Infrastructure sector in Indonesia
Indonesia is a country of huge potential. It has a population of almost 250 million, with similar demographics to the BRIC markets, combined with an affluent and aspirational middle class estimated to be at least 35 million – equivalent to a substantial country on its own.
Despite the challenging economic environment, Indonesia’s economy, the largest in the association of South East Asian Nations (ASEAN) has been outperforming many of its neighbours in terms of growth at 6.5% in 2011, 6.2% in 2012 and predicted to be 5.6% in 2013. As a consequence Indonesia has been identified as one of the UK Trade and Investment (UKTI) High Growth Markets.
Indonesia is rich in natural resources, but it is recognised that to maintain growth and exploit these through exporting investment in infrastructure is necessary, driving power, rail and port expansion. Further the World Bank considers that the public services provided are inadequate for a middle income economy and contributing to the need for improvements in public transport within the country, including rail and air.
Within Indonesia the following opportunities exist for UK companies:
Foreign investment in the sector is welcomed and is being encouraged following changes to the investment regulations within Indonesia. There are particular opportunities existing in the design and construction of new power plants (coal, thermal and hydro), the refurbishment and upgrade of existing plants, supply of products and equipment and provision of specialist engineering and asset management services
Indonesia is positively embracing about renewable energies and has considerable resources to make this happen. The Government has set out progressive policies on promoting the use of renewable fuels and sustainable technologies and this will offer opportunities for UK energy companies who can supply equipment and related technologies.
The development of investment in rail infrastructure in Indonesia has been slow but is vital both in supporting commuter expansion and moving freight. Expansion in mining sector development in outlying areas is seeing further investments. The government is also pushing ahead with plans to alleviate congestion in Jakarta, through a range of vehicles, including monorail, metro, mainline commuter and airport rail link. This offers business opportunities for UK engineers, designers, consultants, equipment providers and operations and maintenance organisations.
Indonesia is an archipelago consisting of 17000 islands there are considerable opportunities on this area. Passenger numbers have increased six-fold since 1997 and are growing. Construction of new airports and expansion of existing ones will be needed and this may offer business opportunities for UK engineers, designers, specialist consultants, as well as providers of related equipment, including navigation/ radar equipment and security solutions.
This should be a key area of development with opportunities for UK companies to become involved in port modernisation and development as well as construction of new ports and allied facilities. Opportunities exist in the area of specialist consultancies and equipment suppliers.
Power Generation – Designer and Contractors, products and equipment suppliers, Engineering Specialist, Asset management services
Renewable energies – Equipment and related technologies suppliers
Railway – Engineers, Designers, Consultants, Equipment providers and Operations and maintenance organisations
Airports – Engineers, Designers, Specialist Consultants, Related equipment providers, (e.g. Navigation/ Radar equipment providers) and Security Solutions
Ports – Specialist Consultant and Equipment suppliers
Getting into the market
Presidential Regulation No. 54/2010 which came into effect on 1 January, 2011 governs, among others, procurements by ministries, state-owned enterprises, funded in part or entirely from domestic loans or grants received by the government, financed in part or entirely from international loans or grants.
Public tender is the standard method of procurement. In all public tenders, information is published on the procuring entity’s website, the formal notice boards, increasingly, the Electronic Procurement Service portals.
Foreign companies are allowed to bid in cooperation with a national company (unless no national company has the ability to provide the goods or services requested) and only on bids that exceed a certain threshold e.g. IDR 100 billion (approximately US$ 10 million) for construction services.
Most companies use the website of the National Public Procurement Office and printed media as a source of information about calls for tenders.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Lian Jap, British Embassy Jakarta. Tel: +62 (21) 2356 5265 or email: [email protected]
Lina Wati, British Embassy Jakarta. Tel: +62 (21) 2356 5311 or email: [email protected]
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.