Indonesia

Business Opportunities in Indonesia for UK Exporters

1. Introduction & Snapshot
Indonesia is Southeast Asia’s largest economy and the fourth most populous country in the world, with over 275 million people. Its strategic location between the Indian and Pacific Oceans, large domestic market, and ongoing economic reforms make it an increasingly attractive destination for UK exporters.
The country’s diversifying economy, investment in infrastructure, and rapidly growing digital sector offer opportunities across multiple industries. The UK-Indonesia bilateral relationship is supported by trade agreements and ongoing government initiatives to strengthen investment flows.
For UK exporters, Indonesia represents a high-growth, high-potential market, particularly for businesses that understand local regulatory nuances and cultural dynamics.
2. Economic Overview
Indonesia’s GDP in 2023 was approximately USD 1.3 trillion, making it the largest economy in Southeast Asia. Economic growth is projected at 5% per year over the next few years, driven by domestic consumption, infrastructure projects, and investment-friendly reforms.
Key economic highlights:
Diverse economy: Strong manufacturing base (electronics, automotive), services, mining, and agriculture.
Young population: Nearly 50% of Indonesians are under 30, creating a robust consumer market.
Urbanisation: Rapid growth in cities such as Jakarta, Surabaya, and Bandung is driving demand for housing, services, and modern retail.
Indonesia is also investing heavily in digital infrastructure, positioning itself as a regional technology hub. The government’s “Omnibus Law” on job creation and investment has simplified regulations to encourage foreign investment.
3. Trade Relations with the UK
Trade between the UK and Indonesia is growing steadily. Key features include:
UK exports to Indonesia: Machinery, pharmaceuticals, chemicals, education services, and financial services.
UK imports from Indonesia: Palm oil, coffee, tea, cocoa, footwear, and electronics components.
Bilateral trade value: Approximately £2.5 billion annually, with opportunities to expand in digital services, green technologies, and education.
Indonesia actively seeks foreign partners for infrastructure, renewable energy, and manufacturing projects. The UK-Indonesia Trade and Investment Working Group facilitates engagement for UK companies across multiple sectors.
4. Market Opportunities
Digital Economy & Technology
Indonesia is experiencing a digital boom, with over 200 million internet users. Opportunities exist for UK exporters in fintech, e-commerce platforms, cybersecurity, cloud services, and software development. Government support for tech innovation and smart city initiatives enhances potential in these areas.
Manufacturing & Industrial Products
Indonesia’s manufacturing sector is expanding, particularly in electronics, automotive, chemicals, and machinery. UK exporters of advanced manufacturing equipment, robotics, and automation technology are well-positioned to enter these markets.
Infrastructure & Construction
The government is pursuing massive infrastructure projects, including new highways, airports, seaports, and the relocation of the capital city to Nusantara in East Kalimantan. UK expertise in engineering consultancy, construction technology, and project finance is in demand.
Renewable Energy & Sustainability
Indonesia aims to increase its renewable energy capacity through solar, wind, geothermal, and hydro projects. UK companies with experience in green energy solutions, grid management, and energy efficiency technologies can play a key role.
Education & Training
A young, rapidly growing population fuels demand for higher education, vocational training, and English-language programs. UK universities and EdTech companies have opportunities to partner with local institutions and deliver quality education solutions.
Consumer Goods & Lifestyle Products
Urban Indonesian consumers are increasingly brand-conscious and open to premium foreign products, including beverages, food, fashion, personal care, and household goods. Rising digital adoption enhances opportunities in online retail and direct-to-consumer channels.
5. Regulatory & Business Environment
Indonesia has made significant strides in improving its investment climate, though challenges remain:
Ease of Doing Business: Ranked mid-range globally; recent reforms have simplified business licensing and foreign investment procedures.
Investment regulations: The Omnibus Law reduces restrictions for foreign ownership in multiple sectors, but some industries remain partially restricted.
Customs & taxation: Import duties and VAT apply; UK exporters should consult local advisors for compliance.
IP protection: Indonesia has strengthened intellectual property laws, though enforcement varies regionally.
Partnering with local distributors, agents, or joint ventures is often the most effective way to navigate regulatory complexity.
6. Cultural & Consumer Insights
Indonesian business culture is relationship-driven and hierarchical. Building trust through personal connections, formal meetings, and respect for hierarchy is critical. English is commonly used in multinational companies, but local language proficiency and culturally aware communication are highly valued.
Consumer behaviour:
Urban consumers are digitally savvy, brand-conscious, and aspirational.
Rural populations are price-sensitive but increasingly connected via mobile technology.
Social media and e-commerce platforms play a central role in shaping purchasing decisions.
7. Challenges & Risks
UK exporters should be aware of several challenges:
Bureaucracy: Despite reforms, obtaining permits and approvals can be time-consuming.
Infrastructure gaps: Logistics costs remain high outside major cities.
Regulatory uncertainty: Policy changes may affect foreign investment rules.
Competition: Strong presence from regional players (Japan, China, Singapore).
Currency volatility: The Indonesian rupiah can fluctuate, impacting costs.
Mitigation strategies include using local legal advisors, joint ventures, and diversified supply chains.
8. Case Study: UK Success in Indonesia
UK firms have achieved success by targeting high-growth sectors and forming strategic local partnerships. Examples include:
Fintech partnerships: UK payment platforms and cybersecurity companies have collaborated with local banks to expand digital services.
Renewable energy projects: UK consultancies have supported solar and hydro initiatives, providing expertise in project management and sustainability.
Education collaborations: UK universities and vocational training providers have partnered with Indonesian institutions to deliver English-language programs and professional skills training.
These successes underline the importance of sector-specific focus, local engagement, and adaptability.
9. Practical Entry Tips for UK Exporters
Engage early with DBT and local trade organisations: Useful for networking and compliance guidance.
Focus on high-growth sectors: Digital, renewable energy, infrastructure, education, and consumer goods.
Choose the right local partner: Distributors, agents, or joint ventures are key to navigating bureaucracy.
Plan logistics carefully: Indonesia’s geography presents challenges for nationwide distribution.
Invest in cultural intelligence: Relationship-building and understanding local business etiquette are critical.
10. Conclusion
Indonesia is a high-potential market for UK exporters, offering a combination of scale, growth, and sector-specific opportunities. Its digital economy, renewable energy agenda, infrastructure expansion, and young population create avenues for UK expertise in multiple areas.
While challenges in bureaucracy, infrastructure, and competition exist, careful planning, strong local partnerships, and focus on high-value sectors can yield substantial rewards. For UK businesses ready to engage with Southeast Asia’s largest economy, Indonesia represents a compelling destination for expansion.