Indonesia

Market overview

COVID-19 is present across Indonesia and the spread is not yet under control, with especially high rates in Jakarta and East Java. Indonesia's economy is feeling the impact of COVID-19, with fluctuations in the rupiah's exchange rate, reduced consumer spending and a decline in foreign investment levels.

Indonesia has taken measures to stop the spread of COVID-19. Most provinces are encouraging social distancing, almost all schools are closed and people have been asked to work from home if possible.

The Indonesian Government has now introduced a “new normal” policy that will allow some cities and regencies to reopen the economy. The decision for reopening is made based on an assessment of a set of criteria from the COVID-19 Task Force.

Jakarta has already begun to ease the ‘large scale social limitations’ (known as PSBB) policy. Offices, public places and malls have reopened – but are restricted to 50% capacity. The policy will be evaluated on 30 June. Elsewhere in Indonesia, Surabaya in East Java has been declared as a “black zone” by authorities due to the high number of positive cases. Despite this, the city has also begun transitioning to the “new normal” due to pressure from factories and businesses to reopen.

For more information on doing business in Indonesia, visit myNZTE - our free online portal for curated, in-depth information and guidance.

Video insights

Export support
Video
4:20
Last updated: 22 Jun 2020
COVID-19 Market Realities: Indonesia overview, 22 June

NZTE Trade Commissioner, Diana Permana, speaks with NZ Ambassador to Indonesia, Dr. Jonathan Austin, about COVID-19 impacts on Indoensia.

Watch now

Economy and trade

The Ministry of Finance has readjusted GDP growth estimates down to -0.4% this year. Private consumption (which accounts for over 50% of GDP) is predicted to slump to 0% growth this year.

Indonesia's economy grew at its weakest pace since 2001 in the first quarter, hitting consumption, investment and vital commodity exports, although the pace of growth was still higher than some countries in the region.

Indonesia's imports fell for 10 consecutive months to April 2020 as manufacturing companies cut production output while consumer demand continues to shrink amid the pandemic, hinting at further cooling economic activity in the future. There were US$12.54 billion in imports in April, an 18.58% drop from the same period last year. Imports of consumer goods decreased 16.6%, while incoming shipments of raw materials and capital goods dropped 19.1% and 17.1% respectively.

The Indonesian Government has relaxed the need for import approvals (import recommendations are still required) for onions and garlic following a sharp rise in prices. Prices for the two ingredients have soared, with garlic reaching Rp 46,000 (NZ$4.74) per kilogram, almost double the usual price while onion prices have leaped to Rp 170,000 per kg in March from Rp 62,500 in February. The relaxation of import requirements is designed to prevent further price surges in the lead-up to Ramadan in late April.

The Ministry of Trade has relaxed the importation of medical devices and personal protection equipment via Trade Minister Regulation No. 28/2020, which amends Trade Minister Regulation No. 87 M-DAG/PER/10/2015 on the requirements on importation of certain products. This leeway will be granted until 30 June 2020.

The Public Works and Public Housing Ministry will suspend a number of infrastructure projects following the ministry's decision to re-allocate a large part of its budget funds to efforts to mitigate the impact of the COVID-19 pandemic.

Tax revenue is expected to reach Rp 1.25 quadrillion in 2020, according to the Government's latest projection, down 23.65% from the 2020 state budget target.

Value-added tax (VAT), the largest tax contributor, grew by more than 10% year-on-year (YOY) to Rp 51.63 trillion in the first quarter, while personal income tax grew by nearly 5% to Rp 36.58 trillion.

Indonesia has imposed a new 10% VAT on digital products sold by non-resident internet companies with a significant presence in the Indonesian market, including streaming services, applications and digital games from 1 July. Services such as Spotify and Netflix will be among those subject to the new tax.

Supply chain, logistics & freight

Supply chains and logistics services remain open to ensure goods mobility.

Government support

Indonesia has announced a series of stimulus packages to cushion the impact of COVID-19:

  • The first stimulus package of NZ$1.1 billion announced on 25 February focused on staple needs and housing subsidies, as well as a six-month tax break for hotels, restaurants and airlines serving Indonesia's priority tourism destinations.

  • The second package of NZ$2.6 billion was announced on 13 March. The package offers further support and details on the first package, including income, value-added tax and import tax breaks.

  • The third package of NZ$3.2 billion was announced on 18 March to help fund the healthcare system.

  • The fourth package of NZ$41.6 billion announced on 31 March is focused on health care, social safety nets, tax incentives and small business.

  • The fifth package of NZ$26.2 billion announced on 16 May is focused on capital support for state owned enterprises, additional spending for regional administrations, and further support for small and medium enterprises through fund placement at certain banks and capital investment.

Through a Presidential Regulation, Parliament has approved the widening of the Government’s budget deficit to fund the COVID-19 response packages. In order to accommodate the two most recent packages, the Government widened its self-imposed budget deficit limit to 6.27% of gross domestic product (GDP) from 3%.

Bank Indonesia (BI), Indonesia’s Central Bank, injected an additional NZ$18.5 billion in May to stabilise the currency and financial system, projecting the rupiah to strengthen to pre-pandemic levels.

Travel

Indonesia has temporarily banned foreigners from visiting and transiting Indonesia, with a few exemptions including KITAS/KITAP visa holders and accredited diplomats. All returning Indonesians (or foreigners who meet the criteria for an exception from the ban) must provide a health certificate with a negative PCR test result on arrival.

A health check will also be carried out on arrival and travellers must also now sign a form on arrival, stating that they are willing to go into a Government-run quarantine facility if they display any COVID-19 symptoms. Travellers with no symptoms are still required to self-isolate for 14 days.

Domestic and international air and sea travel has been banned, with some exceptions, including air travel for foreign nationals wanting to return home, and Indonesians returning to Indonesia. Some areas, including Jakarta and Bali, require an additional Entrance-Exit permit. Cargo transport is exempt from the restrictions.

NZTE recommends all New Zealanders travelling in or out of Indonesia or domestically within Indonesia contact the airlines they are considering for guidance on what documentation is required prior to booking travel.

Useful links

Advice to exporters

New Zealand exporters that already operate in Indonesia should ensure supplies continue to reach the market.

New Zealand exporters with contract discussions underway may experience a slowdown and potentially an end to discussions, and those with existing contracts may see price negotiations or delayed payments.

Tradeshow and event information

Numerous international tradeshows and events are being postponed or cancelled in response to the COVID-19 pandemic.

Make sure you proactively check with organisers for any tradeshow or event you're scheduled to attend – conditions and regulations are changing rapidly overseas, and events may be postponed or cancelled at short notice.

Below is the status of major Indonesia tradeshows and events that NZTE's teams are aware of.

If you have questions about an event not listed here, please contact the organisers in the first instance or get in touch with NZTE for further advice.

  • The 8th Indonesia International Geothermal Convention & Exhibition (12 – 14 August) has been postponed until further notice.

  • The 9th ITB International Geothermal Workshop 30 March – 3 April, has been postponed until further notice.

  • The 4th Indonesia Business & Charter Aviation Summit (IBCAS) 2020, scheduled for 25 – 26 June 2020, has been postponed until further notice.

  • FHTB 2020 (Food Hotel and Tourism Bali) is postponed to 1 – 3 October 2020


sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you’ll find information on any COVID-19 effects across important sectors and industries in Indonesia.

Agriculture

The Indonesian Government has slowly shifted attention to the domestic agriculture industry. Increasing food scarcity and a disrupted supply chain during this pandemic are the main drivers.

This is a great timing for New Zealand agribusinesses to tap into the Indonesian market and start to explore the possible opportunities.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.