Sabadell International Business
Exporting to Indonesia
Opportunities for Spanish companies in Indonesia
- Biggest economy in South East Asia, and an ASEAN region.
- Internal demand is the foundation on which its growth is based (great increase of the middle class).
- Major needs for investment in infrastructures
- Intra-regional agreement for reducing customs duties (ASEAN).
- Rich in natural resources.
- Sound financial system.
- Sovereign credit rating for Investment grade BBB- stable (S&P) / BBB-Positive (Fitch).
- The regulatory and governance system is weak, opaque and requires more transparency
- Low efficiency of public administration and excessive bureaucracy.
- Poor implementation of public projects.
- Major reforms still waiting to be introduced.
- Opportunities in infrastructures, industrial supplies, chemical products and consumer products.
- Agreements for promoting and protecting investments with many countries, including Spain (APPRI 1996). Has signed IGA and MIGA
- Right to transfer and repatriate in foreign currencies, capital, profits, dividends, interest, loan repayments, royalties…
- Incentives for foreign investment restrictions in certain sectors
- There are special economic zones and customers deposits.
- Sustained growth of 5,50% with potential of +6% in the next few years.
- Major programme for development of new infrastructures.
- Reasonably balanced macro- economic programme and in a good external payments position.
- Significant growth in the consumer goods and industrial sectors.
Banco Sabadell in Indonesia
Banco Sabadell’s relations with banking in Indonesia go back to the early 1970s
Over all this time it has developed close and firm bonds with a wide range of Indonesian banks, meeting the needs of Spanish exporters.
The proximity of the regional office of Banco Sabadell in Singapore, which has been working in the country since 1990, has enabled it to work in close cooperation with this market and its public and private agents.
BS Singapore has also reinforced its our capacity to work with and advise companies, investors, importers and exporters and is well known in the financial and economic community of the country.
- A quality, personalised service for Spanish companies.
- Commercial advice on the market, local banking and many different financial products.
- Monitoring transactions, projects and tenders,
- Networking with the chief agents.
- ECA and structured financing for specific projects.
Business structure in Indonesia
Incorporating a foreign company
A foreign company can set up a business in Indonesia as a:
Its work can only involve handling the interests of the company or its subsidiaries. It cannot do business or perform any operations entailing income.
Only applicable for certain highly specific cases (such as tenders for infrastructures which require this) and the parent company takes on all the obligations of the branch. Running one of these is more complicated than a corporation (PT).
Incorporating an Indonesian company
Limited Liability Company
- The structure is that of a public limited company (PT in Indonesian).
- Partners: at least two, and they may be 100% foreign (natural or legal). There are restrictions in some sectors.
- Companies with foreign capital are given the name of PMA.
- Minimum authorised capital of IDR and minimum paid up capital of 25% of the sum authorised.
A very common form for business development that requires an Indonesian partner. It must have the legal form of a corporation (PT).
It is advisable to get assistance from a local legal firm when choosing the form of economic activity and for any legal matter that it is going to be handled in the country
Means of payment in Indonesia
Exports to Indonesia
- Documentary Credit:
means the seller can enjoy the security of being paid before shipping the goods. Option of financing the Indonesian payer (importer).
collection management of trade documents with the purchaser by bank in Indonesia. Usually with sight draft or payment.
- Guarantees for advance payment:
performance bond, deposits and also for regular transactions or capital goods.
mixed finance (FIEM loan / buyer credit) available for public projects.
Imports from Indonesia
- Documentary Credit:
banking payment commitment conditional on submitting documents accrediting export
- Import remittance:
collection management of commercial documents with purchaser by the Spanish bank
- Simple transfer:
a common means of payment and collection
International negotiation protocol in Indonesia
- It is very important to form a relationship and be able to maintain it.
- Regular visits and follow-ups.
- Offer a high standard of technical after- sales service (especially for exporters of equipment and machinery, industrial supplies, etc.).
- Flexible negotiations intended for mutual benefit. With private companies, one tends to deal with Indonesian Chinese, but in public companies, usual practice is to deal with Indonesian Bumis (natives).
- Negotiations with public companies are more complicated and take longer to obtain results.
- It is important to have a local agent.
- Indonesians are friendly and easy to get on with.