Interesting Sectors

(Sustainable) Energy

Market opportunities regarding the energy sector in Indonesia have strongly improved due to a favorable investment climate and stimulating government policy concerning this sector. The Indonesian Ministry of Energy and Mineral Sources, the Dutch Embassy in Jakarta and Agentschap NL have joined forces to dedicate more attention to the private energy sector. Indonesia has a huge shortage of electricity due to the large economic growth (which increases electricity demand) and underinvestment in the capacity of electricity production. In January 2011, only 65% of the Indonesian population was connected to the electricity network.

Meanwhile, the energy sector has been opened up for foreign investors. Installation activities and investments in power stations up to 10 MW are still reserved for medium and small-sized companies. However, foreign companies are allowed to invest in transmission, consultancy, trade in machines and equipment for the production of energy, maintenance, knowledge transfers and electricity distribution. In addition, there are export opportunities for electricity generating machines and related items.

Source: EVD, 03-01-2011

Wastewater management

The situation concerning the water quality in Indonesia has become so poor, that it has generated more (Indonesian) attention for the protection of the environment and Indonesia’s natural sources. The purification of wastewater is being perceived as a public responsibility. Therefore, a policy has been developed to purify instead of dumping this wastewater.

It is a good moment for Dutch companies to claim a spot in the development of the Indonesian market for the purification of wastewater. In Indonesia, the political willingness to take action against the dumping of (hazardous) waste is growing. Most equipment for waste processing comes from the surrounding countries, but the demand for quality equipment is increasing. This provides opportunities for Dutch firms to enter the market, in which especially capacity building and consultancy are interesting areas.

Dutch companies can profit from the opportunities in the Indonesian water sector through

-The supply of equipment for the purification of industrial wastewater;

-The start-up of PPPs (Public-Private Partnerships) and the outsourcing of (performance based) service contracts;

-The supply of purification equipment for the supply of drinking water in rural areas.

Source: EVD, 10-01-2011

Maritime sector

The Indonesian maritime sector still has to be developed. Despite the fact that the sector is heavily regulated by the government, it has enormous potential. There are more than 1735 harbors in Indonesia, of which 141 are international harbors. The Indonesian government has labeled 25 of these harbors as “strategic harbors”. These are the most important harbors in terms of passenger and freight transport and are being controlled by 5 public firms. Indonesia consists of more than 17,500 islands. To connect these islands, approximately 6,000 large and small harbors are needed. In addition, sea transport is limited due to shallow harbors, which restricts large ships from entering them.

Indonesia is in need of deep sea harbors with a minimal capacity of 4,000 TEU. This would provide Indonesian exporters the opportunity to ship their cargo directly to foreign destinations. Currently, 75 per cent of the cargo shipments from Indonesia has to be shipped via harbors in Singapore or Malaysia, where the cargo is being transferred onto large ships. The development of new sea harbors generates commercial opportunities for consultancy, harbor equipment, equipment for cargo management, computer hard- and software, security equipment, development and improvement of the infrastructure, operational support, the development of institutions and capacity enlargement.

Source: EVD, 10-01-2011

Machines

The Indonesian machines-industry is growing. Meanwhile, it is still a market in which profits can be made. During the past decades, Indonesia has given little attention to technological progress. Most installed industrial machines date from 1970-1980. Currently, a substantial amount of firms wants to replace its machines. This provides opportunities for Dutch firms, which can profit from the growth in the Indonesian machines sector by providing consultancy, machines and machine parts. Especially the market for food processing machines is interesting. Moreover, the increasing export of food and drinks can have a positive effect on the demand for packing machinery.

In addition, machines for the production and processing of plastics, machines for mining, equipment and technology for energy production, and medical equipment are needed.

Source: EVD, 06-01-2011

Food industry

Generally, Indonesians still buy their food and beverages at local shops and markets, which still dominate the retail sector. Nevertheless, there are some important developments in this sector, including the introduction of modern shopping malls in the big cities, the introduction of hypermarkets, supermarkets and department stores, and the increase in the number of fast food restaurants and companies, such as KFC, Pizzahut and McDonalds.

Indonesian families spend 45 per cent of their income on food and nonalcoholic beverages. Traditionally, Indonesians have a diverse diet, consisting of fresh fruits, fish, meat and vegetables. However, there is growing demand for different types of soda.

Significant opportunities exist for foreign food companies, due to increasing familiarity of Indonesian citizens with western products, expansion of the middle class and growth in the retail sector. In recent years, the food and tobacco sector has grown by an average of 11 per cent per year. It is expected that strong growth will persist in the next couple of years.

Large opportunities exist regarding:

-processed foods

-dairy products

-meal drinks/meal replacing drinks

Source: EVD, 07-01-2011

Logistics

The Indonesian transport system is very poor and transport costs are very high. Intermodal freight transport is underdeveloped. In order to prevent congestion of the large harbors, the Indonesian government has been developing a blue print for the logistics sector. Currently, this blue print is ready to be signed by the president. Simultaneously, the government is putting a substantial amount of effort in connecting the islands of the Indonesian archipelago. The Ministry of Transport is urging to start the execution of the plans, however, there are still some problems concerning the cooperation with local governments and PT Pelindo.

Regarding the logistics sector, all kinds of knowledge and services are needed.

Source: EVD, 10-01-2011

Other interesting sectors

Other interesting sectors are the oil and gas sector; mining; modern consumer products; and internet and mobile communication.

Source: EVD