Indonesia’s logistics and transportation industry is growing rapidly due to the strong economic development of the country and gradual increase in domestic demand fueled by the rise of the country’s middle class. Opportunities for logistics providers also continue to expand thanks to the strong growth in Indonesia’s e-commerce sector.
However, transportation costs in Indonesia are still significantly higher than in many of its neighboring countries. This is reasonably due to the geographic challenges that Indonesia faces as a conglomerate of thousands of islands composing the country, and also due to Indonesia’s strict logistics and transportation policies regulating import and export of goods. For example, the requirement that ships with imported cargo are obliged to call at particular ports, which means, for example in the case of agricultural imports, that they all would need to go through Surabaya port before being shipped to the other markets where they are needed1 causing an inevitable congestion of shipments rather than a procedure to streamline the logistics.
On the other hand, as an emerging and fast growing economy, the industry is expected to offer in the near future many lucrative business opportunities to European SMEs specialised in logistics, as also recently outlined by Indonesia’s President including ambitious expenditure plans for building new roads, airports and railways and to develop a modern maritime transport system together with better regulations2.
European logistics and transportation SMEs wishing to enter the Indonesian market need to keep in mind that despite improvements in Indonesia’s IP laws and regulations, counterfeiting and other IP infringements are still commonplace in Indonesia and thus robust IP strategies are needed to grow their business in Indonesia.