Planning a business expansion in Indonesia is not easy because you may encounter problems before succeeding. To make it easier on yourself, it pays to look for a reliable distribution partner first. This means taking time to assess the Indonesian contacts you’ve already made and see which ones have business potential.
Why Indonesia is a Good Market Opportunity
There are multiple market opportunities in the world’s fourth-most populated country, including expansion in retail, health, education, telecom, and financial services sectors. The Indonesian consumer ranks as one of the most confident in the world, and it climbed to 125.2 in August 2023 from the previous month 123.5.
Indonesia’s aviation market is the second-fastest growing in the world and favors U.S. products. Aircraft replacement parts and services are a significant market. There is also demand for air traffic control and airport logistics services, including ground support equipment. With high growth, the Indonesian aviation market require infrastructure, training, and components to keep their business running. With a projected CAGR of 6.5% from 2022 to 2028, Indonesia has a highly favorable in the MRO sector. This growth is driven by increasing demand and a wealth of opportunities for industry players. With a flourishing aircraft fleet, a thriving tourism industry, and a government dedicated to advancing the aviation sector, Indonesia holds a significant potential for MRO growth.
A competitive and expanding banking sector offers significant opportunities for IT and financial technology from equipment, software, and technology providers. There are opportunities for telecommunications infrastructure, such as satellites and ground stations, handheld devices, also integration devices or enablers. Telecommunications equipment and services and satellites remain excellent areas for U.S. products and services, which have a comparative advantage technologically.
Types of Local Partner in Indonesia
Before you go finding a local distribution partner, you need to know what type of local partner supply chain management in Indonesia.
Supplier
A supplier is a person or business that provides a product or service to another entity. The role of a supplier in a business is to provide high-quality products from a manufacturer at a good price to a distributor or retailer for resale. A supplier in a business is someone who acts as an intermediary between the manufacturer and retailer, ensuring that communication is forthcoming and stock is of sufficient quality.
The role of a supplier in a business can be a demanding one as retailers expect a certain level of quality, and manufacturers expect suppliers to sell a lot of stock. Due to this suppliers must be flexible and understand how to manage relationships.
Distributor
A distributor is an intermediary entity between a producer of a product, or manufacturer, and a downstream entity in the distribution channel or supply chain. The downstream entity is typically a retailer or value-added reseller (VAR), but it can also be a wholesaler.
The distributor is an integral supply chain component, acting as an intermediary between the manufacturer and the downstream entity. The distributor bridges the gap between upstream and downstream entities while adding important services that help smooth the distribution process.
A distributor typically works with multiple manufacturers and multiple downstream entities. For each manufacturer, the distributor serves as an agent that enters into an agreement with the manufacturer to sell its products to retailers, VARs or wholesalers.
Forwarder
A freight forwarder is a company that serves as an intermediary between transportation companies that import and export goods and the businesses that need them. Freight forwarders manage every aspect of the transportation process, from storing goods before shipment to ensuring they make it through customs.
They don’t handle the movement of the goods themselves, but they establish relationships with the companies that do so they can plan each step of every shipment on a client’s behalf. Freight forwarders work with transportation companies that ship products by road, rail, water and air.
Freight forwarders prepare for the shipment of a company’s merchandise by making arrangements with storage, transportation and other logistics companies. By using the services of businesses they contract with, they give their clients an affordable and reliable way to send and receive goods both domestically and internationally.
Procurement
Procurement is obtaining or purchasing goods or services, typically for business purposes. The Procurement company is most commonly associated with businesses because companies must solicit services or purchase goods, usually on a relatively large scale. It can also include the overall procurement process, which is critically important for companies leading up to a final purchasing decision.
Companies can be on both sides of the procurement process as buyers or sellers though here we mainly focus on the side of the soliciting company.Procurement involves not only deciding on what to buy based on needs and budget, but also ensuring that the company is receiving enough value from the purchase. We all perform this work ourselves as individuals.
Any purchase you make depends on the quality of the product, the amount of time it takes to be delivered to your doorstep, how much value you’ll get out of your purchase, and many other factors.
What Can Distribution Partner Do For You?
Looking for a distribution partner in Indonesia isn’t just to give you an entry into the market. It is your way to sustainability and growth. They can help you with the following:
Setting up a Business
Finding a local distribution partner can help speed up your entry into the market especially if your industry is capped. The partner’s role depends on the agreement.
There are different business structures you can choose, but two of the most popular is a special purpose vehicle and a PT PMA. In a special purpose vehicle arrangement, a local becomes the business owner at face value. PT PMA may be more complex, but it also allows you to have more control over the business as you can hold a position such as a director or a shareholder.
Buying a Shelf Company
The process of company registration in Indonesia can be long and tiring. It may take weeks, sometimes months, to complete. One of the quickest ways to establish here is to buy a shelf company. A business partner such as AsiaCommerce can help facilitate it for you to make it more convenient, easier, and faster.
Distributing of Goods
As not all markets are open to you, as well as to take advantage of existing local businesses, you can look for a partner to help you distribute and sell goods in the country. Its knowledge on the market, rules and regulations particularly on importation, and business culture will come in handy.
How to Choose the Best Local Distribution Partner in Indonesia?
You may now understand the huge role a distribution partner has on your business, but you have no idea how to look for someone reliable. There’s only one smart and hassle-free choice for you: work with AsiaCommerce.
AsiaCommerce is the right business partner for expatriates who wish to work or businesses that want to set foot in Indonesia. We provide the support you need to start, maintain, and grow your business:
- Local partner selection
- Special purpose agreements
- Product registration
- Due diligence
- Market research and analysis
Start Your Business Expansion to Indonesia For Now
AsiaCommerce provides several services such as comprehensive market research, arranging partnerships in local industry, and creating sales programs based on market research.
Our Market Insight Research, Business Partnership Engagement, and Business Registration and Establishment services can help you expand and develop your business, register and establish your products and company.
Our strategy consulting services domain focuses on supporting private sector clients with comprehensive and specialized development regarding the company’s needs and also on the public sector for a broader scope.
If you’re interested in exploring market opportunities in Indonesia, visit our service page for more information. Our team will work with you every step of the way, from finding a supplier, shipping door-to-door, and handling import documents to ensure your success in importing from Indonesia.