News Room - Business/Economics

Posted on 13 Apr 2015

The Cost of Business in Indonesia Compared With China

Indonesia is a major player in ASEAN and has by far its largest population – some 240 million people. It is a expected to become a trillion dollar economy in its own right later this year, and, with a huge landmass containing important mineral reserves, is of special economic significance to the economies of China, ASEAN, and Australiasia in particular.  

Bilateral trade between Indonesia and China has tripled in the past five years to some US$70 billion in 2014, while Chinese companies invested around US$2 billion in FDI in 2013 – mainly establishing trading and light manufacturing businesses.  This mass expansion of trade is down to the ASEAN Free Trade Agreement with China, and is set to continue.

While it was Chinese businesses who initially took advantage of the FTA, local Indonesian companies are now adapting and are boosting their own sales into the Chinese domestic market. The Chinese businesses that have invested in Indonesia are mainly looking for locations with lower production costs that will allow them to then export Indonesian manufactured component parts and goods across ASEAN as well as back to China.  

Elsewhere, Indonesia enjoys good trade relations with the following countries: 

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also possesses a large number of Double Tax Treaties, including with China, that can assist foreign companies reduce their overall tax burden in the country.  These treaties also apply to many other Asian nations, European nations, and the United States. These agreements assist in making trade with the country a strongly viable commodity.

We can compare Indonesia and China in terms of average operational costs as follows:

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