Indonesia: a rising global economy that’s open for business

A growing Southeast Asian powerhouse with a GDP of over US$1 trillion, Indonesia is leading the way in the ASEAN region.¹ It was one of the few countries to emerge from the Covid Delta variant in 2021 with its economy experiencing growth; growing by 3.7%. The economy further picked up speed in 2022, which saw 5.3% year-on-year expansion.² There are many benefits to expanding your business to Indonesia and partnering with HSBC can help you succeed in this dynamic market.

“Indonesia’s economy has experienced impressive growth in recent years, even during the pandemic,” says Riko Tasmaya, Wholesale Banking Director HSBC Indonesia. “With a large working-age population, strategic location, and vast natural resources, the country offers significant potential for foreign investment and expansion. Additionally, its focus on digitization and sustainable industries like EV battery production make it an attractive market for businesses looking to grow and innovate. Partnering with institutions like HSBC can help navigate the dynamic and exciting opportunities in this emerging Southeast Asian powerhouse.”

Indonesia occupies a unique geographic position. It is an archipelago and the largest country to consist entirely of islands.³ It is the fourth most populous country in the world⁴ and benefits from a large working-age population with a median age of 29.⁵ It also offers a gateway to the wider Southeast Asian market and beyond.

Indonesia’s top five trading partners are mainland China, the US, Japan, India and Malaysia.⁶ It also has long-standing trade and investment relationships with Japan, Singapore, South Korea and Hong Kong. In 2021, almost 10% of Indonesia’s exports went to Europe.⁷ It also has a key trade relationship with the UK, which sees Indonesia as an important strategic partner.⁸

Indonesia is a vital emerging economy that is taking big strides to ensure long-term growth. It is projected to become one of the world’s seven largest economies by 2030⁹ and to enter the top five by 2050.¹⁰ In 2020, it passed the Omnibus Law to strengthen the economy via increased competitiveness, job creation and reform of its bureaucracy while easing regulations to attract more multinationals to the country.¹¹

Indonesia is home to the world’s greatest nickel reserves¹² and the third-largest cobalt reserves.¹³ These materials are crucial to the production of batteries for electric vehicles (EVs). It is now pivoting from exporting these materials to producing EV batteries domestically, which will further boost its economy and attract foreign direct investment to the country. The development of a Nickel and EVs ecosystem from upstream to downstream will also contribute towards Indonesia’s net-zero ambition. There is a wider focus to attract investment on value-adding industries to our rich natural resources, which include renewables and agricultural.¹⁴

Indonesia’s digital economy grew from US$41 billion in 2019 to US$77 billion in 2022.¹⁵ Electronic transactions surged by 67% in 2022 and digital banking activity increased by 63%.¹⁶ As part of this effort, the government spearheaded the One Data Initiative, a drive to digitize governmental processes to create more efficient, secure and interconnected data flows between departments. This will help to better coordinate national efforts to develop the economy¹⁷ and give businesses the confidence to move their operations to the country.

Indonesia has also introduced BI-Fast, a real-time payments infrastructure developed by the central bank, Bank of Indonesia. This aims to revolutionize payment infrastructure, integrate the digital economy and finance sectors and deliver fast, secure and affordable payments.¹⁸ This digitization has contributed to a growth in the number of unicorns (startups valued at US$1 billion) in its FinTech, e-commerce and logistics sectors.

Expanding your business to Indonesia can unlock some incredible growth opportunities, but it does come with some challenges. Its market is complex; the fact that Indonesia consists of 17,000 islands and its inhabitants speak more than 300 native languages can be challenging. Because of this market complexity, it is important to find an experienced partner to help you overcome these challenges. HSBC has nearly 140 years’ experience in the Indonesian market and is well-placed to be your guide.

Indonesia’s Omnibus Law on Job Creation, passed in October 2020, is part of the country’s ongoing efforts to simplify bureaucracy and improve ease of doing business. While reforms are progressing, there can still be challenges when doing business in the country, and a trusted banking partner can help provide guidance on how to navigate the business environment.

Businesses attracted to the many opportunities in Indonesia require a bank that offers a combination of global scale and local expertise. At HSBC we offer international subsidiary banking (ISB) services that help you when expanding to a new country like Indonesia. Our ISB teams work with businesses all over the world, including Europe, the US and Asia. We have a network of local, regional and global relationship managers that ensures all your needs are met, whether that’s accessing flexible financing solutions, optimizing your working capital or streamlining your finances. You can leverage our global network to help you identify new growth opportunities in new markets.

HSBC is the longest-serving international bank in Indonesia and in Southeast Asia as a whole.¹⁹ We have more than 40 branches across more than 20 cities in the country. HSBC Indonesia’s track record serving a wide range of banking solutions to our Indonesian clients is unparalleled, and we keep ahead of market trends, especially in extending innovative proposition spanning across, but not limited to, cash management, trade & supply chain, foreign exchange, credit & lending, and debt & capital market, and investment banking.

Our HSBCnet platform is an online service that helps you keep pace with the fast-moving world of digital banking. It offers powerful, intuitive tools that give you total visibility of your global finances, trade transactions and FX positions, supported by 24/7 customer service and offering seamless connectivity. We reduce friction when trading across borders by cutting down on manual tasks and offering cost reduction and the enhanced return of surplus funds.

HSBC has been connecting Indonesia to global businesses since it opened its first bank branch in Jakarta in 1884. We were the first international bank to be locally incorporated in Indonesia and our services spans across corporate, retail, and investment banking. We combine exceptional banking capabilities and global expertise with extensive local knowledge and employ more than 2,000 people in Indonesia.

“Expanding a business to Indonesia can bring great opportunities, but it is not without its challenges, particularly due to the country’s complex market and vast geography,” Charles Kho, Head of Multinational Corporates and International Subsidiary Banking, HSBC Indonesia. “However, partnering with an experienced institution like HSBC can help overcome these hurdles. With its long-standing presence in the Indonesian market, HSBC can provide businesses with a unique combination of global scale and local expertise. Through its International Banking Subsidiary services, businesses can leverage HSBC’s network to access flexible financing solutions, optimize working capital and streamline finances. With innovative propositions and a strong track record, HSBC can be an invaluable partner for businesses looking to expand into Indonesia."²⁰