Business Environment

Competition to attract a production base with Vietnam


Indonesia has negative quarterly GDP growth for the first time since 1999

Indonesia recorded its first negative quarterly growth since 1999, as consumption and investment declined due to the action restrictions implemented by provincial governments and a reduction in business activity as a result of the Corona scare, which was more than the negative 5.08% predicted in advance by Finance Minister Sri Mulyani.

Indonesia's recession is often compared to the recession that started with the 1998 currency crisis, but at the time, Indonesia's foreign exchange reserves ran out due to short selling by hedge funds (selling contracts without cash), which led to a crash in the rupiah market. The recession is accompanied by a temporary suspension of economic activity in the midst of the country's current economic downturn, which means that textbook central bank stimulus measures to lower interest rates and campaigns to support the travel and transportation industries, which have been badly affected by migration restrictions, will be implemented.

After suspending the reception of domestic and international tourists for five months, Bali has resumed accepting domestic tourists on July 31, provided they bring a negative PCR test certificate issued at least 14 days prior to the start of migration, and will resume accepting international tourists on September 11.

The PCR test is now more than 3.5 juta, which is more expensive than the ticket price at the hospital in Indonesia, so it will be limited to the wealthy people who can travel to Bali for the time being, but the resumption of domestic tourists is good news for the tourism industry as they used to account for more than 60% of the tourists to Bali in 2018.

Investment Environment in Vietnam and Indonesia

With the news of SARS in 2003, bird flu in 2005, swine flu in 2009, the new coronavirus in 2020, and the recent deaths of seven people from the Bunya virus, there is a constant stream of incomprehensible viruses and the bodies of Indonesian sailors in the sea The Chinese consulate will instigate rioting demonstrations to take advantage of Black Lived Matter, and send unknown seeds to the U.S. and Japan, and with this much commotion around the world, the de-Chinaization of industry will indeed accelerate. As a result, manufacturers from many countries are competing with Thailand and Vietnam to attract companies to relocate to Indonesia.

However, Vietnam has the geographical advantage of being located on the Malay Peninsula with easy access to neighboring countries, and northern Vietnam belongs to the Chinese cultural sphere with Chinese characters and Confucianism due to the influence of a long period of rule by Chinese dynasties.

Indonesia's average land price of Rp. 3.17 million per square meter is much more expensive than Thailand's Rp. 3.03 million and Vietnam's Rp. 1.27 million, and although the wage level is almost the same as Thailand's, it is much more expensive than Vietnam's, so all countries are trying to attract cheap land and minimum wages to win the competition. There is a common movement in the provinces to develop industrial parks.

The Indonesian government considers labor costs and low land prices to be important factors in an attractive investment environment for foreign companies, and has recommended Batang Industrial Park in Central Java as the most important candidate site. However, if you look at the map, it is close to Semarang, which is an international trade port, and it will be an important base for the Northern Java Automotive Industrial Belt Initiative proposed in Making Indonesia 4.0.

中部ジャワのBatang

There is no doubt that Indonesia's biggest attraction for investors is "a thick domestic consumer market that will continue to grow," and with Vietnam's population of 96.21 million in 2019, close to 100 million, it is already forming a huge domestic market, and Indonesia cannot rely on domestic demand in the competition to attract foreign investment.



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1

It's often said in accounting that "profit and depreciation create cash," meaning that there are two sources of cash for a company: profit and depreciation.

2

There are few cases of cost accounting (actual cost) business, which calculates how much cost is spent on monthly production, being systematized in Indonesia.

3

In Jakarta, the first section of the MRT metro (15.7 km in total) was officially opened in April 2019, but in June this year, in the midst of the corona pandemic, the 6.3 km from Bendaran HI station in front of Plaza Indonesia, the current starting station, to Kota in North Jakarta, West Construction has begun on the second phase of the 5.2km total length of 11.5km (10 new stations) to Ancol's train depot in Jakarta.

4

The Jokowi administration, which came to power in 2014, is said to be a staunch supporter of China, and in 2015, China and Japan fought for the Jakarta-Bandung High Speed Rail project, which was expected to be introduced under the Japanese bullet train system, but the Indonesian government rejected the Japanese plan and adopted the Chinese plan.

大統領選挙で考えたギャップにハマるということ 5

Jokowi's image of a simple uncle with no selfishness and his strong leadership skills as a pragmatist have won over the gap-loving Indonesians, who see him as an ordinary person at first glance but are actually amazing, and the public seems to be in a state of collective hypnosis.

情報共有 6

The sharing of visible results leads to a common recognition of the problems, but if there are people who are troubled because the scarcity of information is diminished by the increasing sharing, the political power to increase the position by monopolizing useful information is at work.

7

In "The Garuda Merchant," written by Yusuke Fukada, a bible-like novel for Japanese living in Indonesia, there is an account of a senior official of the Indonesian Ministry of Religious Affairs inviting Japanese and Indonesians to his home, in which he writes on the invitation card for Indonesians that the party should start thirty minutes early, on the assumption that they will be late.

宗教によって異なる「死んだらどうなる」の考え方 8

Both Christianity and Islam are religions derived from Judaism and believe in the one and only God, Jesus Christ (God Himself) or Allah, respectively.

株価操作なんてインドネシア株では当たり前 9

Stock prices fluctuate with sell and buy orders, and if you get a lot of sell orders and a lot of buy orders, the other investors will follow suit with "me too" and the stock will go up.

心臓に毛が生えたインドネシア人のずうずうしい転職活動を応援してみた 10

Since many Indonesians can't maintain mental stability without revealing a secret story to someone else.

日系企業のインドネシアでの存在意義 11

If Japan's population continues to decline at the current rate, domestic demand will continue to shrink, and if this happens, it is inevitable that domestic companies that find it difficult to survive in the Japanese domestic market alone will look for ways to make a living in overseas markets.

チャンスはあるが勝てる分野が 12

After living in Indonesia, talking to people on my own, and gradually understanding the local situation, I realized that starting a business in Indonesia is surprisingly difficult. The reason for the difficulty is the high shipping costs and tariffs, the competition from local companies, and the high running costs of IMTA and DPKK.

インドネシアのシステムインテグレーション業界 13

The other day, I had the opportunity to exchange opinions with JETRO (Japan External Trade Organization) about IT investment by Indonesian SMEs, and they raised an important issue related to the existence value of system integrators, such as "How can we explain the cost benefits of system investment?

肉体と精神と心と魂 14

Speaking of "Body and Soul," it's the debut song of SPEED, a member of the LDP's House of Councillors, Eriko Imai, who was unofficially appointed as parliamentary secretary of the Cabinet Office following yesterday's cabinet reshuffle, and the name of a long-established Indonesian women's fashion brand.

ジャカルタのラーメン市場 15

I came to Indonesia for the first time in October 1997. I didn't understand Indonesian, my job was hard, the people around me were unreasonable, and there was a time when I wanted to go back to Japan for a while.

ブランド力、技術力、資金力の3要素 16

After the Jakarta riots of 1998, when the rupiah plummeted and domestic companies with foreign dollar-denominated debt were struggling to pay interest, I was looking for a new business in Indonesia that would allow me to earn foreign currency.

日本とインドネシアの間でのタイムマシン経営が通じなくなっている件 17

I think that Yoshinoya overcame the frame of Japanese food and became Indonesian soul food. I am happy to see the scene where Japanese food culture is accepted by Indonesian people.

サリナデパートとマクドナルド 18

The first McDonald's in Indonesia, Sarinah Department Store, will close after today, May 10.
While Jakarta's shopping malls continue to be modernized with new concepts, the Sarinah department store and the Pasaraya in Block M, which were the staple meeting places for young people when I first arrived in Indonesia more than 20 years ago, have been completely left behind.

不景気の歴史 19

Since I came to Indonesia, I have seen the economic recession several times, but because of the spread of the new coronavirus this time, the economy will definitely go into recession, and in a few years' time it may be called corona shock or corona recession.

日本のバブル経済崩壊後とインドネシアの通貨危機後 20

When I entered university in 1991, at the end of the bubble economy, land and stock prices were exploding, Mitsubishi Estate had bought the Rockefeller Center Building, a symbol of America, and the women of the one-length body-con (like the Bubbly Dance of Tomigaoka High School's dance club) were dancing at Juliana Tokyo in the waterfront bay area, waving their fans.

内需と外需の自国経済に及ぼす影響 21

The situation in Japan is that even if public works investment is made, the money stays in the savings of companies and individuals, and domestic consumption does not increase, while the situation in Indonesia is that even if domestic consumption increases, the ratio of imported consumer materials is high, and domestic assets are flowing out to foreign countries.

2019年の総選挙を前にインドネシア政治史のおさらい 22

As the campaign (Kampanye) for next year's presidential election (Pemilu Pilpres Pileg Indonesia 2019) is lifted, it has been decided that the order in which the ballot papers will be printed will be No. 1 for the incumbent President Jokowi and Vice President Mahuru candidate pair and No. 2 for President Prabowo and Vice President Sandiagauno candidate pair.

インドネシアの国土と風土が生み出す産地特有のコーヒー 23

Located in the coffee belt between the Tropic of Cancer and the Tropic of Cancer, Indonesia is a country suitable for coffee cultivation, and during the 300 years of Dutch colonial rule that followed the advance of the East India Company in 1602, Arabica coffee was brought to the country and cultivation began in the plateau region with a favorable climate.

インドネシア人の悪魔祓い 24

My cousin, who hadn't heard from me in a while, called me late last year in early December with tears in her eyes.

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