Indonesia: Future Market with High Potential

  • Hanover Fair Partner Country pursues ambitious industrial strategy
  • Focus on products for digitization, automation and energy efficiency


Bintau/Frankfurt am Main – "German industry should pay more attention to Indonesia," says Klaus John of ZVEI. The head of the International Trade and Future Markets department points to the country's great economic successes in recent years with consistently high growth. "The island state offers a lot of potential, which will increase further as a result of the industrialization path currently being taken. In the strategy "Making Indonesia 4.0", the five sectors – automotive, electronics, food, textiles and chemicals – are particularly highlighted and promoted. The focus is also on the Internet of Things and the country’s expansion as a production location for sensor technology.

Indonesia wants to create incentives for large international companies, primarily through tax advantages. Depending on the industrial sector and the amount of investment, tax rebates of between 20 and 100 percent can be granted for up to 25 years. In addition, the populous country wants to establish a vocational training system to counteract the lack of skilled workers. John: "We can support both technology transfer and the training of skilled workers. Our still very few local companies enjoy a very good reputation". The foreign trade expert points out that the approximately 300 German companies have to compete with many thousands of Asian competitors, especially from China. "Indonesia is deeply involved in Asian trade and financial flows," says John.

For the German electrical and electronics industry, the country is currently only of secondary importance. In 2019, the industry exported goods worth 493 million euros there. Measured against total German electrical exports amounting to 216.5 billion euros, this corresponds to a share of 0.2 percent. Even as a supplier of electrotechnical and electronic goods worth 653.9 million euros, Indonesia is only a secondary size for the German market.

Nevertheless, the ZVEI expert sees Indonesia on the rise: "Due to the high economic growth and the rapidly growing young population, forecasts already see Indonesia as the seventh largest economic nation in 2030, ahead of Germany. German industry must therefore pay more attention to the country. "It is a strategic market. Especially for companies that offer products and solutions for digitization, automation and energy efficiency,” John explains.

Business Cycles & Markets