or more parties to work together on a short-term or long-term project. JVs can be an effective way to undertake research and development, create a new product or provide a new service. By bringing together businesses that operate in different segments of the same industry, they can also be an effective way to build comprehensive product and service offerings. A local Indonesian partner can provide knowledge and contacts, as well as a realistic assessment of risk.

Each party is responsible for the profits, losses and costs associated with the activity, but a JV is an independent entity, separate from the parties’ other businesses.

A JV is underpinned by a legal agreement between the parties. A typical agreement should include details on the:

• Legal basis for the agreement (which may not be Indonesian law)
• Structure, governance and obligations of the joint venture
• Division of profits and losses
• Ownership of intellectual property
• Disagreement or dispute resolution processes
• Leave or termination conditions

E. Public-Private Partnership

A Public-Private Partnership (PPP) is a contractual arrangement between the Indonesian Government and the private sector. Under a PPP, the private sector can build, operate and maintain public infrastructure facilities and provide services traditionally delivered by government. Examples of these are roads, airports, bridges, hospitals, schools, railways, and water and sanitation projects.

Indonesia adopted the PPP model in 2005 and has actively promoted private sector investment in key infrastructure projects. As of 2025, there are 38 projects in progress and a robust pipeline of potential projects and investment opportunities. PPPs are complex to structure and implement, but present opportunities for established businesses to enter the Indonesian market.

Establishing a PPP in Indonesia (from transaction phase)

Success in India’s large, complex market requires businesses to tailor their product or service. This should be based on detailed analysis of consumer trends, demographics, price consciousness, branding, marketing and advertising, and payment methods.

Success in Indonesia requires businesses to tailor their product or service to the market. This should be based on detailed analysis of consumer trends, price consciousness, branding, marketing and advertising, and payment methods.

Indonesia’s middle class is expected to drive increased domestic demand over the next few years making it the world’s fourth largest consumer market after China, India and the US. Median disposable household income is forecast to grow by 30 per cent over the five years to 2026 (Figure 3). Understanding the characteristics, aspirations and spending habits of this emerging group of consumers is crucial for businesses looking to tap into the segment.

As more Indonesian consumers move into the middle-income segment, they are becoming more sophisticated in their spending habits and product choices. Products and services are increasingly targeting Indonesia’s young consumer base, with personal wellbeing and development a growing segment. While many are spending cautiously in the context of inflationary pressures and fears of an economic slowdown, Indonesian consumers are confident in their economic outlook.

Businesses entering Indonesia should adjust their value propositions to cater to middle class consumer trends. Responding to more discerning spending habits by introducing tiered product lines, differentiating product offerings and avoiding product portfolio stagnation can help businesses succeed in the competitive Indonesian market.

Consumer trends in 2024

Figure 3: Median disposable income per household (2016-2026f), AUD current prices

Price consciousness

Despite rapid economic growth, average incomes in Indonesia are still relatively low. In 2024 the Indonesian national income per capita was AUD 7,422 behind Malaysia (AUD 18,001) and Thailand (AUD 10,984). Businesses must remember that price points designed for the middle class in one market may be out of reach for the middle class in another - slight price modifications to an already successful product can significantly boost sales.

Branding

Branding is an essential part of product differentiation, and companies need to research and understand the specific tastes of consumers to achieve success. Indonesian consumers value local and prominent high-quality brands. While this can be a disadvantage for new brands entering the market, targeted promotional campaigns can build a product’s reputation and reach.

Australian businesses in some sectors enjoy a branding advantage simply by virtue of their products being made in Australia. Generally, Australian products have a strong reputation in Indonesia and an emphasis on Australian origin can be a marketing tool for businesses expanding into Indonesia, particularly in the food and beverage and agricultural sectors. Austrade’s Nation Brand toolkit provides a range of free branding assets for businesses looking to export.

Marketing

A trade show can be a useful starting point for marketing in Indonesia. These are productive ways to reach out to new consumer bases and potential clients, while also offering insights into the operations of competitors.

Sales promotions may also help establish your brand with high-impact campaigns. Providing special discounts and events centred on your brand can be an effective way to build consumer loyalty and product awareness – particularly in sectors that are crowded with incumbents.

Digital marketing methods are becoming more common as smartphone penetration continues to grow. Email, text, search engine optimisation and social media marketing are now integral parts of a comprehensive marketing campaign.

Any marketing and promotional efforts – at trade shows, sales promotions or anywhere else – should translate information into Indonesian to ensure the greatest reach

Advertising and media

Indonesia’s young population is driving the uptake of mobile technologies and increasing the reach of digital advertising (Figure 4). YouTube advertisements reached 143 million Indonesians in early 2025 and TikTok advertisements reached 53.5 per cent of all adults aged 18 and above. Television and print advertisements remain a trusted marketing source across Southeast Asia, but with 82 per cent of Indonesians using a social media platform for brand research, a digital strategy is now an essential part of any advertising campaign.

Foreign businesses should consider advertising in both English and Bahasa Indonesia – particularly with the growing use of English in Indonesia. When translating from English, however, care should be taken to ensure cultural and linguistic sensitivities. Local interpreters can aid in ensuring the suitability of your campaign.

Australian businesses looking to promote their products or services in Indonesia can seek professional help from local and international advertising and media companies.

Figure 4: Digital advertising audiences in Indonesia (2025)

Digital payments

Cashless payments have become a major trend in Indonesia with digital payments projected to surge by a CAGR of 17.33%, catapulting the market to AUD 396 billion by 2030. QR codes have become ubiquitous alongside rising smartphone penetration and financial inclusion rates.

Bank Indonesia’s Quick Response Code Indonesian Standard (QRIS) has made all banks and e-wallets interoperable, resulting in an annual tripling of QR payments each year since its introduction in 2020. QR codes are also facilitating seamless and secure crossborder payments with the introduction of a regional QR code payment system linking Thailand, Malaysia, Vietnam, Singapore, the Philippines, Japan, China and Brunei. India, South Korea and Saudi Arabia are in the pipeline.

The most popular B2C digital payment methods in Indonesia include e-wallets, bank transfers, debit and credit cards, and cash on delivery (Figure 5). The most popular app-based payment platforms are GoPay, OVO, Shopee Pay and Dana.

Digital payments can make financial transactions safer, cheaper and more convenient. As digital payment options continue to expand and evolve in the Indonesian market, businesses should consider integrating them into their business model.

Figure 5: Payment methods for B2C e-commerce (2025), %

A well-considered market entry strategy should take a systematic approach that supports long-term success. This section distils the factors businesses should consider when formulating an approach to the Indonesian market into a series of key questions.

Asialink Business provides advisory services and capability training programs to help organisations understand and access opportunities in Asian markets. Should you have questions about any aspect of your Indonesia market entry strategy, please contact us. Austrade’s Indonesia office also provides services and support to Australian businesses with an interest in Indonesia (details can be found in Section 5.2).

Calibrating Ambition

• What is your company’s aspiration for the market?
• What are the challenges and risks you will need to mitigate?

Consumers

• What is the current or potential demand for your product or service in Indonesia?
• Who are the primary customers / consumers for your product or service in the market?
• How will you tailor your product or service to local preferences?

Competitors

• Who are your competitors in the market, and what is their offering?
• How does your product or service compare to competitors on price?

Sales, Brand and Marketing

• What is your unique value proposition for the market?
• What is the ideal mix of marketing and sales channels to reach your target customers?
• Is your marketing strategy aligned with your identified consumer base and value proposition?

Mode of Entry

• What is the right market entry model for your business?
• What are the specific geographies you should target?

Delivery Partners

• Does your team have the right mix of skills and expertise to support your market entry?
• What partnerships will contribute to your business’ success in the market?
• What external advice do you need to commission?

Operating Model

• What changes do you need to make to your business across areas such as operations, HR, finance and IT?

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