LOCATION
POPULATION
Indonesia is the fourth most populous country in the world and is an archipelago of over 17,000 islands.
Current Population: 260,580,848 Languages: Bahasa Indonesian (official), English, Dutch
Located in South-Eastern Asia, Indonesia sits inbetween the Indian Ocean & the Pacific Ocean.
Religions: 88% Islam, 5% Protestant, 3% Catholic, 2% Buddhist, 2% Hindu
Jakarta is the Capital of Indonesia and is a key island for the textile industry and for imports and exports to and from all of Indonesia.
1 Indonesian Rupiah = .000070 USD 1 USD = 14,196.50 Indonesian Rupiah
Economic Overview National Holidays Indonesia has a well-balanced economy with all major sectors playing an important role. Labor Force: 127,110,956 Minimun Wage: 3.94 IDR Million / month Unemployment Rate: 5.34 Top Industries in Indonesia: Petroleum and Natural Gas, Textiles, Automotive, Electrical Appliances Inflation, consumer prices: 3.809% Total export volume from Indonesia in 2017: $1623.105 Million
Ethnic Groups: Malay, Javanese, Sundanese, European, North American, Dutch
Independence Day August 17 (1945) Marks Indonesia’s declaration of independence from the Netherlands. It took four years of diplomacy and armed struggle before their independence was formally granted by Queen Juliana of the Netherlands. Kartini Day April 21 A day to celebrate Hari Kartini, an Indonesian hero of women empowerment. Students & teachers dress in traditional clothes on this day.
Culture Insights Greetings are elaborate and formal affairs that should not be rushed. Gift giving is a traditional part of Indonesian culture. The left hand is considered unclean. Eat with your right hand only and avoid touching anything or anyone with your left hand. Accept gifts and hold cash in the right hand as well. If negotiating, avoid pressure tactics as they are likely to backfire.
Business Etiquitte Business dress is generally conservative. A handshake is the most common greeting accompanied with the word “Selamat”. Business cards should be treated with respect. Give/accept cards using two hands or the right hand. Indonesians are indirect communicators. They do not always say what they mean. Business is personal, so spend time through communication to build a strong relationship
Indonesian Apparel & Textile Industry
S W O T
Strengths • A well developed apparel & textile industry • Vertical integration from raw materials to finished garments - this streamlines the supply chain • Trusted US brands already manufacture here Weaknesses • Poor overall sanitation & sewage treatment facilities, which then tend to result in health risks • Far from the United States in case of emergency • Illegal imports appear to be a growing problem Opportunities • Indonesia can be a one stop shop for international buyers • Opportunities for growing in the market & worldwide industry in the next few years • New technological advances could put Indonesia in the spotlight Threats • A potential debt ceiling crisis could cause the US Indonesia relationship to change • Competitor countries might have lower costs & wages • Potential lower import/export prices & duty
STEEP ANALYSIS Social • Indonesia & the United States have maintained cooperative relations • Top 3 trade partners: China, Japan, Singapore (2017) • Indonesians are comfortable with silence, in both business & social situations
Economical • As for economic assistance to Indonesia, the US has provided food, infrastructure rehabilitation, health care and training through the U.S. Agency for International Development, known as USAID
Environmental • Industrial wastes & sewage pollution are a current environmental issue, due to the absence of environmental law enforcement • Tropical Climate • There are volcanos and mountains in Indonesia
Key Apparel Produced in Indonesia & Exported to the US
Non-Knit Women’s Shirts 8.2% HS92 ID 6206 Export value $405 M
Knit Women’s Suits 13% HS92 ID 6104 Export value $623 M
Non-Knit Men’s Suits 6.8% HS92 ID 6203 Export value $335 M
Non-Knit Women’s Suits 12% HS92 ID 6204 Export value $575 M
Non-Knit Men’s Shirts 5.6% HS92 ID 6205 Export value $276 M
The United States and Indonesia signed a Trade and Investment Framework Agreement (TIFA) in 1996, which was designed to build stronger economic ties.
3 Suppliers from Indonesia to the US Damco Top Product: polyester Customers: Adidas Inc. & Target Inc. 450 Employees Phone # +6262215745180
Transportation & Shipping Shipping from Jakarta Selatan, Jakarta, Indonesia to Savannah, GA or to Los Angeles, CA would take about 35 days. To Savannah Commodity Value of $1,000 Current Market Rate Estimate $4,888.41-$5,402.98 To Los Angeles Commodity Value of $1,000 Current Market Rate Estimate $3,529.67-$3,901.21
Political • Strong relationship with the US due to their stability and peaceful transfers of power • Indonesia is a republic based on the 1945 constitution providing for a limited separation of executive, legislative and judicial power
Trade Agreement between Indonesia & the US
Apparel exports in 2017 from Indonesia to the US = $4.95B
Knit Sweaters 18% HS92 ID 6110 Export value $904 M
Technological • Manufacturing companies in Indonesia are getting increasingly sophisticated with vertical operations of spinning, weaving, & printing • Indonesia is being perceive as a more advanced sourcing opportunity
Sea transportation is a vital aspect of Indonesia’s trading infrastructure carrying over 90% of internationally traded goods. Indonesia has hundreds of small ports throughout the islands, here are the top 6 largest ports of Indonesia: 1. Belawan in Medan 2. Batam near Singapore 3. Tanjung Priok in Jakarta 4. Tanjung Perak in Surabaya 5. Makassar in South Sulawesi 6. Sorong in West Papua
Buma Apparel Industies Top Product: ladies knit Customer: Dress Code Apparel Industies Inc. 5,000 Employees Phone # +62214603108
PT. Hand Sum Tex Top Product: apparel Customer: Lululemon Athletica Inc. 1,000 Employees Phone # +62214404333
Conclusion The business environment is currently mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. But in contrast to that, technology is developing and the apparel and textile manufacturing industry is constantly growing in Indonesia.
Sidney Yost • Professor Donald Levy • FASM 420 • Global Sourcing