You are on page 1of 2

Economic Analysis

Economic Statistics: Indonesia is Southeast Asias largest economy with 250 million people, and GDP
growth above 5% in 2014 and projected to remain above 5% for the next five years. During the global
recession of 2009, Indonesias economy was among the top worldwide performers, due to a number of
factors, including strong domestic demand and rich natural resources. The favorable conditions like
strong macroeconomic variables, a stable currency and recent upgrades in bond ratings have made
Indonesia a major economy to watch for investments in the coming years.
Automotive Sector: The automotive sector in Indonesia has seen a positive growth in the past decade.
Indonesia has a relatively low vehicle ownership rate, but its high population means the overall market
volume is significant. Low interest rates have helped to boost consumption and economic growth. In
2012, Indonesia produced more than one million motor vehicles for the first time. The output rose 3.6
times during 200012, a large increase compared with global output growth of 1.4 times.
Foreign Investment: Inward FDI has driven recent output growth. This has mainly come from Japanese
automotive producers, who now account for some 90 per cent of Indonesian production and domestic
market sales. Today, the large size and growth of the Indonesian domestic market is the main driver of
optimism for automotive producers. Indonesia is reaching an income level at which many urban dwellers
can begin switching from riding motorbikes to driving cars.
Most of the cars in Indonesia are imported or use imported parts. The widening trade deficit has led to an
increase the import tax for consumer goods, from the present level of 2.5 percent, to 7.5 percent. The
government is giving incentives to low cost green cars (LCGC) with reduction of import and luxury tax.
The new automotive investment in Indonesia is more than doubled between 2011 & 2012. Most of these
investments came from foreigners. Indonesia expected to receive up to USD 1.2 billion in foreign
investment in the countrys automotive component industry this year. Of this value, about 40-50 percent
of the investments are expected to come from car manufacturers such as Toyota, Honda and Suzuki,
which planned to build car component manufacturing facilities in the country.
Trade Restrictions: Indonesia has also tried to increase the local content of automotive production by
imposing local-content requirements. The main types of parts being imported are engines and
transmission systems, often from other ASEAN countries, especially Japan and Thailand. One reason
cited for the previous lack of domestic parts production is the scarcity of raw materials available in
Indonesia. As of late 2013, production was continuing to rise, sustaining demand for locally manufactured
automotive parts and components. Some vehicle brands in Indonesia appear to have high local content,
but the indirect import content is often high. To increase genuine local content, Indonesia has charged
lower levels of duty, or no duty, on imported subcomponents since 2006. This is to encourage local
assembly of major components rather than their direct importation.
Media: The internet is profound in Indonesia. It overtook print and radio for the first time in 2012 in
terms of reach. While television is still the dominant medium with near 100% monthly reach. The young
and tech-savvy consumer base is highly social media aware, and supports a huge advertising market that
exceeds US$10 billion.
Market audit & competitive market Analysis
Preliminary marketing Plan
References

http://www.eastasiaforum.org/2015/05/02/indonesias-automotive-industry-shifts-up-a-gear/
http://www.bmiresearch.com/indonesia