INDONESIA

Vulnerable to global trade tensions

B2

MEDIUM RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

The country risk assessments are your North Star metrics to make the right decision for your business and understand the risks in international trade. We have always the best solution for your needs

Swipe to view more

GDP USD1119.191bn (World ranking 16, World Bank 2019)
Population 270.626mn (World ranking 4, World Bank 2019)
Form of state Republic
Head of government Joko WIDODO (President)
Next elections 2024, General elections (Legislative, presidential,local)
  • Abundant natural resources (coal, petroleum, and copper ore along with agriculture)
  • Resilient banking system owing to relatively high capital adequacy ratio and low level of NPLs
  • Favorable demographics: large and young population as well as growing middle class
  • Solid public finances and sound fiscal policies
  • Weak legal system
  • Inefficient tax administration and strong informal economy
  • Growth dependent on raw commodity exports, especially to the slowing Chinese economy
  • Serious infrastructure gap compared to regional peers
  • Increasing inequality poses a threat to social cohesion and inclusive economic growth
  • Low levels of educational spending

Trade structure by destination/origin

(% of total)

Exports Rank Imports
China 16.7%
1
26.3% China
United States 10.6%
2
10.1% Singapore
Japan 9.5%
3
9.2% Japan
Singapore 7.8%
4
5.5% Thailand
India 7%
5
5.5% United States of America

Trade structure by product

(% of total)

Exports Rank Imports
Mineral fuels, mineral oils and related products 20.73%
1
15.69% Machinery and mechanical appliances
Fats 10.52%
2
13.75% Mineral fuels, mineral oils and related products
Electrical machinery and equipment 5%
3
11.58% Electrical machinery and equipment
Motor vehicles 5%
4
6% Iron and steel
Iron and steel 4.43%
5
5% Plastic products
Payment terms in Indonesia are around 30 days on average. However, the payment behaviour of Indonesian companies has deteriorated in recent years. Domestic law regulates the issue of late payment.​

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Legal action in Indonesia is usually lengthy and costly while the appeal process provides debtors with an opportunity to further delay the proceedings; therefore conducting orchestrated debt collection efforts is the best option.

The insolvency framework has improved over recent years, so the amount of inconsistent decisions which used to be rendered has been reduced, but in practice the insolvency system is still to be tested.

Contact

Euler Hermes

Economic Research Team

research@eulerhermes.com

Mahamoud Islam

Senior Economist for Asia

mahamoud.islam@eulerhermes.com

VIEW OUR SOLUTION